The Central Bank of Nigeria (CBN) has recently introduced revised regulatory and supervisory guidelines for Bureau De Change (BDC) operations, aiming to streamline and standardize various aspects of their functioning. These guidelines cover a wide range of areas, from licensing to governance, in alignment with the overarching objectives of the CBN.

Key Highlights:

1. Ownership Restrictions: Entities such as banks, government agencies, and NGOs are barred from holding ownership stakes in BDCs, ensuring the independence and integrity of these entities.
2. Permissible Activities: BDCs are permitted to engage in activities such as buying and selling foreign currencies, issuing prepaid cards, and serving as cash points for money transfer operators, while certain activities like deposit-taking and capital market dealings are prohibited.
3. Foreign Currency Sourcing: BDCs can source foreign exchange from authorized dealers, travelers, hotels, and embassies, with stringent requirements for large transactions above $10,000 to declare their source.
4. Sales Regulations: Strict regulations govern the sale of foreign currencies by BDCs, including limits per customer annually and the mandatory percentage of sales to be conducted via transfer.
5. Categorization: BDCs are classified into two tiers based on their operational scope, with Tier 1 having national presence and Tier 2 restricted to a single state with limited locations.
6. Financial Requirements: Minimum capital requirements are set for each tier, along with specified fees and deposits.
7. Licensing Process: A two-stage licensing process involves an initial approval stage followed by the issuance of a final license, with detailed document requirements at each stage.
8. Corporate Governance: Stringent guidelines dictate board composition, fitness requirements for directors and senior management, ensuring robust corporate governance practices.
9. Operational Standards: BDCs are mandated to adhere to operational standards such as customer identity verification, transaction record-keeping, and integration with CBN systems.
10. Supervision and Compliance: BDCs must submit regulatory returns, maintain accessible records for inspection, and ensure compliance with the regulatory framework.
11. Franchising and Prudential Standards: Standards are outlined for Tier 1 BDCs appointing franchises, along with prudential requirements regarding open positions, fixed assets, and adherence to AML/CFT regulations.
12. Penalties for Non-Compliance: Non-compliance with the regulations may result in severe penalties, including the revocation of licenses, underlining the importance of adherence to the guidelines.

The new regulatory and supervisory guidelines introduced by the CBN mark a significant step towards enhancing transparency, integrity, and efficiency within the BDC sector in Nigeria.

Credit: Mislaw/X