Introduction: Nigerian Market Specificity
For Nigerian export and import businesses, cross-border payments are not just routine transactions—they are the lifeblood of global trade operations. Whether you're paying overseas suppliers, settling freight charges, or receiving payments from international buyers, moving money across borders is essential to keeping your business running.
But as vital as these payments are, navigating the regulatory landscape can be daunting. Between changing foreign exchange policies, documentation requirements, and strict oversight from the Central Bank of Nigeria (CBN), it’s easy for businesses to make costly mistakes.
Understanding the regulatory requirements isn’t just about compliance—it’s about protecting your operations. Failure to follow the rules can lead to delays, frozen transactions, or even penalties from regulatory bodies. In worst-case scenarios, non-compliance can damage relationships with global partners and stall business growth.
This practical guide breaks down the essential rules and processes for sending money abroad from Nigeria, specifically tailored for export/import businesses. You’ll learn which authorities are involved, what documents you need, how to legally move funds, and common pitfalls to avoid. Whether you’re a seasoned trader or just entering the global market, this guide will help you stay compliant and confident in your international payments.
Key Regulatory Authorities and Policies
To legally and efficiently send money abroad from Nigeria, businesses must operate within the framework set by several regulatory bodies and policies. Understanding who regulates what—and how—is the first step toward full compliance.
1. Central Bank of Nigeria (CBN)
The CBN is the apex regulator of foreign exchange (FX) transactions in Nigeria. It sets the rules for how Nigerian businesses can access FX for international payments. This includes guidelines for using Form A, approved payment purposes, limits on transfers, and licensing of authorized dealers (banks and financial institutions). The CBN also issues circulars that regularly update FX procedures—making it essential for businesses to stay informed.
2. Nigerian Financial Intelligence Unit (NFIU)
The NFIU plays a crucial role in monitoring and preventing money laundering and terrorism financing. It ensures that all international transactions meet anti-money laundering (AML) standards. Businesses are expected to report suspicious transactions and maintain proper documentation to avoid triggering NFIU red flags.
3. Nigeria Customs Service (NCS)
For export and import businesses, the NCS ensures that all goods leaving or entering the country comply with customs regulations. Accurate documentation of the value and nature of goods is vital, especially when making FX payments tied to trade. Customs documentation often forms part of the requirements when applying for FX through the bank.
4. Money Laundering (Prohibition) Act
This act mandates financial transparency in both local and international financial transactions. It requires businesses to keep detailed records of transactions, report large or suspicious transfers, and follow KYC (Know Your Customer) and KYB (Know Your Business) protocols. Violations can result in severe penalties, including imprisonment.
5. Foreign Exchange Manual
Issued by the CBN, the FX Manual is a comprehensive document that outlines the procedures for sourcing and using foreign exchange in Nigeria. It covers permissible transactions, documentation standards, and the roles of all stakeholders (banks, customers, regulators). Familiarity with this manual is essential for any business engaged in cross-border payments.
CBN Requirements for Outbound International Transfers
The Central Bank of Nigeria (CBN) sets strict guidelines for businesses that intend to send money abroad. These regulations are in place to ensure transparency, manage foreign reserves, and prevent capital flight. Below are the key requirements Nigerian export/import businesses must meet to process outbound international transfers legally and efficiently.
1. Use of Authorized Dealers
Only banks and financial institutions licensed by the CBN—known as Authorized Dealers—are permitted to process international payments. Businesses must route their transactions through these authorized institutions. Attempting to transfer funds through unlicensed channels can result in sanctions or blocked transactions.
2. Required Documentation
Before any foreign currency can be disbursed, businesses must present complete and valid documentation to their bank. The essential documents include:
- Form A: This is the CBN-approved form used for payment of invisible transactions such as school fees, medical bills, and business travel allowances.
- Proforma Invoice: For payments related to imports, a proforma invoice from the foreign supplier is needed to establish the value and purpose of the transfer.
- Certificate of Importation or Exportation: These confirm that goods were legitimately imported/exported and are used to validate trade-related payments.
Depending on the nature of the transaction, additional documents such as shipping documents, tax identification (TIN), or NEPC certificates (for exports) may be required.
3. Approved Purposes for Transfers
The CBN permits outbound transfers for specific, approved purposes only. Commonly approved categories include:
- Import payments (raw materials, machinery, etc.)
- Business travel allowance (BTA) and personal travel allowance (PTA)
- Education fees for students abroad
- Medical expenses incurred internationally
- Professional services (consulting, legal, etc.)
Any transfer outside of these categories may require additional scrutiny or outright rejection.
4. Foreign Exchange Sourcing
Businesses must also consider how they source the foreign currency used in transfers. The main channels include:
- NAFEX (Investors and Exporters FX Window): The most common and transparent market for businesses to source foreign exchange.
- BDC (Bureau de Change): More suited for personal transfers and not typically recommended for large business transactions.
- Official CBN windows: These are often used for priority sectors or transactions that meet specific national interest criteria.
It's crucial to source FX legally to avoid regulatory breaches or transaction reversals.
5. Limits and Approvals
The CBN enforces various limits depending on the transaction type. For example:
- BTA is usually limited to $5,000 per quarter.
- PTA may be capped at $4,000 quarterly for individuals.
- Large commercial transfers may require additional CBN vetting or approval, especially during periods of FX scarcity.
