Introduction
International Money Transfer Operators (IMTOs) are organisations authorised by the Central Bank of Nigeria (“CBN”) to facilitate the transfer of funds from individuals or entities residing outside Nigeria and the payment of a corresponding sum to a beneficiary (in Nigeria) through a clearing network to which the IMTO belongs.[1]
The regulatory framework for IMTOs in Nigeria has evolved significantly over the past decade. The CBN first established a licensing regime for IMTOs through its 2014 Guidelines for the Operation of International Money Transfer Services in Nigeria (the “2014 Guidelines”). The 2014 Guidelines introduced the foundational licensing architecture, permitted both inbound and outbound money transfers subject to an outbound cap of USD 2,000 per transaction, and required IMTOs to operate through Authorised Dealer Banks (“ADBs”) for settlement and disbursement. In January 2024, the CBN issued revised Guidelines for the Operation of International Money Transfer Services in Nigeria (the “2024 Guidelines”), which came into force on 31 January 2024, fundamentally restructuring the licensing regime, expanding permissible transactions and significantly raising compliance standards.
Through the 2024 Guidelines, the CBN regulates the licensing, operations and conduct of IMTOs in Nigeria, including issuing approvals, setting compliance requirements and overseeing remittance operations.
With a defined licensing regime and the continued growth of the Nigerian diaspora, IMTO operations in Nigeria have surged in recent years. Nigeria’s diaspora community was estimated at approximately 17 million documented migrants[2] which drives one of Africa’s most significant remittance markets. In 2023, Nigeria received approximately $19.5 billion in diaspora remittances, accounting for an estimated 35% of the total sub-Saharan African remittance flows.[3] Following the CBN’s 2024 market liberalisation reforms, formal IMTO channeled inflows surged by 44.5% to approximately $4.76 billion, with monthly inflows peaking at a record $552.94 million in July 2024.[4] Diaspora remittances contribute an estimated 5% to 6% of Nigeria’s Gross Domestic Product (GDP), making them a macroeconomic variable of first- order significance.[5]
This article provides a comprehensive legal and regulatory analysis of the IMTO sector in Nigeria. It examines the primary legislative framework, the licensing regime and its two-phase process, permissible and non-permissible activities, the structural role of banks, compliance obligations, key operational risks, and the sector’s future outlook.
Legal and Regulatory Framework
Primary Legislation
The regulatory architecture governing IMTOs flows from four primary statutes, each of which applies to IMTOs by virtue of their status as financial institutions operating within Nigeria’s foreign exchange market.
Primarily, the CBN Act, 2007 empowers the CBN to promote monetary stability and a sound financial system in Nigeria.[6] This provision grounds the CBN’s broad supervisory and regulatory mandate over all institutions including IMTOs. Section 30(1) of The Banks and Other Financial Institutions Act (BOFIA), 2020 (as amended)[7] authorises the CBN to issue binding regulations and guidelines governing the conduct of banks and other financial institutions. Importantly, Section 61 of the BOFIA defines “other financial institutions” to include money transfer businesses and similar entities. IMTOs are therefore expressly categorised as financial institutions under the BOFIA, providing the direct statutory basis for the CBN’s licensing authority and its power to issue the IMTO Guidelines.[8]
The Foreign Exchange (Monitoring and Miscellaneous Provisions) Act (FEMMAP), 1995[9] provides the broader framework for foreign exchange transactions in Nigeria. Since IMTOs are engaged in cross-border fund transfers that involve the conversion of foreign currencies into naira, FEMMAP governs the foreign exchange dimension of their operations and reinforces the CBN’s authority to prescribe conditions for such transactions
The Money Laundering (Prevention and Prohibition) Act, 2022[10] and the Terrorism (Prevention and Prohibition) Act, 2022[11] impose AML/CFT obligations on all financial institutions, including IMTOs. These statutes require IMTOs to implement robust customer identification, transaction monitoring and suspicious transaction reporting systems, reflecting Nigeria’s international obligations under Financial Action Task Force (FATF) standards.
