CBN has threatened to suspend top Nigerian Banks and BDCs Licenses.
NewsOnline Nigeria reports that the Central Bank of Nigeria (CBN) has announced that it will suspend the dealership licenses of any Bureau de Change (BDC) operators or Authorised Dealer banks found diverting funds or violating its newly implemented foreign exchange trade guidelines.
In a statement issued on Tuesday, the CBN, through its Acting Director of Trade and Exchange Department, Dr. W.J Kanya, emphasized that these guidelines were introduced following the temporary approval granted to existing BDCs to purchase foreign exchange from Authorised Dealers, with a weekly limit of $25,000.
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Additionally, the apex bank has set a maximum disbursement limit of $5,000 per transaction on a quarterly basis for BDCs.
Key Guidelines for Foreign Exchange Transactions
The CBN outlined the following conditions for foreign exchange transactions involving BDCs and Authorised Dealer Banks:
- Authorised Dealers are permitted to sell a maximum of $25,000 per week to each BDC.
- A BDC must purchase foreign exchange from only one preferred Authorised Dealer Bank per week, and any violation of this rule will result in sanctions.
- The selling rate for foreign exchange from Authorised Dealers to BDCs must align with the prevailing daily rate at the Nigerian Foreign Exchange Market (NFEM) window.
- BDCs must sell foreign exchange to end-users at a maximum margin of 1% above the buying rate.
- The 1% margin limit applies to all funds retailed by BDCs, regardless of their source.
- Authorised Dealer Banks are required to submit weekly reports on sales to BDCs using the specified reporting format, sending them to the CBN’s Trade & Exchange Department via teddmo@cbn.gov.ng.
- BDCs must also submit daily transaction reports detailing foreign exchange purchases from Authorised Dealer Banks and other sources, as well as utilization records, on the Financial Institutions Forex Reporting System (FIFX).
Permitted Uses and Compliance Measures
Funds obtained by BDCs can only be disbursed for the following transactions, with a quarterly transaction limit of $5,000:
- Business Travel Allowance (BTA) / Personal Travel Allowance (PTA)
- Overseas school fees
- Overseas medical fees
BDC operators must maintain detailed records of all transactions, including:
- The Bank Verification Number (BVN) of each end-user.
- Endorsement of the disbursed amount in the beneficiary’s international passport.
- The CBN also reiterated the importance of strict adherence to Anti-Money Laundering (AML) laws and Know Your Customer (KYC) protocols in handling foreign exchange transactions.
Penalties for Non-Compliance
The CBN warned that any Authorised Dealer Bank or BDC operator found violating these guidelines, including fund diversion, will face severe sanctions, which may include suspension of their dealership licenses.