The Central Bank of Nigeria (CBN) has released guidelines to regulate the activities of Bureau de Change (BDC) operators in the country.
In the circular released by the apex bank on Wednesday, the minimum capital base for Tier-1 BDCs is N2bn while that of Tier-1 is set at N500m.
The compulsory N200 million caution deposit for tier-1 BDC license holders has been removed and the N50 million for tier-2 holders was waived. The approved guidelines will take effect from June 3, 2024.
All existing Bureau de Change are expected to reapply for new licenses and meet the minimum capital requirement for the license category applied for within six months from June 3, 2024.
The apex bank has also banned street trading, international outward transfers, financing of political activities, dealing in gold or other precious metals, dealing in crypto assets or any other virtual assets, amongst others.
All transactions above $500 must be channelled through digital means.
“As part of reforms to re-position the Bureau De Change (BDC) sub-sector to play its envisioned role in the foreign exchange market in Nigeria, the Central Bank of Nigeria (CBN) issued the Draft Operational Guidelines for BDC Operations in Nigeria in February 2024, for stakeholder comments/inputs,” the circular partly read.
“Following the conclusion of the stakeholder consultations and in the exercise of the powers conferred on it by Section 56 of the Banks and Other Financial Institutions Act (BOFIA) 2020, the CBN hereby issues the attached Regulatory and Supervisory Guidelines for Bureau De Change Operations in Nigeria 2024 for compliance by all operators and promoters of proposed BDCs in Nigeria.
“The guidelines, amongst others, introduce new licensing requirements and categories of BDCs as well as revise the permissible activities, financial requirements, corporate governance requirements and AML/CFT/CPF provisions for BDCs.
“All existing BDCs shall: Re-apply for a new license according to any of the Tiers or license categories of their choice as provided in the Guidelines.
“Meet the minimum capital requirements for the license category applied for within six (6) months from the effective date of the Guidelines.
“Applicants for New BDC License Applicants for a new BDC license are required to meet the conditions for the grant of license in accordance with the Tier or category of BDC chosen as stipulated in the Guidelines. Receipt and processing of applications for license shall commence from the effective date of the Guidelines.”
The regulations stated: “The following conditions shall apply for the sourcing of foreign currencies by BDCs:
“i. Sellers of the equivalent of USD10,000 and above to a BDC are required to declare the source of the foreign exchange and comply with all AML/CFT/CPF regulations and foreign exchange laws and regulations.
“ii. Customers may sell foreign currencies in their individual domiciliary accounts with Nigerian banks to BDCs. All such sales shall be credited to the BDC’s Nigerian domiciliary account.
“iii. Payments for all digital/transfer purchases of foreign currency by a BDC shall be by transfer to the customer’s Naira account. If the customer is non-resident (whether Nigerian or not), a BDC may issue the customer a prepaid NGN card. Where such a card is issued, relevant maximum credit and cumulative limits, in line with relevant Know Your Customer (KYC) requirements, shall apply.
“iv. Payments to customers for cash purchases of foreign currency, the equivalent of above USD500, shall be by transfer to the customer’s Naira bank account. If the customer is a non-resident (whether Nigerian or not), a BDC shall issue the customer a prepaid NGN card.
“v. Payments to customers for cash purchases of foreign currency of the equivalent of USD500 and below may be made in cash.”
Read the full document HERE