Key Guidelines and Circulars
In addition to the primary legislation cited above, the CBN in furtherance of its oversight role, issues guidelines and circulars that govern the operations of financial institutions in Nigeria (including IMTOs). Thus, the regulatory instruments applicable to IMTOs can be divided into two broad categories: (i) substantive Guidelines and Regulations, which establish the primary licensing regime and operational requirements; and (ii) CBN Circulars, which supplement and clarify the Guidelines on specific operational matters. A combination of these instruments provides the complete licensing and operational framework applicable to IMTOs in Nigeria.
As mentioned above, the 2014 Guidelines represented the first formal attempt to create a structured licensing regime for IMTOs in Nigeria. Under those Guidelines, IMTOs could process both inbound and outbound transactions, subject to a USD 2,000 outbound cap and were required to operate exclusively through ADBs for settlement and disbursement.
The 2024 Guidelines, which are the primary subject of this article, replaced the 2014 Guidelines and introduced a significantly more robust framework. Key reforms include a two-phase licensing model, the expansion of permissible transaction categories, the prohibition of outbound transfers, and enhanced AML/CFT and governance obligations.
With respect to the Circulars, the CBN has issued several notable instruments that clarify and supplement the Guidelines. A Circular issued in January 2024[12] removed the previous ±2.5% cap on exchange rates quoted by IMTOs, enabling market-rate pricing in the Nigerian Autonomous Foreign Exchange Market (NAFEM). A further CBN Circular in June 2024[13] granted eligible IMTOs direct access to the CBN foreign exchange window or the ability to operate through ADBs, to execute and settle foreign exchange transactions, significantly improving liquidity for IMTO operations.
The CBN Anti-Money Laundering, Combating the Financing of Terrorism and Countering Proliferation of Financing of Weapons of Mass Destruction in Financial Institutions Regulations, 2022 (AML/CFT/CPF Regulations 2022)[14] establish detailed AML/CFT obligations applicable to all financial institutions, including IMTO.
Licensing Requirements
Access to Nigeria’s formal remittance is strictly regulated; specifically, no person or institution may operate international money transfer services in Nigeria without a valid CBN approval; and any unlicensed offering is illegal.[15] This prohibition is particularly relevant to fintech operators and digital payment companies that may seek to offer cross-border remittance products as ancillary services without obtaining a dedicated IMTO license. The 2024 Guidelines introduced a restructured, two-phase licensing process: an Approval-in-Principle (AIP) stage and a Final Approval stage.[16]
Phase 1: Approval-in-Principle (AIP)
An applicant must submit a formal application to the Director, Trade and Exchange Department, CBN, accompanied by: (i) a non-refundable application fee of N10,000,000, a dramatic increase from the N500,000 fee under the 2014 guidelines; (ii) evidence of approval or agency agreements in other jurisdictions; (iii) incorporation documents and tax clearance in the case of indigenous applicants; (iv)profile of Board and Management personnel; and (vi) evidence of minimum share capital of US$1 million for foreign IMTOs or the naira equivalent for indigenous IMTOs. [17]
A critical point, particularly for fintech operators is that the AIP is a pre-operational authorization only. While the AIP permits limited pre-operational activities such opening a bank account and making preparatory arrangements, it does not authorise the conduct of IMTO operations or the processing of any remittance transactions.[18] Fintechs that misconstrue the AIP as an operational license and commence IMTO activities before obtaining Final Approval risk enforcement action by the CBN, including revocation of the AIP and potential penalties. Operators must ensure that all IMTO transaction activity commences only upon receipt of Final Approval.
Phase 2: Final Approval
Within three months of obtaining the AIP, the applicant must apply for Final Approval, submitting the executed agency agreement with an ADB, a detailed business plan with projected financial statements and a schedule of customer charges. Upon the CBN’s grant of Final Approval, the IMTO may commence operations.
The IMTO license must then be renewed annually on or before 31 January of each year, at a renewal fee of N10,000,000.[19] Failure by an IMTO to provide a copy of the CBN renewal approval to its agent bank(s) within the first quarter of each year shall constitute grounds for such agent bank(s) to cease any further transactions with the IMTO.[20]
Permissible and Non-Permissible Activities
Permissible Activities
Under the 2024 Guidelines, IMTOs are exclusively authorised to facilitate inbound international money transfer transactions.[21] As previously mentioned, this represents a significant departure from the 2014 Guidelines, which permitted both inbound and outbound transfers. This restriction to inbound-only raises an important regulatory question as to what framework now governs outbound money transfers from Nigeria through non-banking channels.
