Central Bank of Nigeria Enforces New Licensing Rules for Bureau de Change Operators

The Central Bank of Nigeria (CBN) has mandated all existing Bureau De Change (BDC) operators to re-apply for new licenses in their preferred category. This was announced on Wednesday in a circular issued by the apex bank and signed by Haruna Mustafa, Director of the Financial Policy and Regulation Department.

However, BDC operators have rejected the new licensing guidelines, arguing that they contravene best global practices. The CBN maintained that the adjustments aim to streamline BDC operations and enhance financial accessibility, emphasizing adherence to corporate governance and anti-money laundering provisions.

This development follows the Monetary Policy Committee’s decision to raise the benchmark lending rate to 26.25 per cent to combat soaring inflation. The naira has significantly depreciated, trading between 1,400/$ and 1,600/$ at the official and parallel markets.

The new guidelines, effective from June 3, introduce Tier 1 and Tier 2 BDC licences. Tier 1 BDCs can operate nationwide, establish branches, and appoint franchisees, subject to CBN approval, while Tier 2 BDCs are limited to a single state and cannot appoint franchisees.

The requirements include a minimum capital base of N2bn for Tier 1 and N500m for Tier 2 BDCs, with non-refundable application and licence fees. The CBN stressed the importance of maintaining adequate records and adhering to AML/CFT/CPF regulations.

Aminu Gwadebe, President of the Association of Bureau de Change Operators of Nigeria, criticized the requirements as excessive and not reflective of global standards. He warned against potential negative impacts, drawing parallels to Algeria’s experience with similar policies.

Gwadebe also highlighted the short deadline for compliance, arguing it is impractical and may inadvertently foster the very issues the CBN seeks to address.