The Central Bank of Nigeria on Friday released the regulatory and supervisory guidelines for Bureau De Change Operations in the country. Below are the major takeaways;
Non-Eligible Promoters
Banks, NGOs and government agencies are not allowed to have equity holding or any holding at all in BDCs.
Permissible activities
BDCs cannot participate in the financial markets as they are not allowed to accept deposits, give out loans or deal in valuables like gold. However, they are allowed to take part in forex trading, release prepaid cards to people while also serving as their POS operators.
Sources of Foreign Currencies
They are also allowed to get foreign currencies from the authorities, the embassies, dealers, etc but need to declare their source when they deal in foreign transactions above $10,000.
Sale of Foreign Currencies
75% of their Currency sales for travel, medical bills, school fees, etc must be through transfer and that is limited to a certain quota per customer yearly while the remaining 25% can be in cash.
Categories of BDCs
There are 2 tiers of BDCs;
Tier 1- This is for National presence
Tier 2- they can only be in a state with maximum of 3 locations.
Financial Requirements
Two billion naira is the least amount required for Tier 1 while 500 million naira with other variables is the requirement for Tier 2.
Licensing Process
This process requires 2 steps. They are approval principle and final license.
Corporate Governance
Rules and requirements on board and management composition are highlighted and must be followed.
Operations
Customers verification must be done. They must keep customers transaction records, as they interface with Central Bank systems.
Supervision
They must followed the specified guidelines by the Apex bank and have their records open and ready for inspection anytime.
Franchising Standards
Guidelines and policies must be followed as regards the appointment of franchises for Tier 1 BDCs.
Prudential Requirements
There are standards and certain requirements they need to reach like fixed assets, borrowings, dividend payments etc.
AML/CFT Requirements
They must obey AML/CFT regulations on policies, monitoring, reporting etc.
Penalties
Failure to comply will lead to revocation of license amongst many other punishments.
Summing up, these guidelines is in line with the Central Bank to control and manage all BDCs operations from licensing to their source of funds and transactions.
