The Central Bank of Nigeria (CBN) issued a directive on Wednesday requiring all existing Bureau De Change (BDC) operators in the country, as well as those intending to enter the market, to reapply for new operating licenses based on updated guidelines.
This move comes alongside the introduction of fresh regulatory and supervisory measures for BDC operations, including a new licensing system and capital requirements.
Under the new framework, BDCs are divided into two tiers, with Tier One allowed to operate nationwide and Tier Two limited to operating in one state or the Federal Capital Territory (FCT). The minimum capital requirement for a national BDC is set at N2 billion, while it’s N500 million for a state-level operator. BDCs are given six months from the effective date of the guidelines to meet the minimum capital requirements for their chosen license category.
These regulatory changes aim to reposition the BDC sub-sector to better contribute to the country’s foreign exchange market. The guidelines introduce new licensing criteria, categories of BDCs, and revised financial requirements, corporate governance standards, and anti-money laundering (AML) provisions.
Additionally, the CBN prohibits certain entities, including banks, financial holding companies, and staff of regulatory agencies, from owning BDCs directly or indirectly.
The guidelines outline specific activities BDCs are allowed to engage in, such as retail sale of foreign currencies for Business Travel Allowance (BTA), but prohibit activities like street-trading of foreign currencies and taking deposits or granting loans to the public. BDCs must also comply with AML/CFT regulations and foreign exchange laws when sourcing foreign currencies, and customers may sell foreign currencies from their domiciliary accounts to BDCs.
Furthermore, the regulations specify the composition of BDC boards, including requirements for gender diversity and the inclusion of independent non-executive directors. BDCs are encouraged to promote gender diversity and women’s economic empowerment in line with Nigerian Sustainable Banking Principles.
Overall, these measures represent the CBN’s efforts to enhance the efficiency and integrity of the BDC sector while promoting sustainable economic development.
