Bureau de Change Operators agents have criticized the new guidelines released by the Central Bank of Nigeria mandating them to re-apply for licenses.
This was announced on Wednesday in a circular issued by the apex bank, which was signed by Haruna Mustafa, the director of the Financial Policy and Regulation Department.
The CBN noted that those adjustments aimed to streamline BDC operations and enhance financial accessibility.
The apex bank noted that the BDCs were expected to adhere to corporate governance requirements and anti-money laundering, counter-terrorism financing, and counter-proliferation financing provisions.
The latest circular comes a day after the Monetary Policy Committee of the apex bank raised the benchmark lending rate to 26.25 per cent to tackle the country’s soaring inflation.
Reacting to the development, Aminu Gwadebe, the president of the Association of Bureau de Change Operators of Nigeria, said:
“The requirement is huge. It is not in line with global practices. Capitalisation in the UK is 50,000 pounds; in Kenya, it is $50,000 and so on. I don’t think it reflects global practice. A BDC is not a deposit taker; it is only buying and selling.
“Also, I’m afraid, we would not go the way of Algeria when they came with such policies and at the end of the day, every other player runs to the open market operations and at the end of the day, Algeria had to look for that open market to even determine their local currency exchange rate. We should be careful so that we will not throw away our experience, capacity and investment,” he warned.
According to the ABCON president, the deadline given to BDCs is short.
“When you are giving other sectors, one year, or two years, why the rush with the sub-sector? The deadline is quite short. It is not feasible and then we should also guide against what we are trying to avoid. The CBN in its mind is checkmating money laundering and we may meet money laundering in the future,” he argued.
According to the new CBN rules, BDCs in the Tier 1 category would be required to have a minimum capital requirement of N2bn, pay N1m as a non-refundable application fee and N5m as a non-refundable licence fee.
The apex bank disclosed that Tier 2 BDCs would be required to have a minimum capital base of N500m, N0.25m as a non-refundable application fee and N2m as a non-refundable licence fee.
The new rules allow BDCs to participate in the Nigerian foreign exchange market as a dealer, following application and approval to the director of the Trade & Exchange Department for an authorised dealership licence.
The CBN said while BDCs could source dollars from individuals, adding, “Sellers of the equivalent of $10,000 and above to a BDC are required to declare the source of the foreign exchange and comply with all AML/CFT/CPF regulations and foreign exchange laws and regulations and customers may sell foreign currencies in their individual domiciliary accounts with Nigerian banks to BDCs. All such sales shall be credited to the BDC’s Nigerian domiciliary account.
“Every BDC shall conspicuously display its buying and selling rates. Such rates shall apply throughout all its branches, and where applicable, its franchisees. Disclaimers or statements by a BDC to the effect that an exchange rate indication is not to be relied on are prohibited. i. A BDC shall not give customers price indications which are misleading or make price comparisons which are not genuine or fair. Every BDC shall maintain adequate records of all its transactions for transparency and compliance with CBN Guidelines, AML/CFT/CPF provisions, circulars or directives,” part of the guidelines stated.
In terms of prudential requirements, the CBN said,
“BDCs are required to observe the following prudential requirements: Net Open Position (NOP) limit in foreign currency of the equivalent of 30 per cent of its shareholders’ funds unimpaired by losses or as may be determined by the CBN from time to time. Limit total borrowing to 50 per cent of shareholders’ funds unimpaired by losses and maintain insurance cover over cash (both naira and foreign currency) in office and in transit, fire, and staff fidelity.”
(Source: Punch Online)
