One of the key changes introduced by the guidelines is the introduction of tiers for BDCs. Tier 1 BDCs, eligible for a national license, must have a minimum capital requirement of N2 billion. Tier 2 BDCs, on the other hand, will operate within a single state and are required to have a minimum capital of N500 million. Tier 2 BDCs are also limited to a maximum of three branches.
By Abdulrahman Aliagan, Abuja
The Central Bank of Nigeria (CBN) has recently released a draft Revised Regulatory and Supervisory Guideline for Bureaux de Change (BDC) operations in Nigeria. The 51-page document outlines new regulations and requirements aimed at enhancing transparency, efficiency, and accountability in the BDC sector.
One of the key changes introduced by the guidelines is the introduction of tiers for BDCs. Tier 1 BDCs, eligible for a national license, must have a minimum capital requirement of N2 billion. Tier 2 BDCs, on the other hand, will operate within a single state and are required to have a minimum capital of N500 million. Tier 2 BDCs are also limited to a maximum of three branches.
To prevent individuals from holding multiple licenses, the guidelines stipulate that a shareholder can only own a single BDC. This measure aims to ensure fairness and promote healthy competition within the sector.
Under the new regulations, BDCs are now authorized to act as agents for disbursement of funds on behalf of International Money Transfer Operators (IMTOs). Cash transactions up to $500 can be received, while larger amounts must be deposited in bank accounts. BDCs will also have the authority to issue Naira cards, providing more convenience to foreign customers.
In addition, BDCs are now allowed to issue Business Travel Allowances (BTAs) and Personal Travel Allowances (PTAs), expanding their array of services.
As part of efforts to digitize operations and enhance accountability, BDCs will be required to integrate the CBN reporting platform for transaction monitoring and Anti-Money Laundering (AML) purposes. They will also need to integrate with the Federal Inland Revenue Service (FIRS) and Nigeria Inter-Bank Settlement System (NIBSS) for Bank Verification Number (BVN) verification and other related functions.
The new guidelines also set forth requirements for the composition of BDC boards. Tier 1 BDCs must have a minimum of five board members, with a maximum of nine, while Tier 2 BDCs are required to have seven members. The guidelines also promote gender equality, prohibiting boards from being constituted with only one gender. The CBN must now approve directors serving on the board of a BDC as well as another regulated financial institution. Furthermore, the guidelines require board members, particularly independent directors, to have previous experience working in financial institutions.
To promote fair competition and prevent conflicts of interest, banks and other financial institutions are prohibited from holding BDC licenses. The document also emphasizes that the CBN will determine whether certain activities, such as the issuance of BTAs and PTAs, will be exclusively reserved for BDCs.
The issuance of the draft guidelines has significantly raised the standards for obtaining a BDC license, with scrutiny levels akin to those for finance companies and banks. These measures demonstrate the CBN’s commitment to strengthening the BDC sector and ensuring its compliance with global best practices.
The draft guidelines are currently under review, and stakeholders are encouraged to provide their input and feedback to further refine the regulatory framework and address any potential issues or concerns.