Central Bank of Nigeria Mandates Forex Sellers to Declare Sources for Transactions Above $10,000 to Bureau De Change

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The Central Bank of Nigeria (CBN) has introduced new regulations mandating foreign exchange sellers to Bureau De Change (BDC) with transactions amounting to the equivalent of 10,000 dollars and above to declare their sources of forex.

Haruna Mustapha, Director of the Financial Policy and Regulation Department at the CBN, announced this as part of a revised regulatory framework aimed at curbing the excesses of BDCs and stabilizing the foreign exchange market.

Mustapha emphasized that such sellers must also adhere to all Anti-Money Laundering/Combating the Financing of Terrorism (AML/CFT) regulations to ensure transparency and integrity in forex transactions.

He explained that the updated guidelines represent a significant enhancement of the regulatory framework governing the operations of BDCs, aligning with ongoing reforms in the Nigerian foreign exchange market. These revisions encompass permissible activities, licensing requirements, corporate governance standards, and AML/CFT provisions for BDCs.

The guidelines stipulate that operating a BDC business in Nigeria requires prior authorization from the CBN and defines a BDC as a company licensed exclusively for retail foreign exchange transactions within the country.

Furthermore, 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. It also restricts certain categories of individuals and entities, such as government personnel and regulatory agency staff, from promoting BDCs.

Authorized sources of foreign currency for BDCs include tourists, diaspora returnees, expatriates, International Money Transfer Operators (IMTOs), authorized hotels, the Nigerian Foreign Exchange Market (NFEM), and other sources specified by the CBN.

However, the guidelines strictly forbid BDCs from engaging in street trading, maintaining public accounts, accepting assets for safekeeping, or offering deposit and loan services to the public. Retail sale of foreign currencies to non-individuals, except for Basic Travel Allowance (BTA) and international outward transfers, is also prohibited, along with offshore business activities and foreign correspondent relationships with foreign establishments.

The CBN aims to foster transparency, accountability, and stability in Nigeria’s foreign exchange market through these regulatory measures while ensuring that BDCs operate within established legal and ethical boundaries.