The 2024 Guidelines do not establish a dedicated non-bank licensing framework for outbound remittance services, leaving outbound transfers effectively within the domain of banks and authorised foreign exchange channels. This gap may create a real risk that informal operators or IMTO licenses operating in breach of the prohibition will continue to offer outbound services, particularly given the practical difficulties of enforcement where transactions do not flow through formal banking channels.
Per the 2024 Guidelines, some of the permissible activities include: Person-to-Person (P2P) transfers for family maintenance; Business-to-Person (B2P) transfers such as salary or supplier payments to Nigeria-based individuals; Business-to-Business (B2B) cross-border transfers; and transfers in favour of foreign tourists visiting Nigeria.
The explicit authorisation of B2P and B2B transactions in the 2024 Guidelines represents a significant expansion from the predominantly P2P focus of the 2014 guidelines, reflecting the growing role of commercial remittances in the Nigerian economy. This liberalisation also signals a broader shift in the remittance landscape. Prior to the 2024 Guidelines, most inbound B2B transactions flowed through commercial banks with international correspondent banking relationships. Extending this function to IMTOs opens the market to a broader class of operators and may reduce transaction costs for business remittances.
All inbound money transfers must be disbursed to beneficiaries in naira, either through a bank account or in cash.[22] The CBN has since reinforced and expanded this framework through its Circular titled “Measures to Further Enhance Compliance in the Remittance Space” dated 24 March 2026 (the “2026 Compliance Circular”). Under the 2026 Compliance Circular, all IMTOs are required to open designated naira settlement accounts with ADBs and route all remittance transactions, including beneficiary disbursements and related settlements, exclusively through those accounts. IMTOs may designate existing accounts or open new ones and may operate multiple settlement accounts across different ADBs in line with their agents with the Nigerian FX market.
The 2026 Compliance Circular also introduced a pricing discipline requirement, requiring IMTOs to reference real-time rates from the Bloomberg BMatch system when pricing transactions, a measure intended to improve price discovery and reduce information asymmetry between IMTOs and banks. Cash payments remain capped at USD 200 and must be supported by satisfactory proof of identification. Transfers exceeding USD 200 must be made through a bank account. The exchange rate applicable shall be the prevailing rate at the Nigerian Foreign Exchange Market on the day the transfer is received.[23]
Non-Permissible Activities
The 2024 Guidelines impose clear prohibitions on IMTOs including prohibiting:[24] (i) outbound transactions (replacing the USD 2,000 outbound limit under the 2014 guidelines); (ii) purchasing foreign exchange from the domestic market for settlement purposes; a prohibition that raises enforcement questions in practice, given that many IMTOs have sourced local FX to fund naira disbursements, and that enforcement becomes particularly challenging where transactions are structured through crypto assets, or decentralized platforms that bypass traditional banking channels; (iii) engaging in any non-IMTO business such as banking, lending, investment management, etc.; (iv) deliberate transaction splitting to circumvent AML reporting thresholds; (v) operating without a valid CBN license; and (vi) banks and fintech companies operating as IMTO license holders.
The Role of Banks in IMTO Transactions
Although prohibited from holding IMTO licenses, ADBs are essential to the IMTO ecosystem as agents responsible for settlement and disbursement.[25] Their principal functions include: crediting naira to beneficiaries’ accounts upon IMTO instruction; maintaining segregated accounts to hold customer funds earmarked for remittances (safeguarding against commingling);[26] providing naira liquidity through NAFEM access under the June 2024 circular; submitting weekly and monthly transaction returns to the CBN and filing Suspicious Transaction Reports (STRs) with the Nigeria Financial Intelligence Unit (NFIU) within 24 hours of detecting suspicious activity; and operating as a cash-out point for payments up to USD 200. This structural separation of “operator” and “agent,” absent under the 2014 Guidelines, is designed to eliminate conflicts of interest, though it raises liquidity and access concerns for smaller IMTOs with limited negotiating power with major banks.
