CBN Clamps Down on BDC Operators' Street Trading Activities

Olayemi Cardoso

BDC operators are prohibited from street trading by CBN

Street trade has been outlawed by Bureau De Change (BDC) operators by the Central Bank of Nigeria (CBN).

The CBN has also prohibited BDC operators from trading in gold or other precious metals, financing political activities, performing international external transfers, and transacting with cryptocurrency or any other virtual asset, among other things.

These actions were a part of the criteria that the CBN adopted in order to control the BDC operators' operations around the nation.

BDCs have to transact any sum above $500 digitally, according to CBN regulations.

The circular partly read: “As part of reforms to re-position the Bureau De Change (BDC) sub-sector to play its envisioned role in the foreign exchange market in Nigeria, the Central Bank of Nigeria (CBN) issued the Draft Operational Guidelines for BDC Operations in Nigeria in February 2024, for stakeholder comments/inputs.

“Following the conclusion of the stakeholder consultations and in the exercise of the powers conferred on it by Section 56 of the Banks and Other Financial Institutions Act (BOFIA) 2020, the CBN hereby issues the attached Regulatory and Supervisory Guidelines for Bureau De Change Operations in Nigeria 2024 for compliance by all Nigeria 2024 for compliance by all operators and promoters of proposed BDCs in Nigeria.

“The guidelines, amongst others, introduce new licensing requirements and categories of BDCs as well as revise the permissible activities, financial requirements, corporate governance requirements and AML/CFT/CPF provisions for BDCs.

“All existing BDCs shall: Re-apply for a new license according to any of the Tiers or license categories of their choice as provided in the Guidelines.

“Meet the minimum capital requirements for the license category applied for within six (6) months from the effective date of the Guidelines.

“Applicants for New BDC License Applicants for a new BDC license are required to meet the conditions for the grant of license in accordance with the Tier or category of BDC chosen as stipulated in the Guidelines. Receipt and processing of applications for license shall commence from the effective date of the Guidelines.”

BDCs are required by CBN regulations to conduct all transactions involving amounts more than $500 online.

The rules specified: “The following conditions shall apply for the sourcing of foreign currencies by BDCs:

“i. 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 exchange laws and regulations.

“ii. Customers may sell foreign currencies in their individual domiciliary accounts with Nigerian banks to BDCs. All such sales shall be credited to the BDC's Nigerian domiciliary account.

“iii. 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-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 (KYC) requirements, shall apply.

“iv. 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 non-resident (whether Nigerian or not), a BDC shall issue the customer a prepaid NGN card.

The Naira has experienced unprecedented volatility over the last year since President Bola Tinubu took office.

The value of the Nigerian Naira fell to an all-time low of almost N1,900 to $1 in February 2024, from about N700 to $1 in May 2023. After that, it increased to almost N1,100 to $1 in April 2024 before abruptly falling to N1,600 to $1 in May of the same year.

Olayemi Cardoso, the governor of the CBN, blamed seasonal demands for the foreign exchange market's volatility on Tuesday, May 21.