What is an IMTO?
International Money Transfer Operators (IMTOs) are companies approved by the Central Bank of Nigeria (CBN) to facilitate the transfer of funds from individuals or entities residing abroad to recipients in Nigeria and the payment of a corresponding sum to a beneficiary through a clearing network to which the IMTO belongs.
Who regulates IMTOs in Nigeria?
IMTOs are regulated by the Central Bank of Nigeria (CBN). No company is permitted to process international remittances into Nigeria without a valid IMTO licence issued by the CBN.
What is an IMTO Licence?
An IMTO licence is the legal authorization required for any company to facilitate the transfer of funds from individuals or entities abroad to recipients within Nigeria. Without this licence, any international money transfer service operating in Nigeria is considered illegal. The IMTO license is valid for one year and subject to renewal on or before the 31st of January, each year.
Two-Phased Approval Process of Licence Approval
The key regulatory framework applicable to IMTOs in Nigeria is the CBN Guidelines on International Money Transfer Services in Nigeria, 2024. These Guidelines expressly provide for approval in principle (AIP) and final approval (FA) as the two licensing phases required to obtain an IMTO licence.
An IMTO licence applicant must first seek an Approval-in-Principle from the CBN by applying to the Director of the Trade and Exchange Department. At this stage, the applicant pays a non-refundable application fee and submits the required supporting documents. The CBN reviews the application and supporting documents before deciding on the grant of Approval-in-Principle. This approval does not authorize business operations; it only permits the applicant to open a bank account and complete pre-operational requirements.
Within three months of receiving an Approval-in-Principle, an IMTO must apply to the CBN for a Final Approval to begin operations. This application requires the submission of all necessary supporting documents.
If the CBN confirms that all requirements for a final licence have been met, it will issue the IMTO licence, valid for one year. IMTO licences must be renewed annually by paying the renewal fee to the CBN on or before 31st January. If an IMTO fails to provide its agent bank with a copy of the renewed licence within the first quarter, the bank is permitted to stop processing transactions for that IMTO.
What does the IMTO licence allow?
An IMTO licence allows a company to:
- Receive money from abroad on behalf of Nigerian beneficiaries
- Pay out funds in Nigeria, through banks or licenced financial institutions
- Settle remittances in foreign currency or naira, in line with CBN rules
Importantly, IMTOs cannot operate like banks or take deposits. Their role is strictly limited to money transfer services. Also, persons prohibited from working in banks under the Banks and Other Financial Institutions Act (BOFIA) 2020, are also prohibited from becoming IMTOs.
How do cross-border payments actually work?
- A sender abroad initiates a transfer through an IMTO.
- The funds are routed through the IMTO’s international clearing network.
- In Nigeria, the IMTO partners with commercial banks or licenced payment service providers for final payout. They act as IMTOs agents.
- The recipient receives the funds in their bank account, or as cash, depending on the service.
All stages are subject to CBN oversight and reporting requirements.
Why Cross Border Payment Regulation is important
Diaspora remittances are regular person-to-person payments sent by Nigerians living abroad to family and friends back home. These payments now make up a large share of Nigeria’s foreign exchange inflows. Between 2019 and 2022, Nigerians abroad sent USD60.22 billion, and in the last eight years, the total reached USD168.33 billion. That amount is more than ten times higher than the foreign direct investment (FDI) Nigeria received in the same period.
Because remittances have such a big impact on Nigeria’s economy and exchange rates, the Central Bank of Nigeria (CBN) closely monitors them. Most of these transactions now happen through digital channels, making them a key part of the fintech ecosystem.
On 31 January 2024, the CBN introduced two new rules for international money transfer operators (IMTOs):
- Updated guidelines for international money transfer services in Nigeria.
- A circular removing the limit on exchange rates quoted by IMTOs.
Previously, IMTOs had to keep their rates within -2.5% to +2.5% of the previous day’s closing rate in the Nigerian Foreign Exchange Market. This restricted their ability to set rates freely.
The new circular removes that cap. Now, IMTOs must use the prevailing market rate, based on a willing buyer, willing seller arrangement.
Key compliance requirements for IMTOs
IMTOs must:
- Obtain and maintain a valid CBN licence
- Comply with AML/CFT regulations
- Submit transaction reports to the CBN
- Partner only with licenced Nigerian financial institutions
- Observe foreign exchange and settlement rules issued by the CBN
Failure to comply can result in sanctions, suspension, or licence revocation.
Nigeria regulates IMTOs strictly because cross-border payments touch on sensitive areas such as foreign exchange flows, anti-money laundering risks, and counter-terrorism financing concerns. By maintaining firm oversight, the Central Bank of Nigeria is able to protect the integrity of the financial system, ensure transparency in remittance inflows, support foreign exchange stability, and safeguard consumers, making regulation a cornerstone of trust and resilience in the country’s remittance ecosystem.