Affairs TV News

News Beyond Headlines


CBN Mandates Reapplication for Bureau De Change Licenses

The Central Bank of Nigeria (CBN) has directed all existing Bureau De Change (BDC) operators to reapply for new licenses under updated guidelines. This announcement was made on Wednesday in a circular signed by Haruna Mustafa, Director of the Financial Policy and Regulation Department.

BDC operators have expressed dissatisfaction with the new licensing guidelines, arguing they deviate from best global practices. Nevertheless, the CBN maintains that the changes aim to streamline BDC operations and improve financial accessibility.

Under the new guidelines, BDCs must adhere to corporate governance standards and anti-money laundering, counter-terrorism financing, and counter-proliferation financing rules. This directive follows a recent decision by the Monetary Policy Committee to raise the benchmark lending rate to 26.25% to address escalating inflation.

CBN Governor Olayemi Cardoso, in the communiqué, attributed recent foreign exchange market volatility to seasonal demand and the natural interplay between supply and demand. The naira has seen significant depreciation, trading between 1,400/$ and 1,600/$ in both official and parallel markets over the last two weeks.

Effective June 3, the new guidelines eliminate the mandatory caution deposit and introduce two BDC license categories: Tier 1 and Tier 2.

A Tier 1 BDC can operate nationwide, establish branches, and appoint franchisees with CBN approval, maintaining a minimum one-kilometre distance between branches and franchisees. They must also comply with specific franchising standards.

A Tier 2 BDC is limited to operating within one state or the FCT and can establish up to five branches with CBN approval. They must maintain a minimum one-kilometre distance between branches and are not permitted to appoint franchisees.

Existing and new BDCs must meet the capital requirements for their license category within six months. Tier 1 BDCs must have a minimum capital of N2 billion, a N1 million non-refundable application fee, and a N5 million non-refundable license fee. Tier 2 BDCs need a minimum capital base of N500 million, a N0.25 million non-refundable application fee, and a N2 million non-refundable license fee.

BDC operators are also allowed to participate in the Nigerian foreign exchange market as dealers, following approval. They can source dollars from individuals, but transactions involving $10,000 or more must declare the source and comply with AML/CFT/CPF regulations. BDCs are required to display their buying and selling rates and maintain accurate transaction records.

Aminu Gwadebe, President of the Association of Bureau De Change Operators of Nigeria, criticized the new requirements as excessive and inconsistent with global standards. He warned of potential negative impacts on the market and called for a more reasonable timeline for compliance.

The CBN stressed that these guidelines are crucial for ensuring transparency and regulatory compliance within the BDC sector.

About The Author


Your email address will not be published. Required fields are marked *