The Central Bank of Nigeria (CBN) has issued new regulations limiting Bureau de Change (BDC) operators to purchasing up to $25,000 weekly from AuthoriSed Dealer Banks (ADBs) for eligible transactions. The move aims to enhance transparency and curb speculative activities in the forex market.
A circular dated February 5, 2025, from the CBN’s Trade and Exchange Department outlines the new guidelines. Signed by Dr. W.J. Kanya, the Acting Director of the department, the circular mandates BDCs to source their foreign exchange (FX) from a single authorised dealer bank each week. This restriction is designed to ensure better oversight and reduce potential misuse of forex.
Under the new rules, ADBs are required to sell forex to BDCs at the prevailing rate in the Nigerian Foreign Exchange Market (NFEM) window to maintain consistency in pricing. BDCs are also restricted to charging end-users a maximum margin of 1 per cent above their purchase price. This is intended to prevent excessive charges and promote fairness in the market.
The CBN has also set stringent reporting requirements for both ADBs and BDCs to enhance market transparency. Authorised dealers must submit weekly reports on forex sales to BDCs in a specified Excel format to the CBN. Additionally, BDCs are required to submit daily returns on forex purchases and sales through the Financial Institutions Forex Reporting System (FIFX). These measures aim to track forex flows and minimise illicit activity in the currency market.
The circular further specified that BDCs can only disburse purchased FX for particular transactions, with a maximum of $5,000 per transaction, quarterly. Eligible transactions include Business Travel Allowance (BTA), Personal Travel Allowance (PTA), overseas school fees, and overseas medical fees.
To ensure proper documentation and combat financial crimes, the CBN has instructed BDCs to keep detailed records of each transaction, including the Bank Verification Number (BVN) of end-users and the endorsement of the disbursed amount in the beneficiary’s international passport. The CBN reiterated that all BDC operators must adhere to Anti-Money Laundering (AML) laws and Know Your Customer (KYC) guidelines to prevent fraud.
The apex bank has warned that BDCs and ADBs that fail to comply with the new guidelines, including any attempt to divert forex, will face severe sanctions, including the suspension of their dealership licenses.
