CBN prohibits banks, bans fintechs from operating as IMTOs

The Central Bank of Nigeria (CBN) has prohibited banks from directly operating International Money Transfer services; they are instead authorized to act solely as agents in this capacity.

Similarly, Financial Technology Companies have been barred from obtaining approval for IMTO.

These regulations align with the provisions outlined in the Banking and Other Financial Institutions Act of 2020 (BOFIA 2020), which extends the prohibition of certain persons’ employment in banks to the realm of IMTOs.

In adherence to BOFIA 2020, conditions excluding specific individuals from managing banks will now extend to the management of International Money Transfer Services.

This means shareholders and officers of companies involved in IMTOs are barred from undertaking International Money Transfer Operations.

The permissible activities for IMTOs are tightly defined, focusing solely on inbound international money transfer transactions.

These activities include accepting funds for the purpose of transmitting them to individuals residing in Nigeria, cross-border personal money transfer services, and services for foreign tourists in Nigeria.

Transactions are structured on a “person to person,” “business to person,” and “business to business” basis, subject to periodic reviews by the CBN.

IMTOs are expressly prohibited from engaging in any other business beyond the stipulated permissible activities.

Outbound transactions and the purchase of foreign exchange from the domestic foreign exchange market for settlement are strictly off-limits.