Rédaction Africa Links 24 with Ayodeji Adegboyega
Published on 2024-02-25 20:41:34
The Central Bank of Nigeria (CBN) recently announced new directives regarding the minimum capital requirements for Bureau de Change (BDC) operators in the country. The Tier 1 license holders will now be required to have a capital of N2 billion, while Tier 2 license holders must have N500 million. This marks a significant increase from the previous threshold of N35 million for a general license. These changes are in line with the revised Regulatory and Supervisory Guidelines for BDC Operations in Nigeria, which are aimed at enhancing the regulatory framework in the foreign exchange market.
The powers for these directives are conferred to the CBN under Section 56 of the Banks and Other Financial Institutions Act, 2020 (BOFIA). The guidelines cover various areas such as permissible activities, licensing requirements, corporate governance standards, and anti-money laundering provisions for BDCs. Under the new guidelines, Tier 1 BDCs can open branches nationwide and appoint franchisees with CBN approval, while Tier 2 BDCs can operate in one state with up to three locations but cannot appoint franchisees.
In terms of capital requirements, Tier 1 operators must deposit a caution deposit of N200 million, with application and license fees of N1 million and N5 million, respectively, and an annual renewal fee of N5 million. Tier 2 operators, on the other hand, must deposit N50 million for caution, with application and license fees of N250,000 and N2 million, respectively, and an annual renewal fee of N1 million.
The guidelines also address the composition of the board of BDCs, requiring a minimum of three directors and a maximum of five. The new guidelines emphasize diversity and women’s empowerment on boards, prohibit one-gender boards, and encourage the disclosure of board memberships in other entities. Directors are also required to submit written statements to the chairman in case of resignations, and the board must appoint replacements within 90 days to ensure the majority remains intact.
On the operational front, the guidelines mandate BDCs to verify customers’ BVN or Tax Identification Number (TIN) for all transactions by residents using electronic retrieval. They also require sellers of foreign currency above $10,000 to declare the source of the funds, promoting transparency in the market. BDCs at Border Control Areas are instructed to transfer Naira directly to customers’ accounts or issue prepaid Naira cards for non-resident visitors without active accounts.
The guidelines also outline penalties for non-compliance, including revocation of licenses for operators using unauthorized accounts or exceeding specified foreign exchange limits. The CBN aims to ensure compliance with these regulations to foster transparency and combat money laundering in the foreign exchange market.
While these new guidelines present challenges, such as increased barriers to entry for BDC operators, experts like Paul Alaje, Chief Economist at SPM Professionals, agree that they are necessary for a more robust regulatory framework. Going forward, the CBN may need to make adjustments to ensure the effective implementation of these guidelines and address any potential loopholes in the system.
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