CBN Introduces New Forex Guidelines for BDCs

• According to the new regulations, BDCs are required to source the allotted foreign exchange from a single authorized dealer bank per week, with the aim of preventing speculative activity and improving oversight.
• The CBN has also emphasized the importance of Know Your Customer (KYC) measures and cautioned that any BDC found violating these guidelines will face appropriate sanctions.

In an effort to promote transparency and curb potential foreign exchange misuse, the Central Bank of Nigeria (CBN) has released new guidelines allowing Bureau de Change (BDC) operators to purchase up to $25,000 weekly from Authorised Dealer Banks (ADBs) to meet retail market demand.

Eko Hot Blog reports that the circular, signed by Dr. W. J. Kanya, Acting Director of the Trade & Exchange Department at the CBN, outlines compliance requirements and restrictions to ensure stability in the forex market.

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According to the new regulations, BDCs are required to source the allotted foreign exchange from a single authorized dealer bank per week, with the aim of preventing speculative activity and improving oversight.

The CBN has also emphasized the importance of Know Your Customer (KYC) measures and cautioned that any BDC found violating these guidelines will face appropriate sanctions.

Authorized dealers must now sell foreign exchange (FX) to Bureau de Change (BDCs) at the prevailing rate in the Nigerian Foreign Exchange Market (NFEM) window, ensuring consistent pricing across the market.

Additionally, the CBN has set a 1% cap on the margin that BDCs can charge end-users above their purchase price.

This 1% margin applies to all forex sold by BDCs, regardless of its source, ensuring fair pricing for end-users.

To enhance market transparency, the CBN has made reporting requirements mandatory for both Authorised Dealer Banks and BDCs:

“Authorised dealers must submit weekly reports of their forex sales to BDCs in a specified Excel format to the CBN Trade and Exchange Department via teddmo@cbn.gov.ng. BDCs must render daily returns on forex purchases and sales (utilisation) through the Financial Institutions Forex Reporting System (FIFX).

These measures will help the CBN track forex flows and prevent illicit activities in the currency market,” the CBN explained.

The circular also specifies that BDCs can only disburse purchased FX for specific transactions, with a maximum of $5,000 per transaction, quarterly. Which include business Travel Allowance (BTA)/Personal Travel Allowance (PTA), Overseas school fees and Overseas medical fees

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Furthermore, the apex bank has warned that any Authorised Dealer Bank or BDC that violates these guidelines including forex diversion will face severe sanctions, including the suspension of their dealership license.

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