Bureau de Change operators decry new CBN-approved guidelines

The news:

Following consultation with stakeholders, the Central Bank of Nigeria (CBN) has directed all existing Bureau de Change (BDC) operators in the country to reapply for new licences in their preferred category.
The new CBN-approved guidelines will take effect on June 3, 2024. Besides, within six months of the date, the apex bank required all existing BDCs to meet the minimum capital requirements for their licence category.
The directive was issued on Wednesday, May 22, 2024, in a circular signed by Haruna Mustafa, Director of the Central Bank of Nigeria’s Financial Policy and Regulation Department.
BDC operators are reportedly kicking against the new licencing guidelines, claiming they contradict best global practices.

Aminu Gwadebe, President of the Association of Bureau de Change Operators of Nigeria (ABCON), lamented in an interview with a publication, “The requirement is huge. It is not in line with global practices. Capitalisation in the UK is 50,000 pounds; in Kenya, it is $50,000 and so on. I don’t think it reflects global practice. A BDC is not a deposit taker; it is only buying and selling.”

Gwadebe also noted that the deadline given by the CBN is short.

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According to the CBN, the current adjustments in the approved guidelines, which are a review of the draft released (pdf) in February 2024, have two goals: to streamline BDC operations and improve financial accessibility.

“As part of reforms to re-position the Bureau De Change (BDC) sub-sector to play its envisioned role in the foreign exchange market in Nigeria, the Central Bank of Nigeria (CBN) issued the Draft Operational Guidelines for BDC Operations in Nigeria in February 2024, for stakeholder comments/inputs,” a part of the circular read.

Tier-1 BDC operators can operate nationwide with a minimum capital base of ₦2 billion, while Tier-1 operators who can only operate in one state or the FCT have a minimum capital base of ₦500 million, according to approved guidelines.

The CBN has removed the previously required caution deposit of 200 million for Tier-1 BDC licence holders and 50 million for Tier-2 licence holders.

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The CBN also prohibited BDC operators from engaging in street trading, international outward transfers, political financing, dealing in gold or other precious metals, and dealing in crypto assets or any other virtual assets, among other things.

The CBN has warned BDC operators that all transactions exceeding $500 must now be conducted through digital channels.

The regulator reiterated its expectation that all BDC operators adhere to corporate governance standards and anti-money laundering, counter-terrorism financing, and counter-proliferation financing regulations.