The Central Bank of Nigeria (CBN) has issued new guidelines to regulate Bureau de Change (BDC) operators in the country, setting minimum capital requirements and restricting certain activities.
In a circular released on Wednesday, the CBN announced that Tier-1 BDCs must have a minimum capital base of N2 billion, while Tier-2 BDCs must maintain N500 million.
The mandatory caution deposit of N200 million for Tier-1 license holders has been removed, and the N50 million requirement for Tier-2 has been waived. These guidelines will come into effect from June 3, 2024.
Haruna Mustafa, CBN’s Director of Financial Policy and Regulation, stated in the circular, “As part of reforms to re-position the Bureau De Change (BDC) sub-sector to play its envisioned role in the foreign exchange market in Nigeria, the Central Bank of Nigeria (CBN) issued the Draft Operational Guidelines for BDC Operations in Nigeria in February 2024, for stakeholder comments/inputs.”
The CBN also banned BDC operators from street trading, international outward transfers, financing political activities, dealing in gold or other precious metals, and trading in crypto assets or any other virtual assets. Additionally, it mandated that BDC transactions above USD500 must be conducted through digital means.
“All existing BDCs shall re-apply for a new license according to any of the Tiers or license categories of their choice as provided in the Guidelines,” the circular further stated. “They must meet the minimum capital requirements for the license category applied for within six (6) months from the effective date of the Guidelines.”
Furthermore, the CBN emphasized that sellers of the equivalent of USD10,000 and above to a BDC must declare the source of the foreign exchange and comply with all Anti-Money Laundering (AML), Combating the Financing of Terrorism (CFT), and Counter Proliferation Financing (CPF) regulations. Payments for digital/transfer purchases of foreign currency by a BDC must be made by transfer to the customer’s Naira account, or a prepaid NGN card may be issued to non-resident customers.
CBN Governor, Olayemi Cardoso, attributed the instability in the foreign exchange market to “seasonal demands.”
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