Guidelines on international money transfer services in Nigeria

Admin 14 July, 2022

Guidelines on international money transfer services in Nigeria

Monetary systems today are based on the roles of Central Bank money and Commercial Bank monies being mutually reinforcing. A currency has a unique character and is distinct from other currencies because its different forms (Central Bank money and Commercial Bank monies) can be used interchangeably by the public in making payments and they are convertible at par. Central bank money plays a key role in payment arrangements, as it has been proven safe and efficient to have a central reference of value with which all other forms of the currency, maintain this par convertibility. This role is long-established and for the most part uncontroversial. For smooth transactions, Central Banks have a set of guidelines that need to be adhered to during international money transfer.

The objectives of the guidelines set by the Central Bank of Nigeria (CBN) are to provide a minimum standard for international money transfer services in Nigeria, while specifying delivery channels in a cost-effective manner. It also specifies minimum technical and business requirements for various participants in the money transfer service industry in Nigeria.

LICENSING REQUIREMENTS

No person or institution shall provide international money transfer services unless such person/institution has been duly licensed by the CBN.

Overseas Partnership Requirements

A money transfer operator, who wishes to engage a foreign technical partner that will provide global or regional payment or money transfer platform, shall obtain a letter of no objection from the CBN. The following conditions shall apply to the technical partner:

Be a registered entity, licensed in its home country to carry on money transfer activities.
Have a minimum Net Worth of US $1 million, as per the latest audited financial statement, or as may be determined by the CBN from time to time.
The Overseas technical partner should be well established in the money transfer business, with a track record of operations.
There should be an MOU that clearly delineates liabilities in the event of disputes and/or process failures.

Prohibitions

Deposit Money Banks are prohibited from operating as Money Transfer Service Operators (MTSO), but can act as agents.

Permissible Activities

The permissible operations of International money transfer services shall include allowable inbound and outbound international money transfer transactions. The transactions shall consist of the following activities:

The acceptance of monies for the purpose of transmitting them to persons resident in Nigeria or another country.
Cross-border personal money transfer services, such as, money transfer services towards family maintenance and money transfer services favoring foreign tourists visiting Nigeria shall be allowed under this arrangement.
The money transfer services shall target individual customers mainly and the transactions shall be on “person to person transfer” basis, to safeguard against corporate customers that might structure their transactions into smaller amounts to circumvent the statutory reporting threshold.

Non Permissible Activities

A money transfer operator is not authorized to:

Act as an authorized dealer in gold or other precious metals.
Engage in deposit taking and/or lending money.
Maintain current accounts on behalf of customers.
Establish letters of credit or act as a custodian of funds on behalf of customers.
Engage in institutional transfers. A money transfer service operator shall not engage in any other business other than as authorized by the Bank.
Buy foreign exchange from the domestic foreign exchange market for settlement.

Guidelines

A money transfer operator shall display prominently at each of its business premises:

The current license to engage in money transfer services;
The business hours;
Details of the tariffs to be charged;
A notice informing the customers that they are entitled to be issued with a receipt for any money transfer service transactions; and
A notice to the effect that the money transfer operator is not allowed to accept deposits or lend to the public.
Allowable limit of the outbound money transfer shall be USD 2000 or its equivalent per transaction, subject to periodic review by the CBN.
All in-bound money transfers to Nigeria, shall only be disbursed to beneficiaries through bank accounts or mobile money wallets. Where the beneficiary does not have a bank account or mobile money wallet, payment 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.
A money transfer operator shall hold all customer funds for transfer in an account designated as “customers'account” domiciled with any deposit money bank in Nigeria. This account shall be separate from all other accounts maintained by the operator. The operator shall maintain complete and accurate accounting records.

Outward Money Transfer Services

A money transfer operator shall:

Advise customers of the time funds sent would be available for collection by beneficiaries.
Inform the customers within 24 hours, where outward transfers could not be effected within the time frame advised.
Refund to the sender, any amount returned undelivered in the manner it was paid by the customer.

Inward Money Transfer Services

A money transfer operator shall:

Make payment to customers only in Nigerian currency, in line with CBN regulation;
Use the prevailing exchange rate on the day the transfer is received.
Declare in the receipt/certificate of transfer that the money paid to the customer is not counterfeited.

At KMoney, we strictly adhere to all the above guidelines and provide hassle free transfers with great exchange rates and fairly calculated low fees. Send money to Nigeria with Credit and Debit Cards. Transfer via the app, in-store or online. Remittance is by cash or bank transfer.