CBN To Raise BDC Minimum Share Capital To N2bn For Tier 1 License

CBN establishes guidelines for BDCs; tier 1 BDCs now need to have N2 billion in capital, while others

As part of efforts to stabilise the value of the naira exchange rate, the Central Bank of Nigeria (CBN) on Friday, issued draft revised regulatory and supervisory guidelines for Bureau de Change (BDC) Operations in the country, in which it prescribed a minimum capital requirement of N2billion for Tier-1 firms in the....

Guidelines for the sale of foreign exchange (Forex) by Bureau De Change (BDC) operators in the nation have been made public by the Central Bank of Nigeria (CBN).

According to the guidelines, sellers who give BDCs $10,000 or more must disclose the source of their foreign exchange.

The guidelines have revised the permissible activities, licensing requirements, corporate governance, and anti-money laundering/combating the financing of terrorism (AML/CFT) provisions for BDCs, according to a document released by the apex bank on Friday, February 23.

Read: Customers Stranded As BDCs In Abuja, Kano, Lagos Shutdown

As part of ongoing reforms to the Nigerian foreign exchange market, the draft guidelines also suggested a significant improvement to the regulatory framework for the operations of the Bureau De Change.

The circular states that commercial, merchant, non-interest, and payment service banks are not permitted to have a direct or indirect ownership stake in BDCs.

Furthermore, according to CBN, holding companies and payment service providers are examples of other financial institutions (OFIS) that are not allowed to own BDCs.

The apex bank stated that non-governmental organizations, serving employees of financial services regulatory and supervisory agencies, governments at all levels, public officers, cooperative societies, and other entities are among the other ineligible entities.

Sellers of foreign exchange to BDCs for an amount greater than $10,000, according to CBN, must disclose the source of the funds “and comply with all AML/CFT/CPF regulations and foreign exchange laws and regulations.”

“Customers may transfer foreign currencies from their individual domiciliary accounts with Nigerian banks to BDCs. All digital/transfer purchases of foreign currencies shall be credited to the BDC's Nigerian domiciliary account.

“Payments for all digital/transfer purchases of foreign currency by a BDC shall be by transfer to the customer's Naira account. If the customer is non-resident (whether Nigerian or not), a BDC may 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.

“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.

“Forex sales by BDCs must fall within the scope of personal travel allowance (PTA), and business travel allowance (BTA), provided that a person who receives BTA on behalf of a non- individual entity shall not be entitled to PTA for the same period,” the apex bank stated.