CBN Introduces Stricter Measures for BDCs, Imposes N2bn Licence Fee

• The Central Bank of Nigeria (CBN) implements stringent measures targeting Bureau De Change (BDC) operators amidst ongoing forex crisis
• National Security Adviser directs law enforcement agencies to clamp down on currency speculators, leading to nationwide raids and arrests

Amidst the ongoing forex crisis in Nigeria, the Central Bank of Nigeria (CBN) has implemented stringent measures targeting Bureau De Change (BDC) operators to address the deteriorating economic situation.

The country faces severe economic challenges, with the naira plunging to an all-time low of N2,000 against the dollar. In response, the National Security Adviser, Mallam Nuhu Ribadu, has directed law enforcement agencies, including the Economic and Financial Crimes Commission (EFCC) and the Department of State Services (DSS), to clamp down on currency speculators operating in the forex market. This directive has led to nationwide raids on BDCs and the arrest of illegal operators.

On Friday, the CBN’s Financial Policy and Regulation Department issued a new set of guidelines for BDC operators and stakeholders in the financial sector. Among the key provisions are:

• License Requirements: BDCs in Tier 1 must have a capital base of N2 billion, while Tier 2 BDCs must maintain a capital base of N500 million.
• Ownership Restrictions: Entities such as banks, government agencies, and NGOs are prohibited from holding ownership stakes in BDCs.
• Permissible Activities: BDCs are authorized to buy and sell foreign currencies, issue prepaid cards, and serve as cash points for money transfer operators. However, they are prohibited from accepting deposits, granting loans, dealing in gold, or engaging in capital market activities.
• Foreign Currency Sourcing: BDCs can source forex from authorized dealers, travellers, hotels, embassies, etc. Transactions exceeding $10,000 require a declaration of the source.
• Sale of Foreign Currencies: BDCs can sell forex for travel, medical bills, school fees, etc., within specified limits per customer annually. At least 75% of sales must be via transfer, with the remaining 25% allowed in cash.
• Operational Standards: BDCs must adhere to customer verification procedures, maintain transaction records, connect to CBN systems, and display exchange rates clearly, among other requirements.
• Supervision and Compliance: BDCs are mandated to submit specified regulatory returns, maintain accessible records for inspection, and ensure compliance with the established guidelines.
• Franchising and Prudential Requirements: Tier 1 BDCs appointing franchises must adhere to specified standards regarding policy, monitoring, and branding, while all BDCs must comply with prudential requirements on open positions, fixed assets, borrowings, dividend payments, etc.
• AML/CFT Compliance: BDCs must comply with Anti-Money Laundering (AML) and Counter Financing of Terrorism (CFT) regulations, including implementing policies, monitoring activities, and reporting suspicious transactions.

These measures represent a concerted effort by the CBN to regulate and stabilize the forex market while ensuring transparency and accountability among BDC operators.