The Central Bank of Nigeria (CBN) has introduced a new regulation mandating that sellers of foreign exchange to Bureau De Change (BDC) above the equivalent of $10,000 disclose the sources of their forex. This move aims to address BDCs’ excesses and enhance transparency in the foreign exchange market.
Haruna Mustapha, Director of the Financial Policy and Regulation Department at CBN, highlighted that compliance with Anti-Money Laundering/Combating the Financing of Terrorism (AML/CFT) regulations is essential for these sellers.
The revised regulatory framework signifies a significant step in reforming the Nigerian foreign exchange market by improving the operational standards of BDCs. It outlines guidelines on permissible activities, licensing requirements, corporate governance, and AML/CFT measures for BDCs, along with record-keeping and reporting obligations.
Entities seeking to operate as BDCs in Nigeria must obtain prior authorization from the CBN, which restricts commercial and other financial institutions from promoting BDCs. Additionally, individuals from financial regulatory bodies, regulated financial institutions, government entities, and similar organizations are barred from endorsing BDCs.
Authorized sources for acquiring foreign currency include tourists, diaspora returnees, expatriates, International Money Transfer Operators (IMTOs), embassies, authorized foreign currency buyers like hotels, the Nigerian Foreign Exchange Market (NFEM), and other sources specified by the CBN.
The guidelines prohibit BDCs from engaging in street trading, holding public accounts, offering safekeeping services, accepting deposits, providing loans to the public, or retailing foreign currencies to non-individuals, except for specific purposes like Basic Travel Allowance (BTA) and international transfers.
By enforcing these regulations, the CBN aims to promote accountability and integrity within the foreign exchange market while safeguarding against illicit financial activities.
