HOW TO OBTAIN AN IMTO LICENSE IN NIGERIA

Introduction

The international money transfer operator (IMTO) licence is one that is required for the provision of inbound cross-border payment services from overseas to Nigerians and foreigners in Nigeria such as the transfer of funds from individual or entities residing abroad to recipients in Nigeria and the payment of corresponding sums to such beneficiaries.

In Nigeria, only those who have been duly incorporated by the Corporate Affairs Commission (CAC) and licensed by the Central Bank of Nigeria (CBN) solely for the purpose of rendering IMTO services in Nigeria can provide these services. Previously, banks and fintechs could carry out IMTO services but this is no longer the case as they are now prohibited from carrying out such services but banks can act as agents of IMTO companies as a result of the CBN revised guideline released on the 31st of January 2024, for international money transfer services in Nigeria.

Please note that fintech who had previously obtained the license are also prohibited from carrying out IMTO services as well effective from the date of this guideline.

Requirements for Obtaining an IMTO License

1. An application to the Director, Trade and Exchange Department of the CBN, accompanied with the following documents:
2. Evidence of approval to operate in other jurisdictions or agency agreements
3. Evidence of tax clearance and CAC incorporation documents for Nigeria entities
4. Ownership structure of the IMTO
5. Board of directors approval to operate with an IMTO license
6. Return on allotment of shares and particulars of directors
7. Profile of the company including the curriculum vitae of the Board and the management of the company
8. Information on beneficial owners of the company (where applicable)
9. Credit reports from a licensed credit bureau for the shareholders and key officers of the IMTO
10. Foreign applicants must have a minimum share capital of US$1million, while Nigerians are expected to have the Naira equivalent of the US$1million as their minimum share capital.
11. Deposit of the share capital in a designated account domiciled with the CBN which will be refunded after the grant of the license.
12. The names of Authorized Dealer Bank(s) to serve as local agent(s) and copy of the agency agreement
13. A business plan which must include:
14. The nature of business
15. Features of the scheme
16. Internal control systems and monitoring procedures
17. Security features that will be put in place
18. Three years of financial projections and market analysis for the company
19. Transaction and other charges that the company will bear
20. Profit sharing agreement among the parties
21. Diagrammatic illustration of transaction flows
22. Consumer Protection and Dispute Resolution Mechanism
23. Information technology policy of the company, including:
24. Privacy Policy
25. Information Ownership, Disclosure, and Loss Policies
26. The Backup and Restore Policy
27. Network Security Policy
28. Encryption Policy
29. Confidential Data Policy
30. Password Policy
31. Third Party Connection Policy
32. Incidence Response Policy
33. Physical Security Policy
34. Enterprise Risk Management Framework
35. Contingency and Disaster Recovery Plan (business continuity plan)
36. Project Development Plan (time, location, operation, etc.)
37. Upon complying with the above requirements, the applicant may be granted approval in principle (AIP) which would allow the applicant to open a bank account and process pre-operational processes. Please note that the AIP does not grant authorization for IMTO operations.
38. Application to the CBN within three (3) months of obtaining the AIP for final approval.

Can IMTOs collaborate with Agents

IMTOs can collaborate with agents but they must notify the CBN upon the appointment of an agent and maintain a separate account with their agents which would hold customer funds meant for remittance.

In other for the IMTOs to conduct its business through agents, such collaboration must be subject to the terms outlined in a formal agreement such as:

1. A statement that the IMTO is wholly responsible and liable for all actions or omissions of the agent
2. Specific services to be rendered by the agent
3. Appropriate policies and procedures to detect, prevent and report money laundering
4. Responsibilities of the agent to deliver supporting transaction documents
5. A statement that the IMTO is the data controller with respect to information collected by the IMTO
6. Prohibition from charging the beneficiary any fees other than the fees agreed upon with the sender.

Can a Local IMTO Company Collaborate with a Foreign Technical Partner?

A local IMTO can collaborate with a foreign technical partner upon the approval of the CBN. The foreign technical partner must have the approval to carry out IMTO transactions in its home country and with a verifiable track record of engaging in IMTO businesses.

The relationship between the local IMTO and foreign technical partner must be formalized through a memorandum of understanding. The CBN shall also conduct appropriate due diligence on the promoters, directors and key officers of the proposed IMTO.

How are Remittances made by IMTO companies in Nigeria?

All transfers are disbursed to beneficiaries in Naira through cash, bank accounts or mobile money wallets. Where the beneficiary does not have a bank account or mobile money wallet, payments shall only be made upon the provision of a satisfactory reference from a current account holder in a bank, confirming that the beneficiary is the bona fide owner of the funds. If the proceeds exceed $200, payment must be made through an account. The exchange rate for the IMTO transactions shall be the prevailing rate in the Nigeria foreign exchange market.

Activities prohibited for IMTOs

1. Split transactions deliberately intended to circumvent anti-money laundering regulations
2. Buying of foreign exchange from the domestic foreign exchange market for settlement purposes
3. Acting as an authorized dealer in gold or other precious metals
4. Engaging in deposit taking and/or money lending business
5. Maintenance of current accounts on behalf of customers
6. Establishing of letters of credit
7. Acting as a custodian of funds on behalf of customers
8. Engaging in institutional transfers

Penalty for non-adherence to CBN guidelines

The followings are some of the sanctions the CBN may make against an IMTO, its board of directors, officers, or agents:

1. Withholding of corporate approvals
2. Financial penalties
3. Suspension from the money transfer operation
4. Revocation of the license

Other Compliance Requirements

1. Registration with the Federal Inland Revenue Service (FIRS) for tax identification number and tax related obligations
2. Registration with the Special Control Unit against Money Laundering (SCUML)
3. Keeping of comprehensive record of the company and also maintaining accurate information on each transaction and issue receipts accordingly.
4. Both IMTOs and their agents are to submit daily, weekly and monthly returns using the prescribed template to the CBN.
5. IMTOs and their agents are mandated to submit a suspicious transaction report (STR) filed in the originating country within 24hours after a suspicious transaction.
6. Disclosure to customers details of applicable exchange rates, commission, fees and any other charges imposed either by the IMTO or their agents in the remittances process.
7. Establishment of a complaint management unit to resolve disputes submitted by its customers and provision of a dedicated phone, email and other means through which complainants may enquire about the progress of their complaints. Also, there must be a monthly report to the CBN about the complaints received.

Cost of Obtaining an IMTO License

The application fee for an IMTO license is set at N10,000,000. The cost for CAC Registration considering the required share capital is about N22,000,000 for the government fees while the application fee with CBN is N10,000,000 (Non-refundable). Please note that there may be other miscellaneous fees which cannot be estimated until the process begins and professional fees for processing the license varies.

Timeline for Obtaining an IMTO License

The estimated timeline for obtaining the Approval-in-Principle from the CBN is between 3 to 6 months while the final license is also about 3 to 6 months.

Is the IMTO License subject to Renewal

The IMTO license must be renewed annually on or before the 31st of January in each year. The renewal fee for the IMTO license is Ten Million Naira (N10,000,000) and failure to renew the licence within the first quarter of the year would prevent the IMTO from further transacting with its agent bank.

Conclusion

Obtaining an IMTO license in Nigeria is a crucial step for operating as an IMTO company. You can reach out to us to help you in obtaining this license without any hassle.