In a strategic move to enhance transparency and curb potential misuse in the foreign exchange (forex) market, the Central Bank of Nigeria (CBN) has issued new guidelines permitting Bureau de Change (BDC) operators to purchase up to $25,000 weekly from Authorized Dealer Banks (ADBs). This directive, detailed in a circular dated February 5, 2025, and signed by Dr. W. J. Kanya, the Acting Director of the Trade & Exchange Department, outlines several compliance measures aimed at regulating the forex market effectively.
Key Provisions of the New Guidelines:
- Single Dealer Engagement: BDCs are mandated to source their weekly forex allocation from a single authorized dealer bank. This measure is designed to prevent speculative activities and ensure better oversight. Non-compliance will attract appropriate sanctions from the CBN.
- Pricing Consistency: Authorized dealers are required to sell forex to BDCs at the prevailing rate in the Nigerian Foreign Exchange Market (NFEM) window, ensuring uniformity in pricing across the market.
- Margin Cap: BDCs are permitted to sell forex to end-users at a rate not exceeding a 1% margin above their purchase price. This cap applies to all forex transactions conducted by BDCs, regardless of the source of the funds.
- Mandatory Reporting: To enhance market transparency, both authorized dealer banks and BDCs are required to submit regular reports. Authorized dealers must provide weekly reports of their forex sales to BDCs in a specified Excel format to the CBN’s Trade and Exchange Department via teddmo@cbn.gov.ng. BDCs are obligated to render daily returns on forex purchases and sales through the Financial Institutions Forex Reporting System (FIFX).
- Eligible Transactions: BDCs can only disburse purchased forex for specific transactions, with a maximum of $5,000 per transaction, quarterly. These transactions include Business Travel Allowance (BTA), Personal Travel Allowance (PTA), overseas school fees, and overseas medical fees. Additionally, BDCs are required to endorse the amount disbursed in the international passport of the beneficiary to ensure proper tracking.
- Compliance with Anti-Money Laundering Laws: Both authorized dealer banks and BDC operators are instructed to adhere strictly to Anti-Money Laundering laws and Know Your Customer (KYC) principles in handling forex transactions. Violations, including forex diversion, will result in severe sanctions, such as the suspension of dealership licenses.
These measures underscore the CBN’s commitment to fostering a transparent and efficient forex market in Nigeria. By implementing these guidelines, the apex bank aims to ensure that forex resources are utilized appropriately and that the market operates within the established regulatory framework.
For more detailed information, stakeholders are encouraged to review the official circular issued by the CBN.
