The Central Bank of Nigeria (CBN) has announced new regulations that will allow Bureau de Change (BDC) operators to purchase up to $25,000 weekly from a single Authorised Dealer Bank (ADB).
This move aims to meet the retail foreign exchange demand for eligible invisible transactions, such as Business and Personal Travel Allowance (BTA/PTA), overseas school fees, and medical expenses.
The guidelines were outlined in a circular issued on February 5, 2025, by Dr. W. J. Kanya, the Acting Director of the CBN’s Trade and Exchange Department.
The circular also stipulates compliance requirements designed to ensure transparency and prevent misuse of foreign exchange (forex).
The new regulations include a series of measures to improve oversight and curb potential forex misuse.
A key rule stipulates that each BDC operator is only permitted to source foreign exchange from one ADB per week. This rule aims to prevent speculation and ensure tighter regulatory controls.
Furthermore, BDCs are prohibited from charging more than 1% above their purchase price when selling foreign exchange, regardless of its source. This is to promote fairness and avoid excessive charges.
Additionally, the CBN emphasised that BDCs can only use the purchased foreign exchange for specific transactions, with a cap of $5,000 per transaction per quarter.
Eligible Uses for Forex Purchases
The CBN has specified the eligible uses for the forex purchases, which include:
- Business Travel Allowance (BTA) and Personal Travel Allowance (PTA)
- Overseas school fees
- Overseas medical expenses
In line with the new regulations, BDC operators are required to maintain comprehensive records of transactions, including the Bank Verification Number (BVN) of end-users.
They must also endorse disbursed amounts in the beneficiaries’ international passports and ensure strict compliance with Anti-Money Laundering (AML) laws and Know Your Customer (KYC) requirements.
To promote transparency, both Authorised Dealer Banks (ADBs) and BDCs are required to submit reports to the CBN.
ADBs must provide weekly reports on forex sales to BDCs, while BDCs must submit daily returns on forex purchases and utilisation via the Financial Institutions Forex Reporting System (FIFX).
Sanctions for Violations
The CBN has made it clear that BDCs and ADBs found violating the guidelines, including forex diversion, will face severe sanctions. These may include the suspension of their dealership licences.
In a related development, the CBN has extended the deadline for BDC operators to access the Nigerian Foreign Exchange Market (NFEM) for weekly forex purchases. The initial deadline of January 31, 2025, has been pushed to May 30, 2025.
This extension is expected to help stabilise the parallel market, improve liquidity, and demonstrate the CBN’s ongoing commitment to ensuring forex accessibility while maintaining strong regulatory oversight.
As part of the broader strategy, the CBN is reinforcing its efforts to balance forex availability with the need to maintain a transparent and regulated foreign exchange market in Nigeria.
