The Central Bank of Nigeria (CBN) has issued detailed operational guidelines for Bureau De Change (BDC) operators to purchase foreign exchange from authorised dealer banks through the Nigerian Foreign Exchange Market (NFEM).
The framework introduces an electronic tracking portal and compliance requirements to improve transparency, efficiency, and liquidity in the retail foreign exchange market.
|
|
In a circular addressed to authorised dealer banks and licensed BDC operators on Thursday, the apex bank said the guidance follows its 10 February circular, which granted BDCs access to foreign exchange from the NFEM through authorised dealer banks of their choice.
According to CBN, the new framework provides the regulatory guidance and operational modalities for implementing the policy and supporting sustained liquidity in the retail segment of the foreign exchange market.
|
|
|
|---|
CBN said the guidelines take immediate effect and apply to all licensed BDCs, authorised dealer banks, and all foreign exchange transactions conducted between them through the NFEM.
Framework
Under the framework, CBN will deploy a centralised electronic platform known as the FX BDC Purchase Tracker (FXBT) to enable BDCs to submit purchase requests electronically and provide real-time transaction data for regulatory oversight.
The apex bank said every licensed BDC is free to purchase foreign exchange from any authorised dealer bank of its choice, stressing that banks must not impose exclusivity arrangements or referral fees.
“No Authorised Dealer Bank shall impose exclusivity arrangements, referral fees, or any condition that restricts a BDC’s freedom to select its preferred counterparty bank,” CBN said.
Requirements
CBN said only BDCs with valid and subsisting licences would be eligible to participate in the framework, while operators under regulatory sanctions or with suspended licences would be excluded until such restrictions are lifted.
Before executing any foreign exchange transaction, authorised dealer banks are required to complete Know Your Customer (KYC) and Customer Due Diligence (CDD) checks on BDCs.
Banks must also obtain and retain the BDC’s licence certificate, Tax Identification Number (TIN), Corporate Affairs Commission (CAC) incorporation documents, beneficial ownership information, and details of principal officers.
The regulator added that enhanced due diligence should be conducted for higher-risk BDCs, while KYC records must be updated annually or whenever there are significant ownership or management changes.
“No foreign exchange shall be disbursed to any BDC that has not satisfied the Bank’s KYC and due diligence requirements,” it stated.
Settlement rules
The guidelines require authorised dealer banks to acknowledge purchase requests within two business hours through the electronic portal and immediately communicate approval or rejection.
Where requests are rejected, banks must provide reasons, including incomplete KYC documentation, unresolved compliance issues, internal risk considerations, or where the BDC has already reached the weekly $150,000 purchase limit through another bank.
CBN also directed that all settlements between banks and BDCs, as well as between BDCs and customers, must be conducted exclusively through accounts held with licensed financial institutions.
It prohibited third-party transactions, stating that foreign exchange purchased by a BDC must be credited only to its registered settlement account.
“Disbursement to any account other than the BDC’s own registered account shall constitute a regulatory violation and shall be reported immediately to the CBN,” the circular stated.
The apex bank further directed BDCs not to retain unused foreign exchange purchased from the NFEM.
It said any unutilised balance must be sold back to the market within 24 hours after the expiry of the utilisation period.
“Failure to comply shall attract regulatory sanctions, including but not limited to forfeiture of the unutilised balance and suspension of the BDC’s NFEM access,” CBN said.
The bank clarified that the 24-hour rule also applies to foreign exchange obtained from other autonomous sources.
Reporting, sanctions
Under the framework, licensed BDCs are required to continue submitting weekly electronic returns to the CBN detailing total foreign exchange purchased, sales to end-users by transaction category, unutilised balances and how they were disposed of, as well as settlement breakdowns.
CBN warned that violations of the guidelines could attract sanctions under the Banks and Other Financial Institutions Act (BOFIA) 2020 and the Foreign Exchange Act.
READ ALSO: CBN approves weekly sale of $150,000 to BDCs
These include monetary fines, suspension of NFEM access, withdrawal or suspension of BDC licences, revocation of authorised dealer status for banks found complicit in violations, and referral to law enforcement agencies where criminal conduct is suspected.
The Trade and Exchange Department will oversee compliance through on-site and off-site examinations, which may be conducted without prior notice.
CBN added that, while BDCs may continue their existing relationships with authorised dealer banks, all future transactions must comply with the new operational framework with immediate effect.
