Here are the core highlights of the revised regulatory and supervisory guidelines for Bureau De Change operations in Nigeria:
– Non-Eligible Promoters: Certain entities like banks, government agencies, NGOs etc are not allowed to have ownership stake in BDCs.
– Permissible Activities: BDCs can buy and sell foreign currencies, issue prepaid cards, serve as cash points for money transfer operators etc. They cannot take deposits, grant loans, deal in gold or engage in capital market activities.
– Sources of Foreign Currencies: BDCs can source forex from authorized dealers, travellers, hotels, embassies etc. Large transactions above $10,000 require declaration of source.
– Sale of Foreign Currencies: BDCs can sell forex for travel, medical bills, school fees etc up to specified limits per customer annually. At least 75% of sale must be via transfer, 25% can be cash.
– Categories of BDCs: There are 2 tiers of BDCs – Tier 1 with national presence, branches and franchises; Tier 2 restricted to 1 state with max 3 locations.
– Financial Requirements: Minimum capital of N2 billion for Tier 1 and N500 million for Tier 2. Other fees and deposits specified.
– Licensing Process: Two stage process – Approval in Principle and Final Licence, each with specified document requirements.
– Corporate Governance: Board composition, assessment of propriety, fitness requirements for directors and senior management specified.
– Operations: Must verify customer identity, keep transaction records, connect to CBN systems, display rates clearly etc.
– Supervision: Specified regulatory returns must be rendered, records available for inspection, compliance with guidelines required.
– Franchising Standards: Standards specified for Tier 1 BDCs appointing franchises regarding policy, monitoring, branding etc.
– Prudential Requirements: Specified limits on open position, fixed assets, borrowings, dividend payment etc.
– AML/CFT Requirements: Must comply with AML/CFT regulations on policies, monitoring, reporting etc.
– Penalties: Non-compliance may lead to sanctions including revocation of licence.
In summary, the guidelines aim to regulate all aspects of BDC operations from licensing, governance, sources of funds, forex transactions, reporting, supervision etc in line with Central Bank objectives.
This is a masterstroke from CBN governor, Yemi Cardoso. The demon is in the enforcement.
There are so many politically exposed persons, bankers on this table. If these guidelines can be judiciously enforced without someone calling the Villa for a waiver or to shout “who does he think he is”, we will make a headway with not just a semblance of stability in the FX market, but also be removed from the grey list for AML/CFT by the Financial Action Task Force (FATF),
Regulating BDCs is a key step in fighting illicit financial flows for terrorist financing in Nigeria.
