New Guidelines: CBN Requires Sellers to Declare Sources of Forex Above $10,000

The Central Bank of Nigeria (CBN) has issued new regulations mandating foreign exchange sellers to Bureau De Change (BDC) who deal in amounts equivalent to or exceeding $10,000 to disclose the sources of their forex.

According to Haruna Mustapha, Director of the Financial Policy and Regulation Department at CBN, these measures aim to curb irregularities among BDCs and stabilize the foreign exchange market.

Under the revised guidelines, such sellers must also adhere to Anti-Money Laundering/Combating the Financing of Terrorism (AML/CFT) regulations.

Mustapha highlighted that these guidelines mark a significant step in enhancing the regulatory framework governing BDC operations, as part of broader reforms in the Nigerian foreign exchange market.

The new directives encompass various aspects including permissible activities, licensing criteria, corporate governance standards, and AML/CFT provisions for BDCs.

In addition to introducing stricter record-keeping and reporting requirements, the guidelines stipulate that operating a BDC business in Nigeria requires prior authorization from the CBN.

The guidelines define BDCs as entities licensed by the CBN solely for retail foreign exchange transactions within Nigeria, thereby barring other financial institutions from promoting BDCs.

Moreover, certain categories of individuals, such as staff of financial regulatory bodies, regulated financial services providers, and government personnel, are prohibited from promoting BDCs.

BDCs are permitted to source foreign currency from authorized channels such as tourists, expatriates, International Money Transfer Operators (IMTOs), and designated entities in the Nigerian Foreign Exchange Market (NFEM).

However, they are strictly prohibited from engaging in street trading, holding public funds, or offering banking services such as deposits and loans.

Furthermore, retail sale of foreign currencies to non-individuals, except for specific purposes like Business Travel Allowance (BTA) and international outward transfers, is not allowed under the new guidelines.