Ensure your transfer amount aligns with the applicable limits to avoid delays or rejection.
Step-by-Step Process for Sending Money Abroad Legally
For Nigerian export/import businesses, sending money abroad involves more than just walking into a bank with dollars. It’s a regulated process designed to ensure transparency, traceability, and alignment with national economic policy. Below is a step-by-step guide that will help your business comply with Nigerian regulatory standards when making outbound international payments.
Step 1: Register Your Business with the CAC and Obtain a TIN
Before you can engage in international trade or financial transactions, your business must be registered with the Corporate Affairs Commission (CAC). You’ll also need to obtain a Tax Identification Number (TIN) from the Federal Inland Revenue Service (FIRS), which is essential for all regulatory filings and bank documentation.
Step 2: Open a Domiciliary Account with an Authorized Dealer Bank
To send or receive foreign currency, your business must open a domiciliary account (dom account) with a CBN-authorized dealer bank. This account will be used for holding, sending, and receiving USD, EUR, GBP, or other foreign currencies as needed.
Step 3: Obtain the Necessary Trade Documents
Depending on your transaction type, gather the required supporting documents. These may include:
- Proforma Invoice (for pre-payment)
- Final Invoice (for post-shipment payment)
- Bill of Lading or Airway Bill
- Import/Export License
- NEPC Certificate (for exporters)
- Customs declarations
Proper documentation helps validate the purpose and legitimacy of your transaction.
Step 4: Apply for Form A via the Trade Monitoring System (TRMS)
For transactions involving invisible trade (services, education, travel, etc.), submit an application through the CBN’s Trade Monitoring System (TRMS) portal. This system helps track and manage FX applications transparently and efficiently.
You’ll be required to upload your documents and select your purpose of remittance. Your bank will verify and approve your request based on current CBN guidelines.
Step 5: Submit Documents to Your Bank
Once you’ve completed the TRMS application or gathered trade documents for visible trade (e.g., goods), submit them to your bank. The bank serves as an intermediary, vetting the transaction and ensuring it complies with both CBN and anti-money laundering requirements.
Step 6: Await CBN Approval or Bank Processing
Some transactions—especially large-value ones—may require CBN pre-approval, while others can be processed directly by your bank. Processing times vary depending on FX availability and regulatory checks. Stay in close contact with your bank’s trade desk during this period.
Step 7: Funds Are Disbursed to the Beneficiary Abroad
Once all approvals are in place and foreign currency is sourced, the bank will initiate the SWIFT transfer to the beneficiary’s international account. You’ll receive a confirmation once the funds are sent.
Tip: Keep copies of all submitted documents and transaction confirmations for your internal records and future audits.
Common Mistakes to Avoid
Despite the best intentions, many Nigerian businesses still fall into avoidable traps when sending money abroad. These mistakes not only delay transactions but can also expose your business to regulatory penalties, frozen accounts, or even investigations. Here are the most common pitfalls—and how to avoid them.
1. Using Informal Channels
Attempting to bypass the formal banking system by using unlicensed money transfer operators, black-market forex dealers, or peer-to-peer networks can seem quicker or cheaper—but it’s a major compliance violation. The CBN frowns on unofficial FX transactions, and using informal channels can result in funds being seized, your account flagged, or even criminal charges.
Avoid it: Always use CBN-authorized dealer banks and stick to legal FX sourcing windows.
2. Incomplete or Inaccurate Documentation
Submitting a Form A without attaching a valid invoice or failing to update a bill of lading with the correct HS code can halt your transaction instantly. Documentation errors are one of the most frequent reasons for transfer delays.
Avoid it: Double-check that all documents are accurate, complete, and up-to-date. Work with your logistics and compliance teams to verify every detail before submission.
3. Ignoring Updated CBN Circulars
The foreign exchange landscape in Nigeria is dynamic—policies change fast, sometimes overnight. Ignoring new CBN circulars or continuing to follow outdated procedures can put your transactions at risk.
Avoid it: Monitor the CBN website, subscribe to updates from your bank, and stay in touch with a compliance officer or consultant who understands regulatory shifts.
4. Underreporting Transfer Values
Some businesses intentionally under-declare the value of imports or services to reduce taxes or FX exposure. However, this is considered regulatory fraud, and if caught, it can result in penalties, blacklisting, or loss of trading privileges.
Avoid it: Always declare the true and full value of your transaction. It builds long-term credibility with both regulators and international partners.
Avoiding these mistakes can save your business time, money, and stress. A strong internal compliance process—and a good relationship with your bank—will keep your cross-border transactions running smoothly.
Conclusion: Stay informed about the regulations
In today’s highly regulated financial environment, compliance isn’t optional—it’s essential for the smooth operation of any Nigerian export or import business. Understanding and following the CBN’s requirements for sending money abroad protects your transactions, ensures faster processing, and keeps your business in good standing with regulators.
By staying proactive, keeping your documentation accurate, and monitoring policy updates, you position your business for sustainable growth and stronger global trade relationships. Think of compliance not as a burden, but as a strategic advantage.
Trust your international payments to Kanzum, a reliable partner that provides fast, secure, and cost-effective global B2B payments tailored to your business.
Trust your international payments to Kanzum, a reliable partner that provides fast, secure, and cost-effective global B2B payments tailored to your business.