International IMTOs: Specific Licensing Considerations
While the two-phase licensing process described above applies to all IMTO applicants, the 2024 Guidelines draw a clear distinction between foreign and indigenous IMTOs, with materially different requirements for each category.
Foreign IMTOs
A foreign IMTO is an entity incorporated outside Nigeria that seeks CBN authorisation to channel remittance flows into the country. Foreign IMTOs are subject to the same two-phase AIP and Final Approval process as indigenous applicants, but with the following specific requirements.[27]
First, share capital; foreign IMTOs must maintain a minimum share capital of USD 1 million, as evidenced in their latest audited financial statements. This is pegged to the US dollar rather than fixed in naira, which creates an important asymmetry as the naira depreciates, the naira-equivalent share capital threshold for indigenous IMTOs rises automatically, while foreign IMTOs remain anchored to the USD 1 million floor. In practice, this structural difference has continued to favour foreign IMTOs in terms of capitalisation, as the naira has weakened significantly in recent years.
Second, proof of foreign licensure; foreign IMTOs must provide evidence of approval to operate in other jurisdictions, or evidence of existing agency agreements in those jurisdictions.[28] This requirement effectively mandates that foreign applicants be established, licensed operators in their home markets. A fintech startup or new entrant without an existing licensed footprint in another jurisdiction cannot qualify as a foreign IMTO, it would need to incorporate locally and apply as an indigenous operator instead.
Third, unlike indigenous applicants, foreign IMTOs are not required to submit Nigerian incorporation documents or tax clearance certificates. Their regulatory anchor is their home-country licensing, supplemented by the CBN’s own due diligence on their promoters, directors, and key officers.
A critical practical implication for foreign IMTOs is that their ADB agency relationship is not merely operational but constitutionally required for Final Approval.[29] A foreign IMTO without an executed agency agreement with a Nigerian ADB cannot proceed beyond the AIP stage. Given the liquidity and access concerns that characterise the ADB market, particularly for smaller or newer operators, international entrants should treat the identification, negotiation, and execution of an ADB partnership as a threshold task in their Nigerian market-entry strategy, rather than an afterthought to the CBN licensing process.
Compliance Obligations
IMTOs have robust compliance obligations under applicable CBN circulars and regulations, as summarised below.
AML/CFT/CPT Obligations
All IMTOs must implement risk-based AML/CFT/CPF policies aligned with the CBN AML/CFT/CPF Regulations 2022[30]. These must encompass Customer Due Diligence (CDD) including collection of Bank Verification Numbers (BVN), government-issued identification; Enhanced Due Diligence (EDD) for high-risk customers and politically exposed persons (PEPs); beneficial ownership identification and verification; real-time transaction monitoring systems; and internal controls to prevent the facilitation of crime.
Reporting Obligations
IMTOs and their agents must submit daily, weekly and monthly transaction returns to the CBN’s Trade and Exchange Department using the prescribed template.[31] STR must be filed with the NFIU within 24 hours of detecting a suspicious transaction.[32] The Money Laundering (Prevention and Prohibition) Act 2022 defines suspicious transactions by reference to unjustifiable transaction frequency, unusual complexity, lack of economic justification, and inconsistency with known transaction patterns.[33]
Consumer Protection and Governance
IMTOs must transparently disclose to customers all applicable exchange rates, commissions, fees, and any other charges prior to each transaction, issue transaction receipts, and maintain a comprehensive management information system (MIS) that enables complete audit trails.[34] Boards of Directors must exercise effective oversight of the IMTO’s operations and compliance, and all key officers are subject to fit-and-proper assessments during the licensing process and during ongoing supervision.
Future Outlook
Several regulatory, technological and macroeconomic developments are likely to shape the trajectory of the Nigerian IMTO sector in the near term.
On the regulatory front, Nigeria’s ongoing remediation of strategic AML/CFT deficiencies identified by the FATF is the most consequential near-term development for the sector. A successful exit from the grey list would reduce correspondent banking friction, lower cross-border compliance costs and signal to global IMTO operators that Nigeria’s regulatory environment meets international standards, potentially attracting new entrants and intensifying competitive pressure on transaction pricing. The CBN’s stated target of approximately $23.8 billion in annual remittance inflows by 2025[35] further signals continued regulatory support for sector growth.
