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In fresh regulations, CBN directs sellers of $10,000 and above at BDCs to declare sources of funds

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By Samuel Bankole

In a bid to streamline and fortify the foreign exchange market, the Central Bank of Nigeria (CBN) has rolled out a revised regulatory framework, stipulating that sellers of foreign exchange to Bureau de Change (BDC) entities, amounting to $10,000 and above, must declare the sources of their forex.

The regulatory overhaul, disclosed by the apex bank on Friday, aims to curb excesses within the BDC sector and instill stability in the forex market.

According to the CBN, sellers are now obligated to adhere to Anti-Money Laundering/Combating the Financing of Terrorism (AML/CFT) regulations and comply with existing foreign exchange laws and regulations.

This move signifies a strategic step by the CBN to bolster the regulatory landscape governing BDC operations, aligning with broader reforms within the Nigerian foreign exchange market.

Key highlights of the revised guidelines encompass adjustments to permissible activities, licensing requirements, corporate governance standards, and AML/CFT provisions tailored for BDCs.

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The guidelines explicitly outline the approved sources from which BDCs may obtain foreign currencies, encompassing tourists, diaspora returnees, expatriates, residents, International Money Transfer Operators (IMTOs), authorized foreign currency buyers like hotels and embassies, the Nigerian Foreign Exchange Market (NFEM), and other sources specified by the CBN.

Furthermore, the guidelines allow customers to transfer foreign currencies from their individual domiciliary accounts with Nigerian banks to BDCs.

Notably, all digital or transfer-based purchases of foreign currencies are to be credited to the BDC’s Nigerian domicile account, with corresponding payments executed through transfers to customers’ Naira accounts.

For non-resident customers, BDCs are authorized to issue prepaid NGN cards, subject to specified credit and cumulative limits in alignment with Know Your Customer (KYC) requirements.

In the case of cash purchases exceeding USD 500, payments to customers will be conducted through transfers to their Naira bank accounts, with the provision for prepaid NGN cards for non-resident customers, subject to relevant limits and KYC requirements. However, for cash purchases below the USD 500 threshold, payments may be made in cash.

This comprehensive regulatory framework overhaul positions the CBN at the forefront of market governance, reinforcing confidence in the foreign exchange sector while addressing potential loopholes and uncertainties.

As the global financial landscape continues to evolve, such measures are crucial to maintaining stability and transparency within Nigeria’s forex ecosystem.

(Edited by Oludare Mayowa; omayowa@globalfinancialdigest.com; Newsroom: +234 8033 964 138)

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