CBN move to suspend license of defaulting BDCs, banks over violation of new Forex rules

The Central Bank of Nigeria (CBN) has issued a strong warning that it will suspend the licenses of any Bureau de Change (BDC) operators or authorised dealer banks that divert funds or violate the newly introduced foreign exchange trading guidelines.

In a statement signed by its Acting Director of Trade and Exchange, Dr. W.J. Kanya, the CBN emphasized that the new guidelines were introduced following its decision to temporarily allow existing BDCs to purchase foreign exchange from authorised dealers. However, this access is limited to a weekly cap of $25,000.

In addition, the apex bank also pegged the maximum disbursement per transaction in BDCs at $5,000 quarterly.
The statement reads in part: “Further to the Circular Referenced TED/FEM/FPC/001/030 dated December 19, 2024, which granted temporary access to existing BDCs to the Nigerian Foreign Exchange Market, NFEM, for the purchase of FX from Authorised Dealers, subject to a weekly cap of USD25,000.00, the following modalities/guidelines shall apply.

“Authorised Dealers shall sell foreign exchange cash to BDCS subject to a maximum of $25,000.00 (Twenty-five Thousand United States Dollars) to a BDC per week.

“A BDC shall approach its preferred Authorised Dealer Bank (ADB) and can only procure the said amount from only that bank of its choice in a week. Any breach of this condition will attract appropriate sanction.
“The selling rate by the Authorised Dealers to BDCs shall be the prevailing day rate at NFEM window;
“Foreign exchange cash purchased by BDCs from Authorised Dealer Banks shall be sold to foreign exchange end-users at a rate not exceeding one (1) percent margin above the buying rate;
“For the avoidance of doubt, the one (1) percent margin stated in (3) above shall be applicable to all funds to be retailed by BDCs regardless of sources of fund;
“Authorised Dealer Banks shall continue to render weekly returns on sales to BDCs as specified in the attached excel format to Trade & Exchange Department, CBN, Abuja through this email: teddmo@cbn.gov.ng

“All BDCs are required to render daily returns on foreign exchange purchases from Authorised Dealer Banks and other sources as well as sales (utilization) on the Financial Institutions Forex Reporting System (FIFX); Funds purchased by BDCs shall be disbursed for the following eligible transactions only. In all cases, the maximum disbursement per transaction shall not exceed $5,000.00 quarterly.

“Business Travel Allowance/Personal Travel Allowance; Overseas School fees; and Overseas Medical fees. Records shall be maintained for all transactions by the BDCs showing the BVN of the end-user, including endorsement of the amount disbursed in the International Passport of the beneficiary; it is to be noted that Authorised Dealer Banks and BDC operators shall ensure strict compliance to the provisions of Anti-Money Laundering Laws and observance of appropriate KYC principles in the handling of these transactions.

Any Authorised Dealer and BDC that diverts funds or violates the provision of these guidelines shall attract appropriate sanction including suspension of its dealership license.”