In response to the ongoing economic challenges, the Central Bank of Nigeria (CBN) has unveiled comprehensive reforms affecting Bureau de Change (BDC) operations across the country.
The new guidelines, outlined in a statement by the Financial Policy and Regulation Department, aim to address the economic crisis and enhance regulatory measures.
1. Capital Requirements Restructured
Under the revised guidelines, BDCs are now divided into two tiers, each with distinct capital requirements. Tier 1 BDCs must maintain a minimum capital of N2 billion, while Tier 2 BDCs face a capital threshold of N500 million. This represents a significant increase from the previous uniform capital requirement of N35 million.
2. Ownership Restrictions for Financial Institutions
The CBN circular explicitly prohibits banks, NGOs, government agencies, and other financial institutions from holding ownership stakes in BDCs, either directly or indirectly. This includes commercial banks, merchant banks, non-interest banks, payment service banks, as well as holding companies and payment service providers.
3. Limited Activities for BDCs
While BDCs are authorized for specific activities like buying and selling foreign currencies, issuing prepaid cards, and serving as cash points for money transfer operators, they are now restricted from accepting deposits, extending loans, trading in gold, or engaging in capital market activities.
4. Forex Sourcing and Sale Guidelines
BDCs are permitted to source forex from authorized channels, including dealers, travelers, hotels, and embassies. The sale of foreign currencies is regulated, with specified limits per customer annually for purposes such as travel, medical bills, and school fees. Additionally, BDCs are barred from engaging in offshore business and financing political activities.
5. Emphasis on Electronic Transactions
The CBN emphasizes a shift towards electronic transactions, mandating that at least 75 percent of sales be conducted through electronic transfers. For beneficiaries of Basic Travel Allowance (BTA) or Personal Travel Allowance (PTA), 25 percent of the foreign currency can be received in cash, with the remaining 75 percent electronically transferred to the customer’s Nigerian domiciliary account or prepaid card.
6. Disclosure Requirements for High-Value Transactions
Customers selling $10,000 or more to BDCs must disclose the source of the foreign exchange, complying with Anti-Money Laundering and Counter Financing of Terrorism regulations. Payments for cash purchases of forex below $500 may be made in cash, while transactions exceeding this limit are subject to electronic transfers.
