CBN issues new guidelines for bureau de change operations

Date:

The Central Bank of Nigeria (CBN) has released new guidelines aimed at regulating Bureau De Change (BDC) operations in Nigeria.

The new guidelines, effective June 3rd, 2024, raise the minimum capital requirement for BDC operators.

The new guidelines, signed by Haruna Mustafa, Director of the Financial Policy and Regulation Department, on Wednesday, raise the minimum capital requirements for BDCs.

“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,” CBN said.

“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 minimum capital base for Tier-1 BDCs is N2bn, while that of Tier-1 is set at N500m. Also, the mandatory caution deposit of N200 million for tier-1 BDC licence holders was removed, while the N50 million for tier-2 licence holders was waived.

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, the apex bank noted

It added that “all existing BDCs shall: re-apply for a new licence according to any of the Tiers or licence categories of their choice as provided in the Guidelines.

“Meet the minimum capital requirements for the licence category applied for within six (6) months from the effective date of the Guidelines.

“Applicants for New BDC Licence Applicants for a new BDC licence are required to meet the conditions for the grant of licence in accordance with the Tier or category of BDC chosen as stipulated in the Guidelines. Receipt and processing of applications for licence shall commence from the effective date of the Guidelines.”

The following conditions apply to the sourcing of foreign currencies by BDCs:

i. Sellers of the equivalent of USD 10,000 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 made 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 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.

Source: The Guardian

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