The Central Bank of Nigeria (CBN) has issued a directive requiring entities that sell foreign exchange to Bureau De Change (BDC) operators, in amounts equal to or exceeding $10,000, to disclose the origins of their foreign currency.
In a recent overhaul of the regulatory framework, aimed at reining in the practices of BDCs and stabilizing the foreign exchange market, Haruna Mustapha, who heads the Financial Policy and Regulation Department at the CBN, outlined these new stipulations.
Mustapha emphasized that these sellers are also obligated to adhere to stringent Anti-Money Laundering/Combating the Financing of Terrorism (AML/CFT) rules.
He further explained that the new guidelines would bolster the regulatory environment surrounding BDC operations, contributing to the broader reforms of the foreign exchange market in Nigeria.
The updated guidelines redefine permissible operations, set criteria for licensing, establish standards for corporate governance, and reinforce AML/CFT measures for BDCs.
“Additionally, the guidelines introduce new requirements for record-keeping and reporting, among other directives,” Mustapha stated.
As reported by the News Agency of Nigeria (NAN), the guidelines also clarify that operating a BDC business in Nigeria is prohibited without explicit approval from the CBN.
BDCs are identified as companies that the CBN has authorized to engage exclusively in retail foreign exchange transactions within Nigeria.
The regulations prohibit commercial, merchant, non-interest, and payment service banks, along with Other Financial Institutions (OFIs), holding companies, and payment service providers from supporting BDC operations.
Furthermore, the guidelines restrict employees of financial regulatory and supervisory agencies, workers of regulated financial entities, and government officials across all levels from backing BDC ventures.
Permissible sources for BDCs to acquire foreign currency include tourists, diaspora returnees, expatriates with foreign exchange earnings from employment, travel, investments, or domiciliary accounts.
Other authorized sources encompass International Money Transfer Operators (IMTOs), embassies, hotels approved to purchase foreign currencies, the Nigerian Foreign Exchange Market (NFEM), and any other sources designated by the CBN.
The guidelines caution BDCs against engaging in street trading, holding any form of account for the public, or accepting assets for safekeeping.
It is also stated that BDCs are forbidden from accepting deposits or granting loans to the public in any currency or form, selling foreign currencies to non-individuals (except for Business Travel Allowance), conducting international transfers, partaking in offshore business, or establishing foreign correspondent relationships.
