CBN Releases New Guidelines for BDCs Operation, Bans Street Trading, 22 Other Activities

• The CBN has announced new rules that will see the end of the sale of dollars on the street in Nigeria
• New guidelines issued for Bureau de Change (BDC) operators are aimed at streamlining their operations and enhancing regulatory oversight
• CBN hopes these measures will help create stability for the naira and transparency of the foreign exchange market

Legit.ng journalist Dave Ibemere has over a decade of business journalism experience with in-depth knowledge of the Nigerian economy, stocks, and general market trends

The Central Bank of Nigeria (CBN) has released a proposed revised regulatory guidelines for Bureau De Change (BDC) operators.

In the 51-page documents published on its website, the CBN, among several rules, listed various non-permissible activities and sanctions for licenced BDC operators.

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One of the rules proposed by the CBN is the ban on street trading by BDCs. The CBN also stated that BDCs are not allowed to take deposits from or grant loans to members of the public in any currency.

Others include acting as custodian of foreign currency on behalf of customers, selling foreign exchange on credit to any customer, and dealing in gold or other precious metals.

In total, there are 23 proposed non-permissible activities for BDC operators.

Although many are not new or different from its revised operational guidelines for BDCs in 2015, it show the CBN's determination to have more control in the foreign exchange market.

CBN rules for BDC operators

Also, in the document, the CBN said permissible activities by BDCs include the acquisition of forex from approved sources, sales of FX in line with its guidelines, serving as cashout points for IMTOs, etc, Punch reports.

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Furthermore, the bank noted that sellers of forex above $10,000 are mandated to disclose the source of the forex.

CBN also proposed banning cash payments to customers for forex above $500.

Also, in the document, the CBN said permissible activities by BDCs include the acquisition of forex from approved sources, sales of FX in line with its guidelines, serving as cashout points for IMTOs, etc, Punch reports.

Part of the document reads:

“Sellers of the equivalent of USD10,000 and above to a BDC are required to declare the source of the foreign exchange and comply with all AML/CFT/CPF regulations and foreign

“Payments to customers for cash purchases of foreign currency, the equivalent of above USD500, shall be by transfer to the customer’s Naira bank account.

"If the customer is a non-resident (whether Nigerian or not), a BDC shall issue the customer a prepaid NGN card. Where such a card is issued, relevant maximum credit and cumulative limits, in line with relevant Know Your Customer requirements, shall apply.”

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The apex bank said there will be sanctions, including revocation of licenses, for BDC operators that violate its guidelines.

Expert reacts

Speaking about the document, Kelvin Emmanuel, a Nigerian economist, praised the CBN governor for the guidelines in a chat with Legit.ng, while also calling for full implementation.

He said:

"This is a masterstroke from Cardoso. There are so many politically exposed persons, bankers on this table.

"If these guidelines can be enforced judiciously, without anyone needing to call the Villa for a waiver or to shout "who does he think he is," we can make progress not only towards achieving stability in the FX market but also towards being removed from the grey list for AML/CFT by the Financial Action Task Force (FATF).

"Regulating BDC’s is a key step in fighting illicit financial flows for terrorist financing in Nigeria."

CBN instructs banks on crypto accounts

Legit.ng also reported that the Central Bank of Nigeria banned cash withdrawals from virtual and digital asset transactions.

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This was disclosed in a new document posted on the CBN website titled 'Guidelines on Operations of Bank Accounts for Virtual Assets Service Providers.'

According to the apex bank, an account opened for virtual assets will only be used for transactions involving virtual/digital assets and not for any other purpose.

Source: Legit.ng