By Milcah Tanimu
In response to the ongoing forex crisis, the Central Bank of Nigeria (CBN) has issued a directive requiring all bureau de change (BDC) operators in the country to reapply for new licences starting from June 3, 2024. This directive also includes meeting the new capital requirements of N2 billion for tier 1 operators and N500 million for tier 2 operators.
The CBN’s move stems from the revised Regulatory and Supervisory Guidelines for BDC Operations in Nigeria, which announced a new minimum capital for BDCs earlier this year in February. A circular issued by the CBN’s director of the Financial Policy and Regulation Department, Haruna Mustafa, yesterday, reiterated this directive.
The guidelines are part of broader reforms aimed at repositioning the BDC sub-sector to effectively function in the Nigerian foreign exchange market. Among other provisions, the guidelines introduce new licensing requirements and categories for BDCs, as well as revise permissible activities, financial requirements, corporate governance standards, and anti-money laundering/combating the financing of terrorism (AML/CFT) provisions for BDCs.
As per the circular, existing BDCs must reapply for a new licence within six months from the effective date of the Guidelines and meet the minimum capital requirements for their chosen licence category. Additionally, new BDC licence applicants must fulfill the conditions specified for their chosen tier or category as outlined in the Guidelines.
Furthermore, BDC operators are required to submit detailed information, including the names of promoters, proposed BDC names, email addresses, and phone numbers of the promoters.
This latest directive follows the CBN’s revocation of licences for 4,173 BDC operators in March due to non-compliance with regulatory provisions. The revocation was attributed to failures such as non-payment of necessary fees, including licence renewal, within stipulated periods, as outlined in the guidelines.
Currently, the number of BDCs in operation stands at 5,690, according to data from the CBN. As the forex crisis continues to unfold, these regulatory measures aim to enhance the stability and efficiency of the foreign exchange market while ensuring compliance and accountability within the BDC sector.