CBN Fixes New Capital Requirements For Flutterwave, Western Union, Other IMTOs
- The Central Bank of Nigerian (CBN) issued new guidelines for International Money Transfer Operators
- The bank fixed $1 million as a capital requirement and a license fee of N10 million, renewable annually
- CBN also stated that no IMTO is allowed to commence operations with just an API
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The Central Bank of Nigeria (CBN) has fixed $1 million as the minimum share capital requirement for International Money Transfer Operators (IMTOs) in Nigeria.
The bank disclosed this in its revised guidelines for the operation of IMTOs, officially released on its website and signed by the director of Trade & Exchange Department, Hassan Mahmud.
Source: UGC
New guideline to help boost the naira
The new directive followed a series of policy reforms to strengthen the foreign exchange market in Nigeria and encourage fuguidelinesnd remittance via legal and authorised channels.
The new guidelines stipulate that applicants must comply with the apex bank's anti-money laundering, combating terrorism and countering proliferation financing of weapons of mass destruction regulations.
CBN stated that compliance with the requirements and receiving a favourable outcome would allow the applicant's Approval-in-Principle to open a bank account and process pre-operational processes.
CBN issues requirements for IMTO operations
It also said an IMTO cannot use an Application Programme Interface (API) to commence operations, and the Approval-in-Principle may be withdrawn if the IMTO does not meet the set requirements.
Punch reports that CBN said for an IMTO to get final approval, it shall submit an application to the bank for final approval three months after obtaining API, subject to the fulfilment of the requirements.
The listed requirements include the names of Authorised Dealer Bank(s) to serve as local agents and a copy of the agency agreement.
Another is to submit a detailed business plan to the CBN, including the nature of the business, internal control systems and monitoring procedures, and more.
It stated that an IMTO would be required to pay annual renewal fees of N10 million or any amount the bank may specify from time to time on or before January 31 of the year.
CBN asks banks to release dollars in their possession
The move by CBN comes as the naira tumbled in official and parallel markets, and Nigeria reportedly devalued its currency for the second time a year to attract foreign investors.
The bank has, in recent days, issued a raft of policies to boost the naira's performance against the US dollar.
In one of the policies, CBN gave banks a February 1, 2024, deadline to release all Forex holdings in their possessions.
Analysts laud CBN's policies
Analysts believe the move has propped the naira against the US dollar, leading to its appreciation in the official and parallel markets.
Stockbroker and financial expert Chikere Igwe said the move by CBN is good but requires strict enforcement to become effective in the long run.
"These are short-term measures to combat the freefall of the naira. It has been predicted that the naira will be exchanged for N2,000 per dollar before June.
So, to forestall that prediction, CBN is throwing in everything to prove the naysayers wrong. The remedy still lies in boosting non-oil exports to boost forex earnings and supplies," Igwe said.
Naira recovers in official, black markets
Legit.ng reported that following the February 1, 2024 deadline for commercial banks by the Central Bank of Nigeria to sell all excess foreign exchange holdings, banks on Thursday, February 1, 2024, made efforts to sell their surplus dollar stocks.
Reports say the banks' treasury departments spent the day battling to sell their excess dollar holdings, with officials processing several forex request forms of their customers as they sold more dollars.
The rise in forex sale activities at the official exchange rate market led to the naira's recovery in the black market.
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Source: Legit.ng
