The Central Bank of Nigeria (CBN) has rolled out new regulatory measures aimed at enhancing transparency and curbing malpractices in the foreign exchange market. Under the revised guidelines, foreign exchange sellers to Bureau De Change (BDC) operators are mandated to declare the equivalent of $10,000 and above, along with providing details of the source of the forex.
Haruna Mustapha, Director of the Financial Policy and Regulation Department at the CBN, announced the regulatory overhaul as part of broader efforts to address the excesses of BDCs and stabilize the foreign exchange market. Mustapha emphasized that compliance with Anti-Money Laundering/Combating the Financing of Terrorism (AML/CFT) regulations is mandatory for these sellers.
The updated guidelines also encompass provisions pertaining to permissible activities, licensing requirements, corporate governance, and AML/CFT provisions for BDCs. Mustapha highlighted that the revisions aim to bolster the regulatory framework governing BDC operations in Nigeria.
Furthermore, the guidelines stipulate that individuals or entities intending to engage in BDC operations must obtain prior authorization from the CBN. The definition of a BDC is narrowed down to a company licensed solely to conduct retail foreign exchange transactions in Nigeria.
The regulations explicitly prohibit commercial banks, merchant banks, non-interest banks, payment service banks, and other Financial Institutions (OFIs) from promoting BDCs. Additionally, employees of financial regulatory and supervisory agencies, regulated financial services providers, and government personnel are barred from promoting BDCs.
BDCs are permitted to acquire foreign currency from authorized sources such as tourists, diaspora returnees, expatriates, International Money Transfer Operators (IMTOs), embassies, authorized hotels, the Nigerian Foreign Exchange Market (NFEM), and other sources designated by the CBN.
However, the guidelines sternly warn BDCs against engaging in street trading, maintaining public accounts, accepting assets for safekeeping, or extending loans to the public in any form or currency. Moreover, retail sale of foreign currencies to non-individuals, except for authorized purposes like Business Travel Allowance (BTA) and international outward transfers, is strictly prohibited.
The CBN’s regulatory overhaul underscores its commitment to fostering transparency, stability, and integrity in the foreign exchange market while safeguarding against illicit financial activities.
