The Central Bank of Nigeria (CBN) is the top financial regulator. It keeps Nigeria’s financial system stable and safe. On January 31st, 2024, the CBN set new rules to make international money transfers clearer and faster. This guide will explain these new rules and how they affect money transfer services and people sending money.
The CBN’s new rules aim to increase money sent to Nigeria. They also want to make the foreign exchange market work better. It’s important for all money transfer companies in Nigeria to follow these rules. They must meet certain standards, keep enough money, and be open about their transactions.
Nigeria’s financial world is shaped by the CBN’s foreign exchange rules. It’s key for both those sending and receiving money to know and follow these rules. This helps build a strong and trustworthy system for sending money.
Understanding Central Bank of Nigeria’s Revised Guidelines
The Central Bank of Nigeria (CBN) updated its rules on January 31st, 2024. These CBN 2024 guidelines aim to make the foreign exchange market more transparent. They introduce stricter rules for International Money Transfer Operators (IMTOs).
The application fee for an IMTO license now costs N10,000,000, up from N500,000. This change is a hurdle for new businesses. The guidelines also require a non-refundable fee of N10,000,000 for Approval-in-Principle (AIP) and final approval. IMTOs must renew their licenses every year by January 31st, with a fee of N10,000,000.
The new rules remove limits on exchange rates. This lets IMTOs set rates based on the current market. They can now handle person-to-person, business-to-person, and business-to-business transactions.
But, the CBN limits remittances to cash or bank accounts in Naira. Banks and fintech companies can’t get IMTO licenses anymore.
Foreign IMTOs must have at least US$1 million in share capital. Indigenous ones need the same in local currency. They must also pay an annual renewal fee of N10,000,000 by January 31st.
The CBN wants fees and exchange rates to be clear during transactions. IMTOs now keep records for five years, down from six. They must also submit daily, weekly, and monthly reports to follow the guidelines.
Between 2019 and 2022, Nigerians abroad sent $60.22 billion home. This is a big boost to Nigeria’s economy. Over eight years, they sent $168.33 billion, more than ten times the foreign direct investment Nigeria got.
Guide to Central Bank Nigeria Restricts Nigerian Naira Remittance Inflows
### Guide to Central Bank Nigeria Restricts Nigerian Naira Remittance Inflows
The 2024 Central Bank of Nigeria (CBN) guidelines have changed how money comes into Nigeria. These rules focus on money coming into the country. They also stop fintech companies from getting special licenses to handle money transfers.
These new rules make it clear how money is moved. Everyone knows the exchange rates and fees before sending or receiving money. This shows the Central Bank’s effort to make money transfers safe and reliable.
Now, only approved companies can sell foreign exchange in Nigeria. This change started on June 24, 2024. It aims to make more local currency available for money sent from abroad.
Also, new rules require companies to confirm their bank partners and give clear instructions for settling money. They must also renew their approval every year by January 31. Companies working with foreign partners need to meet certain CBN rules to get approval.
- IMTOs can help send money to individuals and businesses in Nigeria.
- They cannot send money out of Nigeria, take deposits, or lend money to the public.
- Banks can help IMTOs, but banks and fintech companies cannot send money internationally.
- Money must be received in Naira through a bank account or cash, using Nigeria’s exchange rates.
The Central Bank of Nigeria wants to get $1 billion in remittances each month. Thanks to these rules, more money is coming in. In April, it was over $250 million, and in September, it was over $600 million. These efforts help make the foreign exchange market more stable and transparent.
The foreign exchange Nigeria market is a key focus for the CBN. They keep working on policies to make the financial system stronger and more inclusive. They want a secure and stable place for money transfers in Nigeria.
Licensing Procedures and Requirements for IMTOs
For those wanting to start an International Money Transfer Operator (IMTO) in Nigeria, knowing the IMTO licensing Nigeria rules is key. The Central Bank of Nigeria (CBN) has a two-step process. It includes the Approval in Principle (AIP) and Final Approval stages.
The AIP phase checks if the applicant can operate well and is financially stable. This ensures only strong financial companies move forward. They need to provide documents like incorporation certificates and shareholder credit reports.
After getting the AIP, the Final Approval stage focuses on the business plan. IMTOs must have at least One Million Dollars in share capital. They also need to pay a Ten Million Naira application fee.
The CBN updated its rules on January 31, 2024, and again on June 24, 2024. Now, IMTOs can only handle money coming into Nigeria. This includes Person-to-Person, Business-to-Person, and Business-to-Business transactions. IMTOs must report daily to the CBN about where the money comes from.
Here’s a detailed table showing what’s needed for the CBN IMTO application:
| Phase | Key Requirements | Details |
|---|---|---|
| Approval in Principle (AIP) | Operational & Financial Assessment | Submission of incorporation documents, shareholder credit reports, and board approvals. |
| Final Approval | Detailed Business Plan | Submission of a detailed business strategy and compliance roadmap. |
| Financial Obligations | Minimum Share Capital | One Million Dollars (US$1,000,000.00) for foreign IMTOs. |
| Application Fee | Mandatory Licensing Fee | Ten Million Naira (N10,000,000.00). |
IMTOs must renew their licenses every year. This keeps them in line with financial service regulations Nigeria. Not following the rules can lead to penalties, like having their license taken away. By following these steps, IMTOs can work safely in Nigeria’s remittance market.
Comparison of Service Providers: Why Choose Wise and Currencies Direct?
Wise and Currencies Direct stand out among many International Money Transfer Operators (IMTOs). Wise is known for following global rules and being open about its fees. This means customers get the best deal when sending money to Nigeria.
Currencies Direct also values transparency and low costs. It offers great rates and an easy-to-use platform. Being in line with the Central Bank of Nigeria (CBN) rules makes it a trustworthy option.
The fintech scene in Nigeria is growing fast, with 144 startups in 2021 and 217 in 2023. Wise and Currencies Direct keep up with these changes well. They are leaders in the market, known for their reliability and adaptability.
Remittances to Nigeria have also seen an increase, up by USD0.4 billion in 2023. This shows how important it is to have good remittance services. For more on how tech is changing remittances, check out this report.
