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CBN Mandates Foreign Exchange Sellers to Declare Forex Sources

by Vicky Oselumese
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CBN Mandates Foreign Exchange Sellers to Declare Forex Sources

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The Central Bank of Nigeria (CBN) has implemented a new regulatory framework that requires foreign exchange sellers, specifically Bureau De Change (BDC) operators, to declare the sources of their forex transactions amounting to 10,000 dollars and above.

This move is aimed at curbing the excesses of BDCs and ensuring transparency in the foreign exchange market.

According to Haruna Mustapha, the Director of the Financial Policy and Regulation Department of the CBN, sellers will also need to comply with anti-money laundering/combating the financing of terrorism (AML/CFT) regulations.

These guidelines are part of the ongoing reforms in the Nigerian foreign exchange market and will enhance the regulatory framework for BDC operations.

The revised guidelines cover various aspects such as permissible activities, licensing requirements, corporate governance, and AML/CFT provisions for BDCs.

They also introduce new record-keeping and reporting requirements. The guidelines state that no person can engage in the business of BDC in Nigeria without prior authorization from the CBN.

BDCs are defined as companies licensed by the CBN to conduct retail foreign exchange business in Nigeria.

The guidelines prohibit commercial, merchant, non-interest, and payment service banks, as well as other financial institutions, from promoting BDCs.

BDCs are allowed to acquire foreign currency from authorized sources, including tourists, returnees from the diaspora, expatriates with foreign exchange inflows, international money transfer operators, authorized foreign currency buyers such as embassies and hotels, the Nigerian Foreign Exchange Market, and any other source specified by the CBN.

However, the guidelines strictly prohibit BDCs from engaging in street-trading, maintaining accounts for the public, accepting assets for safekeeping, and providing loans or accepting deposits from the public.

Retail sale of foreign currencies to non-individuals, except for purposes like Basic Travel Allowance (BTA) and international outward transfers, as well as engaging in offshore business or maintaining foreign correspondent relationships, are also not permissible.

This article was updated 2 months ago

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