The Central Bank of Nigeria (CBN) has rolled out stringent measures on Bureau De Change (BDC) operators as part of measures to tackle the forex crisis in the country.
The Naira is going through it’s worse phase in recent time, leading to inflation and high cost of food items in the country.
The National Security Adviser, Mallam Nuhu Ribadu, had ordered the Economic and Financial Crimes Commission (EFCC), Department of State Services (DSS) and other security agencies to crack down on currency speculators in the forex market.
This had resulted in raids on BDCs nationwide and arrest of some illegal operators.
On Friday, the Financial Policy and Regulation Department of the apex bank, released new set of guidelines to all BDC operators and stakeholders in the financial sectors.
According to the guidelines, the capital required for licence of BDCs in Tier 1 category is N2 billion, while that of Tier 2 is N500 million.
Other guidelines are:
– Non-Eligible Promoters: Entities like banks, government agencies, NGOs are not allowed to have ownership stake in BDCs.
– Permissible Activities: BDCs can buy and sell foreign currencies, issue prepaid cards, serve as cash points for money transfer operators etc. They cannot take deposits, grant loans, deal in gold or engage in capital market activities.
– Sources of Foreign Currencies: BDCs can source forex from authorized dealers, travellers, hotels, embassies etc. Large transactions above $10,000 require declaration of source.
– Sale of Foreign Currencies: BDCs can sell forex for travel, medical bills, school fees etc up to specified limits per customer annually. At least 75% of sale must be via transfer, 25% can be cash.
– Categories of BDCs: There are 2 tiers of BDCs – Tier 1 with national presence, branches and franchises; Tier 2 restricted to 1 state with max 3 locations.
– Operations: Must verify customer identity, keep transaction records, connect to CBN systems, display rates clearly etc.
– Supervision: Specified regulatory returns must be rendered, records available for inspection, compliance with guidelines required.
– Franchising Standards: Standards specified for Tier 1 BDCs appointing franchises regarding policy, monitoring, branding etc.
– Prudential Requirements: Specified limits on open position, fixed assets, borrowings, dividend payment etc.
– AML/CFT Requirements: Must comply with AML/CFT regulations on policies, monitoring, reporting etc.
