Barely three days after the extension of the deadline for Bureau de Change operators to access $25,000 from the Nigerian Foreign Exchange Market (NFEM) for weekly FX purchases by four months to May 30, the regulator, Central Bank, (CBN) is closing in on their activities through new operational guidelines.
The circular, dated February 5, 2025, signed by Dr. W. J. Kanya, the Acting Director of Trade & Exchange Department further outlines compliance requirements by both the BDCs abd Banks to ensure transparency and curb potential forex misuse.
Metrobusinessnews.com (MBN) had reported on Wednesday the dwindling fortunes of the economy ocassioned by sharp decline in the nation’s foreign reserves, urging CBN to beam searchlight on the activities and structures of the operarors in the retail segment of rhe market to ensure transparency and possible round-tripping.
Conseqquently, BDCs must source the allotted forex from a single authorised dealer bank per week, so as to prevent speculative activity that had been the bane when they were buying from many banks without proper records and monitoring.
CBN, promising better oversight of their activities, warned that any operator found violating this rule will face appropriate sanctions.
It advised the banks, as the authorised dealers, to ensure consistency in pricing and good renditions, sell FX to BDCs at the prevailing NFEM rate
In an apparent demonstration of its awareness of abuse of rules by dealers abd it’s redolve to tackle it, CBN has imposed a 1% cap on the margin the BDCs can charge end-users above their purchase price.
This measure is aimed at protecting end-users from excessive charges as well as promotion of a fairer forex market.
However, it insisted that the one per cent margin applies to all forex sold by BDCs, irrespective of its source.
Under the new guidelines, it has become mandatory for both the authorised dealer banks and BDCs to submit reports under specific formats.
Consequently, 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, while BDCs must render daily returns on forex purchases and sales (utilisation) through the Financial Institutions Forex Reporting System (FIFX) to prevent illicit activities as well track fx flows in the market.
The circular also specifies that BDCs can only disburse purchased FX for specific transactions, with a maximum of $5,000 per transaction, quarterly. These include:
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Business Travel Allowance (BTA) / Personal Travel Allowance (PTA)
Overseas school fees
Overseas medical fees
Strengthened anti-money laundering measures
As part of efforts to combat financial crimes, the CBN has directed BDCs to maintain proper records of all transactions, including, Bank Verification Number (BVN) of end-users abd endorsement of the amount disbursed in the beneficiary’s international passport.
The CBN also reiterated that all operators must comply strictly with Anti-Money Laundering (AML) laws and Know Your Customer (KYC) requirements to prevent fraud and illicit financial activities.
CBN 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.
MBN gathered that some banks are currently being investigated over infractions in the fx market.
