In a move aimed at regulating the retail foreign exchange market and enhancing transparency, the Central Bank of Nigeria (CBN) has issued new guidelines limiting Bureau de Change (BDC) operators to purchasing a maximum of $25,000 per week from a single authorised dealer bank.
The directive, detailed in a circular from the Trade and Exchange Department, was signed by Dr. W. J. Kanya, Acting Director of the department, and took immediate effect on Wednesday.
Key Guidelines for BDC Operators
Single Dealer Restriction: BDCs must select one authorised bank per week for forex purchases. Buying from multiple banks is prohibited, and violations will attract sanctions.
Forex Pricing Regulation: BDCs must sell foreign exchange at the prevailing market rate from the Nigerian Foreign Exchange Market (NFEM) window to ensure price stability.
Cap on Profit Margins: The CBN has imposed a 1% cap on the margin BDCs can charge above their purchase price, preventing excessive markups for consumers.
Mandatory Reporting & Compliance Measures
Reporting Obligations:
- Authorised dealer banks must submit weekly forex sales reports to the CBN.
- BDCs must provide daily transaction reports through the Financial Institutions Forex Reporting System (FIFX).
Transaction Restrictions:
- Each end-user is limited to $5,000 per quarter for transactions including Business Travel Allowance (BTA), Personal Travel Allowance (PTA), overseas school fees, and medical expenses.
Anti-Money Laundering (AML) & Know Your Customer (KYC) Rules:
- BDCs must maintain proper transaction records, including Bank Verification Numbers (BVN) of buyers.
- Disbursed amounts must be endorsed in the beneficiary’s international passport to prevent financial crimes.
Strict Penalties for Violations
The CBN has warned that any BDC or authorised dealer bank that fails to comply with these rules—including forex diversion—will face severe penalties, including the possible suspension of their operating licence.
CBN’s Broader Strategy for the Forex Market
This new directive aligns with the CBN’s ongoing efforts to stabilize the naira, enhance market transparency, and curb speculation. It follows the recent extension of FX sales to BDCs until May 30, 2025, further signaling the apex bank’s commitment to forex market reforms.
