The Central Bank of Nigeria (CBN) has introduced new regulations limiting how Bureau de Change (BDC) operators conduct foreign currency transactions.
BDCs can only buy dollars from one authorised dealer every week under the new rules, and they can only acquire a maximum of $25,000. This implies that a BDC cannot divide purchases among several dealers and must select one commercial bank or another authorised vendor each week.
The CBN also emphasized the importance of Know Your Customer (KYC) procedures, ensuring that BDCs properly verify the identities of those buying foreign currency to prevent fraud and money laundering.
A circular signed by W.J. Kanya, Acting Director of the CBN’s Trade and Exchange Department, explained the new restrictions:
- BDCs must buy foreign currency from only one approved dealer per week.
- Any BDC that violates this rule will face penalties.
- The exchange rate at which commercial banks sell to BDCs must match the rate in the Nigerian Foreign Exchange Market (NFEM) on that day.
- BDCs can only sell dollars to customers with a markup of no more than 1% above the buying rate.
The CBN also made it clear that this 1% markup applies to all funds sold by BDCs, regardless of the source.
Additionally, commercial banks that sell FX to BDCs must submit weekly reports to the CBN, detailing their transactions. BDCs must also report their daily transactions, including where they sourced the FX and how it was sold.
To ensure that foreign exchange is used for legitimate purposes, BDCs can only sell dollars for:
- Business Travel Allowance (BTA)
- Personal Travel Allowance (PTA)
- Payment of overseas school fees
- Payment of medical bills abroad
In each case, the maximum amount a customer can receive is $5,000 per transaction, and customers can only make such requests once every three months.
BDCs must also keep proper records of all transactions. This includes:
- Recording the Bank Verification Number (BVN) of the buyer.
- Stamping the buyer’s international passport with details of the transaction.
The CBN warned that any BDC or authorized dealer that diverts funds or breaks these rules will face severe sanctions, including having their license suspended.
These initiatives are a part of the CBN’s efforts to control the foreign exchange market, stop speculation, and make sure that money isn’t being utilised for illicit purposes but rather for legitimate transactions.
