The Central Bank of Nigeria (CBN) has issued its approved guidelines to regulate the activities of Bureau de Change (BDC) operators in the country.
In its new circular released on Wednesday, the minimum capital base for Tier-1 BDCs is N2bn while that of Tier-1 is set at N500m. Also, the mandatory caution deposit of N200m for tier-1 BDC licence holders was removed while the N50m for tier-2 licence holders was waived.
In the circular to BDCs, CBN’s Director of Financial Policy and Regulation, Haruna Mustafa, said the approved guidelines take effect from June 3, 2024.
The apex bank directed existing BDCs to reapply for new licenses and meet the minimum capital requirements for the license category applied for within six months from June 3, 2024.
The CBN banned BDC operators from street trading, international outward transfers, financing of political activities, dealing in gold or other precious metals, dealing in crypto assets or any other virtual assets, amongst others.
The CBN insisted that BDCs must channel their transactions through digital means once it is above USD500.
“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,” the circular partly read.
“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 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.”
The CBN insisted that BDCs must channel their transactions through digital means once it is above USD500.
The Nigerian currency has experienced an unprecedented volatility in the last one year since the assumption of President Bola Tinubu. The Naira, which was around N700/1$ in May 2023, descended to an all-time low of about N1,900/1$ in February 2024 before it climbed in April to about N1,100/$1 and then embarked on a sudden descent to N1,600/$1 in May 2024.
CBN Governor, Olayemi Cardoso, on Tuesday, attributed the instability in the foreign exchange market to “seasonal demands”.
