The Central Bank of Nigeria (CBN) has introduced stringent regulatory measures aimed at promoting transparency and combating malpractices in the foreign exchange market. The move comes as part of broader efforts to address issues within the Bureau De Change (BDC) sector and stabilize forex operations in the country.
Haruna Mustapha, Director of the Financial Policy and Regulation Department at the CBN, unveiled the regulatory overhaul, emphasizing its significance in curbing excesses among BDC operators. Under the revised guidelines, foreign exchange sellers to BDCs are now required to declare transactions equivalent to $10,000 and above, providing detailed information on the source of the forex.
The focus on compliance with Anti-Money Laundering/Combating the Financing of Terrorism (AML/CFT) regulations is paramount, according to Mustapha. The updated guidelines encompass various aspects including permissible activities, licensing requirements, corporate governance, and AML/CFT provisions, aiming to strengthen the regulatory framework governing BDC operations.
Key provisions include the necessity for individuals or entities intending to engage in BDC activities to obtain prior authorization from the CBN. The definition of a BDC is refined to companies exclusively licensed for retail forex transactions in Nigeria.
Furthermore, commercial banks, merchant banks, non-interest banks, payment service banks, and other financial institutions are now barred from promoting BDCs. Employees of financial regulatory agencies, regulated financial services providers, and government personnel are also prohibited from promoting BDCs.
BDCs are permitted to source foreign currency from authorized channels such as tourists, diaspora returnees, expatriates, International Money Transfer Operators (IMTOs), and other designated sources. However, the guidelines strictly prohibit activities such as street trading, maintaining public accounts, accepting assets for safekeeping, or extending loans to the public.
Moreover, retail sale of foreign currencies to non-individuals, except for authorized purposes like Business Travel Allowance (BTA) and international outward transfers, is strictly forbidden.
The CBN’s regulatory overhaul underscores its commitment to fostering transparency, stability, and integrity in the forex market while combatting illicit financial activities. These measures are expected to play a significant role in restoring confidence and ensuring a well-regulated forex environment in Nigeria.
