The federal government has set a plan in motion, to ban some online international money transfer operators, IMTOs including Lemonade Finance from
The federal government has set a plan in motion, to ban some online international money transfer operators, IMTOs including Lemonade Finance from carrying out their services both within and outside the country.
This same scenario played out in 2021 when the CBN first banned IMTOs and cryptocurrency services providers in the country, explicitly instructing financial institutions to refrain from operating accounts for them in view of the money laundering, terrorism financing risk and vulnerabilities inherent in their operations.
Despite the ban, Nigeria maintained the lead position globally in terms of cryptocurrency usage, ownership, and awareness.
Surprisingly, in December 2023, the CBN changed its stance and asked banks to disregard its February 2021 ban on crypto transactions only for the same CBN to again restrict their operations to only inbound transfers, stopping outbound transfers and now, outright ban.
The CBN has been having growing concerns about these activities, which can significantly distort market dynamics.
CBN’s restrictions implies that these operators can no longer facilitate money transfers from Nigeria to other countries, according to the revised guidelines for their operations which was officially released on January 31, 2024, and a clear departure from the 2014 guidelines, which permitted the operators to engage in allowable inbound and outbound international money transfer transactions.
Stating the permissible activities of the operators at that time, the guideline for their operations revealed that, “The permissible activities of International Money Transfer Operators shall include inbound international money transfer transactions only. The transactions shall be limited to the following activities:
- The acceptance of monies for the purpose of transmitting them to persons resident in Nigeria.
- Cross-border personal money transfer services, such as money transfer services towards family maintenance; money transfer services in favour of foreign tourists visiting Nigeria, etc.
- The money transfer services shall target individual customers and the transactions shall be on person to person, business to person and business to business transfer basis which may be reviewed by the CBN from time to time.
- All inbound money transfers to Nigeria shall be paid to beneficiaries in Naira through a bank account, or cash.
- Proceeds of International Money Transfer Operators more than the equivalent of $200 shall be paid through an account. Cash payments shall be made upon the provision of a satisfactory/acceptable means of identification.
- Where the beneficiary does not have an account with the IMTO agent bank, the agent bank shall credit the beneficiary account in another bank.
Additionally, the CBN increased the application fee for an IMTO license from N500,000 in 2014 to N10 million in the revised guidelines, a non-refundable application fee of N10 million, along with other requirements such as evidence of tax clearance, incorporation documents in Nigeria, and an annual renewal fee of N10 million.
The CBN also established a minimum operating capital requirement for IMTOs at $1 million for foreign entities and an equivalent amount for local IMTOs.
The regulatory measures were seen as part of the CBN’s efforts to instill stability in the foreign exchange market and curb foreign currency speculation and hoarding among Nigerian banks.
But in a bold and unexpected move, the CBN plans to totally ban some of these IMTOs.
CBN claims that they serve as conduits through which politicians launder the proceeds of stolen sovereign wealth to foreign countries without the possibility of a trace and that most criminals who reside outside the country use these operators to repatriate the proceeds of their crime through these online money transfer companies, making it difficult to detect the inflow of these illicit funds to Nigeria.
Aside from suspicions of economic sabotage, CBN also speak of national security concerns as the platforms are often patronised by other criminal groups, including for payments of ransom.
