CBN Enforces Stricter Regulations for Bureau de Change Operators

By Joke Kujenya

COMPREHENSIVE GUIDELINES to govern the operations of Bureau de Change (BDC) operators, setting new standards for capital requirements and operational practices has been introduced by the Central Bank Of Nigeria (CBN).

Under the revised regulations issued on Wednesday, Tier-1 BDCs are now required to maintain a minimum capital base of N2 billion, while Tier-2 BDCs must have a minimum of N500 million.

The previous mandatory caution deposit of N200 million for Tier-1 and N50 million for Tier-2 BDC license holders has been abolished.

According to Haruna Mustafa, CBN’s Director of Financial Policy and Regulation, these new guidelines will take effect from June 3, 2024.

Existing BDCs must reapply for licenses and meet the updated capital requirements within six months of this date.

The CBN’s directives include prohibitions on street trading, international outward transfers, financing political activities, and transactions involving gold, precious metals, and crypto assets.

Furthermore, any BDC transaction exceeding USD500 must be conducted through digital channels.

The guidelines are part of a broader effort to reform the BDC sector and align it with Nigeria’s foreign exchange market needs.

Stakeholder consultations, which began in February 2024, have culminated in these stringent regulatory measures.

The CBN’s circular emphasizes that all existing BDCs must reapply for new licenses based on their chosen tier and comply with the revised financial and governance requirements.

New applicants must also meet these conditions to obtain a license.

Additionally, the regulations outline specific conditions for sourcing foreign currencies by BDCs. Transactions above USD10,000 must declare the source and adhere to AML/CFT/CPF regulations.

Customers can sell foreign currencies from their domiciliary accounts to BDCs, with payments for digital or transfer purchases made directly to the customer’s Naira account. For non-residents, BDCs may issue prepaid NGN cards, subject to KYC requirements.

These measures come against the backdrop of significant volatility in the Nigerian Naira, which has fluctuated dramatically over the past year.

From N700 to the dollar in May 2023, the Naira hit a low of N1,900 in February 2024, briefly recovering to N1,100 in April before declining again to N1,600 in May 2024.

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