Furthermore, regarding technology, the rise of digital-only money transfer operators presents both opportunities and threats. Digital operators have achieved average transaction costs of approximately 3.97%, nearly half those of traditional bank-based transfers, demonstrating the cost-reduction potential of technology-driven service delivery.[36] However, the proliferation of cryptocurrency-based remittance channels poses a growing, underregulated threat to the formal IMTO framework. Nigeria recorded over $59 billion in crypto transactions between July 2023 and June 2024, consistently ranking among the top 10 globally for crypto adoption, with currency instability and high traditional remittance costs cited as primary drivers[37].
In practice, a number of operators are leveraging crypto assets or channels as informal money transfer vehicles to process cross-border transfers outside formal IMTO channels, thereby circumventing AML/CFT reporting obligations and bypassing the naira-only payout requirement.[38] Enforcement in this space is particularly challenging given the CBN’s lack of viability or oversight on those channels, including the pseudonymous nature of blockchain transactions and the absence of a regulated entity responsible for ADB settlement. The CBN has yet to issue a comprehensive framework for crypto-based remittances, and this regulatory gap is likely to grow as crypto adoption among Nigerian diaspora communities increases.
On the macroeconomic side, Nigeria’s large and growing diaspora provides a structural foundation for sustained remittance growth. The formalisation of B2B and B2P remittance channels under the 2024 Guideline, combined with the mandatory naira payout policy, is expected to continue redirecting flows away from informal channels and toward licensed IMTOs. The trajectory of the naira and the stability of the NAFEM exchange rate will remain key variables affecting the competitiveness of formal IMTO services relative to parallel-market alternatives.
Conclusion
Nigeria’s IMTO regulatory framework has undergone a significant transformation from a relatively limited remittance regime under the 2014 Guidelines to a far more sophisticated and compliance-driven system under the 2024 Guidelines. Through the revised framework, the CBN has sought to formalise remittance inflows, improve foreign exchange transparency, strengthen AML/CFT oversight, and position formal IMTO channels as a strategic component of Nigeria’s broader monetary and financial stability objectives.
The reforms have already produced measurable market effects, particularly the substantial increase in formal remittance inflows following the liberalisation of exchange rate pricing and the expansion of permissible transaction categories. At the same time, the framework continues to present important legal and operational questions, including the absence of a dedicated outbound remittance regime for non-bank operators, the increasing compliance burden on indigenous IMTOs, the market concentration risks arising from higher capital and licensing thresholds, and the growing challenge posed by crypto-enabled informal remittance channels.
For legal practitioners, compliance officers, financial institutions, and investors, a thorough understanding of the IMTO regulatory framework, spanning the CBN Act, BOFIA, FEMMAP, the AML/CFT/CPF Regulations, and the 2024 IMTO Guidelines, is essential for navigating this dynamic sector. As Nigeria’s diaspora continues to grow and the digital transformation of financial services accelerates, IMTOs will remain at the center of one of the most consequential financial flows in the African continent.
[1] Section 1 of the 2024 Guidelines.
[2] Nigerians in Diaspora Commission (NiDCOM), Diaspora Statistics Report, 2023 available at https://nidcom.gov.ng/registry/, accessed 4 May, 2026.
[3] This Day, Emmanuel Addeh, ‘W’Bank: at $19.5bn, Nigeria Accounted for 35% of Sub- Saharan African’s Diaspora Remittance in 2023’, thisdaylive.com, available at https://www.thisdaylive.com/2024/07/01/wbank-at-19-5bn-nigeria-accounted-for-35-of-sub-saharan-africas-diaspora-remittance-in-2023/, accessed 4 May 2026.
[4] CBN Reforms Push Diaspora Remittances, Radarr Africa, May 26 2025, available at https://radarr.africa/cbn-reforms-push-diaspora-remittances-to-4-76bn-in-2024-up-by-44-49/, accessed 5 May 2026; The Guardian Nigeria, ‘Remittance Inflows Hit Record $553 Million in July 2024’, guardian.ng, available at https://guardian.ng/business-services/money/remittance-inflows-hit-record-553-million-in-july-2024-cbn/, accessed 4 May 2026
[5] World Bank, Remittances Data, Nigeria 2023; National Bureau of Statistics, GDP Data, 2024.
