CBN Permits BDCs to Purchase $25K Weekly with New Compliance Rules

The Central Bank of Nigeria (CBN) has issued new guidelines allowing Bureau de Change (BDC) operators to buy up to $25,000 per week from Authorised Dealer Banks (ADBs) to meet the demand in the retail forex market.

The guidelines, released on February 5 and signed by Dr. W. J. Kanya, Acting Director of the Trade & Exchange Department at the CBN, set out strict compliance requirements meant to promote transparency and prevent forex misuse.

Under these new rules, BDCs must receive their weekly forex allotment from a single authorised dealer. The goal of this move is to stop speculative activities and make sure that there is more oversight.

It is also now needed for ADBs to sell foreign currency to BDCs at the rate set by the Nigerian Foreign Exchange Market (NFEM) window. The CBN has limited the amount of extra money that BDCs can charge end-users to 1% of the purchase price.

This is to protect consumers even more. All forex deals are limited to this amount, no matter where the money comes from. The CBN is also tightening up the rules for reports. Authorised dealers must send weekly reports to the CBN Trade and Exchange Department in a certain Excel file about the foreign exchange they sell to BDCs.

Through the Financial Institutions Forex Reporting System (FIFX), BDCs must report every day on the foreign exchange they buy and sell. These rules about reporting are meant to help the bank keep an eye on foreign exchange flows and stop illegal actions in the currency market.

Also, the rules say that BDCs can only use the bought foreign currency for certain deals, and they can only send a maximum of $5,000 per transaction every three months. Business travel allowances, personal travel allowances, overseas school fees, and overseas medical fees are all examples of activities that are allowed.

The CBN has said that strict punishments will be given for any violation of these rules, including diverting cash. This could mean that the dealership licence for both Authorised Dealer Banks and Bureau de Change owners is taken away.