CBN issues stricter guidelines for BDCs, other FX stakeholders

The Central Bank of Nigeria (CBN) has 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 which seek to enhance the regulatory framework for BDC operations as part of ongoing reforms of the Nigerian foreign exchange market, were contained in a circular on Friday, February 23, 2024.

The circular signed by Haruna Mustafa, Director, Financial Policy and Regulation Department of the CBN had the 50-page 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, and 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 enhance the regulatory framework for the operations of Bureau De Change as part of ongoing reforms of the Nigerian foreign exchange market.

“The Guidelines revise 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 their comments to the Director, Financial Policy and Regulation Department, CBN, Abuja with soft copies mailed to PolicyandRegulationDivision@cbn.gov.ng by March 4, 2024.

The News Agency of Nigeria (NAN) reports that some portions of the 50-page draft document targeted transparency, elimination of corruption and hoarding of Forex.

It gave reasons for the preservation of records and conditions for the revocation of the 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 eligible ones in a fraudulent manner.

It also spelt out sanctions for other regulatory infractions.