CBN sets guidelines for BDCs, says N2 billion now capital requirement for tier 1 BDCs, others - Watchtower media

CBN sets guidelines for BDCs, says N2 billion now capital requirement for tier 1 BDCs, others 

The Central Bank of Nigeria (CBN) has released guidelines for the sale of foreign exchange (Forex) by Bureau De Change (BDC) operators within the country.

The guidelines require that sellers of $10,000 and above to  BDCs will have to declare the  source of foreign exchange.
CBN also said the minimum capital requirement for tier 1 BDCs is N2 billion and N500 million for tier 2 BDCs, from N35 million previously set for all BDCs.

The apex bank, in the document released on Friday, February 23, disclosed that the guidelines revise the permissible activities, licensing requirements, corporate governance and anti-money laundering/combating the financing of terrorism (AML/CFT) provisions for BDCs.
The draft guidelines also proposed a  significant enhancement to  the regulatory framework for the operations of Bureau De Change as part of ongoing reforms of the Nigerian foreign exchange market.

According to the circular, commercial, merchant, non-interest, and payment service banks shall not be allowed to participate in the ownership of BDCs — directly or indirectly. 

Also, CBN said other financial institutions (OFIS), including holding companies and payment service providers are not permitted to own BDCs.

Other ineligible entities, the apex bank said, include non-governmental organisations, serving staff of financial services regulatory and supervisory agencies, governments at all levels, public officers, and cooperative societies, among others.

CBN said sellers of the equivalent of $10,000 and above to BDCs are required to declare the source of the foreign exchange “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.

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