The Central Bank of Nigeria (CBN) reeled out guidelines and policies on Foreign exchange, Forex, to check the free fall of local currency, Naira,.
The apex bank has mandated foreign exchange sellers to Bureau De Change (BDC) of the equivalent of 10,000 dollars and above to declare their forex sources.
Mr Haruna Mustapha, Director, Financial Policy and Regulation Department of the CBN, said this in a revised regulatory framework to curtail excesses of BDCs and check uncertainty in the foreign exchange market.
Mustapha said that such sellers would also be required to comply with all Anti-Money Laundering/Combating the Financing of Terrorism ( AML/CFT) regulations.
He said that the guidelines would significantly enhance the regulatory framework for the operations of BDCs as part of ongoing reforms of the Nigerian foreign exchange market.
According to him, the guidelines revise the permissible activities, licensing requirements, corporate governance and AML/CFT provisions for BDCs.
“It also sets out new record-keeping and reporting requirements, among others,” he said.
The guidelines also specifies that no person shall carry on the business of BDC in Nigeria except with the prior authorisation of the CBN.
It described BDC as a company licensed by the CBN to carry on only retail foreign exchange business in Nigeria.
It banned commercial, merchant, non-interest and payment service banks, Other Financial Institutions (OFIs), including holding companies and payment service providers from promoting BDCs.
It also precluded serving staff of financial services regulatory and supervisory agencies, serving staff of regulated financial services providers, governments at all levels, among others, from promoting BDCs.
The guidelines permitted BDCs to acquire foreign currency from authorised sources like tourists, returnees from the diaspora and expatriates with foreign exchange inflows from work, travel, investment or their domiciliary accounts.
Other permissible sources are International Money Transfer Operators (IMTOs), embassies, hotels that are authorised buyers of foreign currencies, the Nigerian Foreign Exchange Market (NFEM) and any other source that the CBN may specify.
It warned the BDCs not to engage in street-trading, maintaining any type of account for any member of the public, or accepting any asset for safe keeping/custody.
It said that the BDCs were also not permitted to take deposits from or grant loans to members of the public in any currency and in any form.
“Retail sale of foreign currencies to non-individuals, except for BTA, international outward transfers, engaging in off-shore business or maintaining foreign correspondent relationship with any foreign establishment are also not permissible,” it said.
The Bank also issued a draft of revised Regulatory and Supervisory Guidelines for all Bureau de Change (BDC) Operators and stakeholders in the financial services industry.
The guidelines seeks to enhance the regulatory framework for BDC operations as part of ongoing reforms of the Nigerian foreign exchange market.
The circular signed by Mustafa the CBN had the 50 paged guidelines attached.
The guidelines spelt out activities allowed, licensing requirements, corporate governance and Anti-Money Laundering/Combating the Financing of Terrorism provisions for BDCs.
The draft document on the CBN’s website also listed new record-keeping and reporting requirements, corporate governance requirements, financial requirements, among others.
“Pursuant to the powers conferred under Section 56 of the Banks and Other Financial Institutions Act, 2020 (BOFIA), the Central Bank of Nigeria (CBN) hereby issues this draft revised Regulatory and Supervisory Guidelines for Bureau de Change (BDC) Operations in Nigeria for stakeholder comments and/or inputs.
“The Guidelines significantly enhances the regulatory framework for the operations of Bureau De Change as part of ongoing reforms of the Nigerian foreign exchange market.
“The Guidelines revises the permissible activities, licensing requirements, corporate governance and Anti-Money Laundering/Combating the Financing of Terrorism (AML/CFT) provisions for BDCs.
“It also sets out new record-keeping and reporting requirements, among others,” the circular said.
Mustafa said the draft guidelines were available on the CBN’s website, www.cbn.gov.ng.
He urged stakeholders to forward thier comments to the Director, Financial Policy and Regulation Department, CBN, Abuja with soft copies mailed to [email protected] by March 4, 2024.
Some portions of the 50 paged draft document targeted transparency, elimination of corruption and hoarding of Forex.
It gave reasons for preservation of records and conditions for revocation of BDC operations licence.
“Every BDC shall maintain documents obtained from its customers for at least five years after the consummation of the transaction,” draft item 18.0 in the schedule noted.
It said the CBN may revoke the license of a BDC: where the operator or its entities forges, mutilates, alters or defaces any foreign currency, or other fx instruments with intent to defraud.
The document also prohibited multiple ownership of BDCs; obtaining foreign currency from ineligible sources or from eligible ones in a fraudulent manner.
It also spelt out sanctions for other regulatory infractions.
