The Central Bank of Nigeria (CBN) has initiated a policy to prohibit Bureau De Change (BDC) operators from engaging in street trading. Additionally, the CBN has capped cash payments for selling foreign exchange at a maximum of $500. The apex bank has also proposed a revised regulatory guidelines for BDC operators, which include an increase in the share capital of Bureau De Change (BDC) operators from N35 million (general license) to N2 billion (Tier 1 license) and N500 million (Tier 2 license).
The CBN has recently revised its policy regarding the exchange of foreign currency. According to the new policy, individuals or companies exchanging $10,000 or more are required to declare the sources of the currency. Additionally, sellers must comply with all Anti-Money Laundering/Combating the Financing of Terrorism (AML/CFT) regulations, as well as foreign exchange laws and regulations. The implementation of these regulations aims to strengthen the regulatory framework for the operations of BDCs in Nigeria.
Furthermore, the apex bank has introduced a two-tier license for BDC operators in the country, under the minimum capital requirements.
A Tier 1 BDC is authorized to operate on a national basis can open branches and may appoint franchisees, subject to the approval of the CBN.
A Tier 1 BDC (which is the franchisor) shall exercise supervisory oversight over its franchisees. All franchisees shall adopt their franchisor’s name, branding, technology platform, and rendition requirements. Aside from the N2 billion as minimum share capital, operators under this tier are expected deposit a Mandatory Caution Deposit of N200 million. The application and license fee is also N1 million and N5 million respectively.
A Tier 2 BDC is authorized to operate only in one state or the FCT. It may have up to three locations – a head office and two branches, subject to approval of the CBN. It is not permitted to appoint franchisees. operators are expected to have N500 million as minimum share capital while depositing a Mandatory Caution Deposit of N50 million.
The application and license fee are also N250,000 and N2 million respectively.
The bank has announced that BDCs operators are only allowed to engage in specific activities such as buying forex from approved sources, selling foreign exchange in accordance with its guidelines, and serving as cash-out points for International Money Transfer Operators (IMTOs).
However, the CBN has warned that activities such as street trading, account maintenance, accepting deposits and granting loans, facilitating international outward transfers, dealing in precious stones and metals, establishing subsidiaries, and any other unapproved activities will be punished.
