‘No crypto transactions, non-refundable licence fee’ — all the changes in CBN’s BDC guidelines

On May 22, the Central Bank of Nigeria (CBN) announced approved guidelines for bureau de change (BDC) operations.

The approved guidelines, made after consulting with stakeholders in the sector, will take effect on June 3.

According to the CBN, the guidelines revised the permissible activities, licencing requirements, corporate governance and anti-money laundering/combating the financing of terrorism (AML/CFT) provisions for BDCs.

In February, CBN released a ‘Draft Revised Regulatory and Supervisory Guidelines for Bureau De Change Operations in Nigeria’.

One of the directives in the draft version is sellers of the equivalent of $10,000 and above to BDCs must declare the source of the foreign exchange.

Also, CBN said FX sales by BDCs must be for personal travel allowance (PTA), business travel allowance (BTA), medical bills, payment of school fees, and the repurchase of unused naira from a non-resident from whom the BDC had sourced foreign currency in the course of the visit.

However, in the approved document, the apex bank made some changes.

TheCable looks at the adjustments made.

REAPPLY

The financial regulator directed all existing BDCs to reapply for new licences.

“All existing BDCs and promoters of proposed BDCs are to note the following: Re-apply for a new license according to any of the Tiers or license category of their choice as provided in the Guidelines,” CBN said.

“Meet the minimum capital requirements for the license category applied for within six (6) months from the effective date of the Guidelines.”

PURPOSE OF FX SALE 

CBN added professional examination and annual subscriptions to FX demands BDCs can attend to.

“BDCs may sell foreign currency up to the equivalent of USD2,000 to a customer for professional examination fee and annual professional subscription,” CBN said.

“Requests for such payment shall be supported with the following documents: Duly completed e-Form A on the TRMS, Evidence of registration or membership and Invoice from the professional body.”

NO DEALINGS IN CRYPTOCURRENCY

Under the non-permissible activities of BDCs, operators must not engage in cryptocurrency.

The apex bank said dealing in cryptocurrency or with entities dealing in cryptocurrency, crypto assets or such other virtual assets is prohibited.

This action comes amid the recent clampdown on cryptocurrency transactions in the country.

Binance is currently facing an allegation of aiding illicit foreign exchange (FX) transactions.

On May 6, the Securities and Exchange Commission (SEC) announced plans to delist naira from all peer-to-peer (P2P) platforms.

P2P platforms allow two parties to connect directly to engage in financial transactions without the involvement of traditional financial institutions.

The commission said the decision was taken to avoid the level of “manipulation” happening in the cryptocurrency space.

REMOVAL OF FEES

Another adjustment in the guidelines is the removal of the mandatory caution deposit of N200 million for tier-1 licence holders.

The financial regulator also removed the N50 million for tier-2 licence.

Similarly, the CBN withdrew the non-refundable annual licence renewal fee of N5 million and N1 million for tier-1 and tier-2 BDCs, respectively

REDUCTION IN BOARD COMPOSITION

The CBN also reviewed the number of directors in the board composition.

According to the apex bank, compared to the former draft, the approved guideline now permits a minimum of five directors in the tier-1 category of BDCs and seven as the maximum instead of nine as previously stated.

For the tier-2 category, the minimum number of directors was reduced to three as against the five initially prescribed while the maximum was moved from seven to five.

CBN INCREASES TIER-2 BRANCHES

The CBN increased the number of branches tier-2 licence holders are allowed to open — from three to five.

Also, the financial regulator directed both tier-1 and tier-2 BDCs to maintain a minimum distance of one kilometre between their branches.