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CBN Tightens Grip on BDC Operators in Nigeria

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Capital inflows, BDC, customs duty rate

CEM REPORT, FINANCE | The Central Bank of Nigeria (CBN) has announced a new regulatory and supervisory framework for bureau de change (BDC) operators in Nigeria, effective from February 23, 2024. The move is aimed at enhancing the efficiency and effectiveness of BDCs in the foreign exchange market and curbing the activities of unlicensed operators.

Higher Capital Requirements

According to a circular¹ signed by the Director of Financial Policy and Regulation Department, Mr. Kevin Amugo, the CBN has increased the minimum capital requirement for BDCs from ₦35 million to ₦100 million, and the mandatory caution deposit from ₦35 million to ₦50 million. The caution deposit, which is interest-free and refundable, serves as a collateral for any breach of regulatory requirements by the BDCs.

The CBN says the higher capital requirements are necessary to ensure that only genuine and viable BDCs operate in the country, and to reduce the risk of insolvency and fraud.


“This increase in capital base will ensure that BDCs have the necessary financial muscle to meet operational demands and comply with regulations effectively,” said Mr. Kevin Amugo, Director of the CBN’s Financial Policy and Regulation Department.

Stricter Regulations

The circular also stipulates that BDCs must render returns on their transactions to the CBN through the e-FASS application, and comply with the anti-money laundering and combating the financing of terrorism (AML/CFT) regulations. BDCs are required to verify the identity and source of funds of their customers, and report any suspicious transactions to the Nigerian Financial Intelligence Unit (NFIU).

The CBN further states that BDCs are only authorized to buy and sell foreign currencies cash-to-cash, and are prohibited from engaging in wire transfers, drafts or cheques issuance, or any other form of foreign exchange transactions. BDCs are also barred from accepting cash deposits into their bank accounts, or using their accounts for foreign exchange transactions.

The CBN says these measures are intended to prevent the abuse of the BDCs as channels for money laundering, terrorism financing, and currency speculation.

“These measures are crucial for combating illicit financial activities and ensuring the integrity of the foreign exchange market,” stated Mr. Amugo.


The circular warns that any BDC that violates the provisions of the framework will face sanctions, such as suspension, revocation of license, or prosecution. The CBN also urges the public to report any BDC that operates outside the scope of the framework to the CBN or the Economic and Financial Crimes Commission (EFCC).

The CBN says the revised framework is part of its efforts to ensure stability and transparency in the foreign exchange market, and to protect the interest of the public and the economy.

“We are committed to ensuring a stable and transparent foreign exchange market. These revised regulations are vital steps towards achieving this goal and protecting the interests of the public and the economy.”

The CBN also assures that it will continue to monitor the activities of BDCs and other stakeholders in the market, and take appropriate measures to maintain order and discipline.

Impact on BDCs and Market

The revised framework comes amidst concerns about the role of BDCs in illegal forex activities. The CBN aims to address these concerns by strengthening regulations, increasing transparency, and deterring potential misconduct.

[READ ALSO] Nigeria’s Broad Money Supply Hits Record High of ₦93.72 Trillion in January 2024

The new regulations will undoubtedly impact BDCs. While some may struggle to meet the increased capital requirements, others may view it as an opportunity to consolidate and professionalize the sector.

The CBN hopes that the revised framework will lead to a more stable and transparent foreign exchange market. Increased transparency and reduced illegal activity could potentially attract more foreign investment and improve overall market efficiency.

Expert Perception

The public has often expressed concerns about the opaqueness of BDC operations. The CBN’s move towards stricter regulations and increased transparency is likely to be met with positive public perception.

However, concerns remain about the potential impact on access to foreign exchange, particularly for low-volume users. The CBN has assured the public that licensed BDCs will continue to cater to their needs, emphasizing the importance of using only authorized operators.

Overall, the CBN’s revised framework represents a bold step towards reforming the BDC sector and promoting a more transparent and efficient foreign exchange market in Nigeria. While challenges remain, the new regulations are expected to benefit both the industry and the broader economy in the long run.

Bureau de change are merchants that offer the financial service of exchanging one currency for another. In Nigeria, the street trade is dominated by traders from the Hausa/Fulani ethnic group hence bureau de change operators in Nigeria are nicknamed Aboki.

BDCs are financial institutions licensed by the CBN to carry on small scale foreign exchange business on a stand-alone basis in Nigeria, serve as tools for the management of exchange rate and provide economic data for monetary policy decisions³.

The evolution of the foreign exchange market in Nigeria up to its present state was influenced by a number of factors such as the changing pattern of international trade, institutional changes in the economy and structural shifts in production.

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