[6] Section 2(d) of the Central Bank of Nigeria Act 2007, available at https://www.cbn.gov.ng/OUT/CIRCULARS/CSD/2007/CBN%20ACT%202007.PDF, accessed 4 May, 2026.
[7] Bank and Other Financial Institutions Act 2020, available at https://www.cbn.gov.ng/Out/2021/CCD/BOFIA%202020.pdf, accessed 4 May, 2026.
[8] Section 61 of BOFIA.
[9] Foreign Exchange (Monitoring and Miscellaneous Provisions) Act, 1995, available at https://www.nipc.gov.ng/ViewerJS/?#../wp-content/uploads/2019/03/FOREIGN-EXCHANGE-MONITORING.pdf, accessed 4 May, 2026.
[10] Money Laundering (Prevention and Prohibition) Act, 2022, available at https://placng.org/i/wp-content/uploads/2022/05/Money-Laundering-Prevention-and-Prohibition-Act-2022.pdf, accessed 4 May, 2026.
[11] Terrorism (Prevention and Prohibition) Act 2022, available at https://nctc.gov.ng/ova_doc/terrorism-prevention-publication-web/, accessed 4 May, 2026.
[12] CBN, Removal of Allowable Limit of Exchange Rate Quoted by the IMTOs, TED/FEM/FPC/GEN/001/003, January 2024, available at https://nairametrics.com/wp-content/uploads/2024/01/Circular-on-allowable-limit-of-exchange-rate-quote_240131_211923.pdf, accessed 4 May, 2026.
[13] CBN, New Measures to Enhance Local Currency Liquidity for Settlement of Diaspora Remittances, TED/FEM/PUB/FPC/001/019, June 2024.
[14] Central Bank of Nigeria, AML/CFT/CPF Regulations, 2022., available at https://www.cbn.gov.ng/Out/2022/FPRD/AML%20CIRCULAR%20AND%20REGULATIONS%20MERGED.pdf, accessed 4 May, 2026.
[15] Section 2 of the 2024 Guidelines.
[16] Ibid.
[17] Ibid.
[18] Ibid.
[19] Ibid.
[20] Ibid.
[21] Section 2 of the 2024 Guidelines.
[22] Ibid.
[23] Section 4 of the 2024 Guidelines.
[24] Ibid.
[25] Sections 2 and 3 of the of the 2024 Guidelines.
[26] Section 3 of the of the 2024 Guidelines.
[27] Section 3 of the of the 2024 Guidelines..
[28] Section 2.1 of the of the 2024 Guidelines.
[29] Section 2.2 of the 2024 Guidelines.
[30] Central Bank of Nigeria, AML/CFT/CPT Regulations, 2022.
[31] Section 3 of the 2024 Guidelines.
[32] Nigeria Financial Intelligence Unit, AML/CFT Guideline, 2022; Money Laundering (Prevention and Prohibition) Act, 2022.
[33] Money Laundering (Prevention and Prohibition) Act, 2022.
[34] Section 4 of the 2024 Guidelines.
[35] World Bank, Remittance Prices Worldwide, Q4, 2023, available at https://remitanceprices.worldbank.org, accessed 6 May, 2026.
[36] Rozermit, ‘The Ultimate 2025 Guide to Online Remittances for Nigeria and Africa, June 2025, available at https://rozeremit.com/blog/the-ultimate-2025-guide-to-online-remittances, accessed 6 May, 2026.
[37] ava.Chainup, ‘Nigeria’s Crypto Boom: From P2P to Institutional Growth’, August 2025, available at https://www.chainup.com/blog/nigeria-crypto-market-2025/, accessed 6 May, 2026.
[38] IMF, ‘Regulating the Crypto Market in Nigeria’, Selected Issues Paper 2025/096, July 2025, available at https://www.imf.org/-/media/files/publications/selected-issues-papers/2025/english/sipea2025096-source-pdf.pdf, accessed 6 May, 2026.