CBN Imposes N2 Billion Licence Fee on BDCs Amid Forex Crisis

The Nigerian Central Bank (CBN) has implemented strict policies for Bureau De Changes (BDCs) in an effort to address the nation’s foreign exchange issue.

All BDC operators and other financial sector players received a new set of rules on Friday from the apex bank’s Financial Policy and Regulation Department.

The guidelines state that N2 billion in capital is needed for BDC licenses in Tier 1 and N500 million in Tier 2 categories.

Other guidelines are:

– Non-Eligible Promoters: Entities like banks, government agencies, NGOs are not allowed to have ownership stake in BDCs.

– Permissible Activities: BDCs can buy and sell foreign currencies, issue prepaid cards, serve as cash points for money transfer operators etc. They cannot take deposits, grant loans, deal in gold or engage in capital market activities.

– Sources of Foreign Currencies: BDCs can source forex from authorized dealers, travellers, hotels, embassies etc. Large transactions above $10,000 require declaration of source.

– Sale of Foreign Currencies: BDCs can sell forex for travel, medical bills, school fees etc up to specified limits per customer annually. At least 75% of sale must be via transfer, 25% can be cash.

– Categories of BDCs: There are 2 tiers of BDCs – Tier 1 with national presence, branches and franchises; Tier 2 restricted to 1 state with max 3 locations.

– Operations: Must verify customer identity, keep transaction records, connect to CBN systems, display rates clearly etc.

– Supervision: Specified regulatory returns must be rendered, records available for inspection, compliance with guidelines required.

– Prudential Requirements: Specified limits on open position, fixed assets, borrowings, dividend payment etc.

– AML/CFT Requirements: Must comply with AML/CFT regulations on policies, monitoring, reporting etc. [CONTINUE READING HERE]