Nigeria: CBN Requires Disclosure for FX Sales of $10,000+ to BDCs

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The Central Bank of Nigeria (CBN) has issued a directive mandating sellers of foreign exchange (FX) to Bureau De Change (BDC) entities for amounts equivalent to $10,000 and above to disclose the sources of their forex.

Haruna Mustapha, Director of the Financial Policy and Regulation Department at the CBN, made this announcement as part of a revised regulatory framework aimed at curbing excesses in the activities of BDCs and mitigating uncertainty in the foreign exchange market.

Mustapha emphasized that sellers meeting this threshold would also need to adhere to all Anti-Money Laundering/Combating the Financing of Terrorism (AML/CFT) regulations.

He highlighted that these guidelines represent a significant enhancement to the regulatory structure governing BDC operations, forming part of ongoing reforms within the Nigerian foreign exchange market. Among the revisions, the guidelines address permissible activities, licensing prerequisites, corporate governance standards, and AML/CFT provisions for BDCs.

“These guidelines also introduce new record-keeping and reporting requirements, among other provisions,” Mustapha stated.

The guidelines categorically stipulate that individuals or entities may not engage in BDC operations in Nigeria without prior authorization from the CBN. Furthermore, BDCs are defined as companies licensed by the CBN exclusively for retail foreign exchange transactions within Nigeria.

The guidelines prohibit commercial, merchant, non-interest, and payment service banks, as well as other Financial Institutions (OFIs), including holding companies and payment service providers, from promoting BDCs. Additionally, employees of financial services regulatory and supervisory agencies, regulated financial services providers, and governmental personnel at all levels are barred from promoting BDCs.

Authorized sources for BDCs to acquire foreign currency include tourists, diaspora returnees, expatriates with forex inflows from work, travel, investment, or domiciliary accounts, among others. International Money Transfer Operators (IMTOs), embassies, authorized foreign currency buyers such as hotels, the Nigerian Foreign Exchange Market (NFEM), and any other sources specified by the CBN are also permissible.

The guidelines explicitly prohibit BDCs from engaging in street trading, maintaining accounts for the public, accepting assets for safekeeping, or offering deposit services or loans to the public in any currency or form. Additionally, retail sale of foreign currencies to non-individuals (excluding Basic Travel Allowance), international outward transfers, offshore business engagement, and foreign correspondent relationships with foreign entities are deemed impermissible activities for BDCs.

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