The Central Bank of Nigeria (CBN) has issued new guidelines aimed at regulating Bureau De Change (BDC) operations in the country. Under these guidelines, Tier 1 BDCs are now required to have a minimum capital of N2 billion, while Tier 2 BDCs must have a minimum capital of N500 million. Previously, Tier 1 BDCs had a license fee of N15 million, which represents a significant increase of 13,233.33 percent.
The new guidelines were introduced in response to the ongoing foreign exchange crisis in Nigeria. The CBN's Financial Policy and Regulation Department, led by Haruna B Mustafa, outlined the expectations for BDCs, including prohibiting ownership by banks, government agencies, and NGOs. Permissible activities for BDCs include buying and selling foreign currencies, issuing prepaid cards, and acting as cash points for money transfer operators.
BDCs are not permitted to take deposits, grant loans, deal in gold, or engage in capital market activities. They can source foreign currencies from authorized dealers, travelers, hotels, embassies, and other sources. For transactions exceeding $10,000, a declaration of the source is required. BDCs can sell foreign currencies for purposes such as travel, medical bills, and school fees, with at least 75 percent of sales conducted through electronic transfers.
There are two tiers of BDCs: Tier 1, which has a national presence, and Tier 2, which is limited to operating in one state with a maximum of three locations. BDCs must verify customer identities, maintain transaction records, connect to CBN systems, and display rates clearly. They are also required to submit regulatory returns, make records available for inspection, and comply with anti-money laundering and countering the financing of terrorism regulations.
