This is a step-by-step guide to establishing a money remittance company in Kenya. The Central Bank of Kenya licenses and regulates companies that conduct money-remittance business.
What is a Money Remittance Company
A money transfer, money service, or remittance company essentially involves providing a service to receive funds from the sender and convey it to the beneficiary. This can be a local service provided within the same nation or a cross-border/international service provided between two or more countries.
Money Transfer Providers (MRPs) play an important role in international money transfers. Kenya has 17 licensed money remittance providers (MRPs).
How To Register A Money Remittance Company In Kenya
The key steps involved in registering a money remittance company in Kenya, as defined by the Central Bank of Kenya Act and Money Remittance Regulations, are as follows:
Stage 1: Approval of Name
- Contact the Central Bank of Kenya early on to arrange a provisional meeting to discuss regulations and other issues.
- Suggest and earmark at least three business titles with the words “money remittance” or “money transfer” as a brand with the Registrar of Companies.
- Before incorporating the company as limited by shares, submit the suggested names to the Central Bank in priority order.
Stage Two: Application for Licence
a) Complete and return to CBK an approved application form (CBK/MRB/1 of the First Schedule) along with all supporting documents, including:
- A copy of the incorporation certificate that has been certified.
- A certified copy of your tax personal identification number (PIN).
- Certified copy of the enrolled memorandum and Articles of Association specifying at least Kshs 10 million in paid-up capital, which is expected to increase to Ksh 20 million by the end of the year.
- Verified official notification of the company’s registered place of business, as well as prospective locations (Head Office, branches, agencies, and outlets, if any).
- Pay a Ksh 20,000 non-refundable application fee to the Central Bank via bankers’ cheque or RTGS.
b) Show proof of a minimum core capital of Ksh 10 million and the capacity to increase it to Ksh 20 million by the end of the year.
- Evidence should be reflected in a bank statement issued by a licensed bank or microfinance institution indicating the secluded funds and/or Government of Kenya Treasury Bills and Bonds that are not encumbered.
- The evidence should be in the name of the business and/or its promoters/shareholders.
- The promoters/shareholders should delegate authority to the Central Bank to verify the authenticity of bank statements straight from the bank or microfinance establishment.
- The promoters/shareholders should disclose to each individual promoter/shareholder and/or firm the distribution or allocation (final beneficiaries, citizenship, quantity, and percentage) of core capital, identifying important shareholders/promoters (holding at least 10% of the shareholding).
c) Create and submit a thorough evaluation and business strategy that addresses, but is not restricted to:
- Executive Summary
- Background
- Structure of governance, including ownership
- Operational and financial performance summary, if applicable
- Financial and economic conditions
- Analysis of Institutions and Markets
- Business Activities/Products Scope
- Income Reports and Analysis for the Next Three Years
- Plan for business continuity.
d) Fill out and return the ‘Fit and Proper Forms’ (FORM/CBK/MRB/2) for all significant stockholders (at least 10% controlling stake) and suggested directors, along with supporting documentation (certified), including:
For individuals:
- CVs and accredited copies of professional and academic certificates are required.
- An individual statement of affairs covering the last three years is required.
- Certificated replicas of bank statements, bank deposit receipts, and government securities are examples of evidence and disclosure of the source of funds.
- Duplicate of National ID and PIN certificate;
- The total number and proportion of shares to be purchased;
- Two recent passport-size color photographs, at least one of which must be certified;
- Names and contact information for three independent referees, along with postal addresses, e-mail addresses, and phone numbers;
- A credit history report from a reputable credit bureau.
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For Companies, Firms or Other Corporate Entities:
- A certified copy of the company’s Certificate of Incorporation or Certificate of
- Registration of Business or other entity.
- Certified copy of the Association/Memorandum bodies and Articles of Association, Partnership Agreements, or Constitution.
- Personal Identification Number (PIN) certificate for the organization.
- A resolution of the Board of Directors or a General Meeting authorizes the investment.
- Where the entity is regulated, the name and address of the Regulator, as well as a certified copy of the operating license.
- Financial statements that have been audited for at least the last three years.
- Certified copies of bank statements, fixed deposit receipts, and government securities are examples of evidence and disclosure of the source of funds.
- The total number and percentage of shares to be purchased.
- Beneficiaries of the shares to be procured.
- A credit history from a reputable credit bureau.
For Forex Bureaus and associated entities
Forex bureaus and other entities that are already in the money transfer business will be required to meet the following additional requirements:
- A request for permission to change one’s name.
- Resolutions of the board of directors and shareholders approving the transformation and proposed investment (Business Plan approved by the board).
- Copies of the previous three years’ audited financial statements, including the auditor’s report, if applicable.
- An external audit firm’s due diligence report on operational and financial performance, as well as legal risks, detailing a review of the adequacy of the management information system and internal control systems.
Foreign companies
Foreign companies planning to establish a local subsidiary will be required to provide additional information, including but not limited to:
- A copy of the board bill allowing the entity to contribute to the Kenyan money transfer business.
- The foreign entity’s historical context.
- A signed assertion by the board of directors that they will follow the Act and the Regulations issued under it, as well as other relevant Kenyan laws, at all times during the license’s validity.
- List of all countries from which they operate, including contact information for the respective regulators.
Stage Three: Letter of Intent.
After assessing and meeting all of the above prerequisites in stage two, the Central Bank will provide a Letter of Intent, which is an approval in principle, and inform the applicant of the next steps and criteria to be met before the issuance of a license and approval to begin operations, including:
a) Payment of the Kshs 100,000 license fee to the Central Bank by banker’s cheque or cash
b) Provide security in the form of a surety bond, an irrevocable letter of credit from a commercial bank or a microfinance institution, or an insurance bond in the amount of Kshs.5 million or 1% of the applicant’s projected total volume of business for the first year of operation.
c) Preparation of premises to meet prescribed standards and application for Central Bank approval/license before beginning operations.
d) Fill out and return the Fit and Proper Forms for key senior officers (FORM /CBK/MRB/2) along with all supporting documentation, including but not limited to:
- Curriculum Vitae and any supporting documentation are required.
- At least three referees with detailed contact information, including e-mail and phone numbers.
- Previous employers and businesses of the proposed officers, including detailed contact information such as e-mail and phone numbers.
- Photographs and duplicates of identification documents (ID card and/or passport) as well as the PIN certificate must be certified. A registered commissioner of oaths should certify the document. Documents must be notarized by a public notary in the foreigner’s jurisdiction;
- Submit a statement that neither of the senior officers owns or holds a similar position with another money remittance vendor.
Developing and implementing a management information system and other institutional structures required for the money remittance business, such as, but not limited to:
- Governance structures include a board of directors and senior management.
- Infrastructure and management information systems.
- Accounting procedures, Management Information systems, internal audit and controls, Know Your Customer (KYC), operations and asset manuals, and risk management are all covered in operations manuals.
NOTE: The Central Bank must conduct management due diligence as well as an assessment of the MIS and internal controls and procedures.
Stage Four: License Issuance
If the Central Bank is confident that the applicant has fulfilled all of the requirements, it may grant the Applicant a license to begin a money remittance business.
