In a decisive move to curb currency misuse, the Central Bank of Nigeria (CBN) has announced that it will suspend the dealership licenses of any Bureau de Change (BDC) or Authorised Dealer bank found guilty of diverting funds or breaching the newly introduced foreign exchange (FX) trading regulations.
The CBN’s new guidelines, outlined in a statement by Dr. W.J. Kanya, Acting Director of the Trade and Exchange Department, follow the bank’s decision to grant existing BDCs limited access to purchase foreign exchange from Authorised Dealer banks.
This access comes with stringent conditions, including a weekly cap of $25,000 for FX purchases.
Further details from the CBN’s statement reveal that the maximum amount a BDC can disburse per transaction is $5,000 on a quarterly basis.
This regulation is part of a broader framework designed to ensure transparency and control over foreign exchange transactions within the Nigerian market.
The guidelines mandate that:
Authorised Dealer banks are allowed to sell foreign exchange cash to BDCs, but only up to $25,000 per week per BDC.
BDCs must purchase their weekly quota from a single bank of their choice, with any breach of this rule triggering sanctions.
The sale price of foreign exchange by Authorised Dealers will align with the daily rates at the Nigerian Foreign Exchange Market (NFEM).
BDCs must sell foreign exchange to end-users at no more than a 1% margin above their purchase price.
Additionally, all foreign exchange purchases by BDCs must be reported through the Financial Institutions Forex Reporting System (FIFX), and detailed records must be maintained for each transaction, including the BVN of the end-user and supporting documentation, such as passport endorsements for overseas expenses.
Transactions eligible for disbursement include Business and Personal Travel Allowances, school fees, and medical expenses overseas.
However, each disbursement must not exceed $5,000 per quarter.
In a final note, the CBN emphasized the importance of compliance with Anti-Money Laundering (AML) laws and Know Your Customer (KYC) principles.
The consequences for non-compliance are severe, with offending BDCs and Authorised Dealers facing potential suspension of their operating licenses.
