CBN releases new Forex market guidelines to BDCs for enhanced transparency

*The Central Bank of Nigeria introduces fresh regulations allowing Bureau de Change operators to purchase about $25,000 weekly from a single Authorised Dealer Bank in a bid to improve transparency and combat financial crimes in the Foreign Exchange market

Alexander Davis | ConsumerConnect

In a bid to further improve transparency and combat financial crimes in the Foreign Exchange (Forex) market, the Central Bank of Nigeria (CBN) has introduced new regulations allowing Bureau de Change (BDC) operators to purchase about $25,000 weekly from a single Authorised Dealer Bank (ADB).

ConsumerConnect reports the CBN noted these fresh guidelines in a circular dated February 5, 2025, and signed by Dr. W. J. Kanya, Acting Director of the Trade and Exchange Department.

The Bank said the regulations were introduced to cater to retail Forex demand for eligible transactions.

The Bankers’ Bank directive also sets compliance requirements aimed at promoting transparency and curbing potential forex misuse.

Key provisions in new Forex Guidelines for BDC operators

Some of the major provisions of the new regulations are a Single Dealer Bank Rule: Each BDC can only source FX from one authorised dealer bank per week, a measure designed to prevent speculation and enhance regulatory oversight.

It says violators will face sanctions.

The Bank also noted that authorised dealers must sell Forex to BDCs at the prevailing rate in the Nigerian Foreign Exchange Market (NFEM) window, ensuring uniform pricing.

Besides, the BDCs cannot charge more than 1 percent above their purchase price when selling FX, regardless of its source, to prevent excessive charges and promote fairness.

The circular stated: “Purchased FX can only be used for specific transactions, with a cap of $5,000 per transaction per quarter.”

In terms of eligible uses, the CBN has included Business Travel Allowance (BTA)/ Personal Travel Allowance (PTA); Overseas school fees; Overseas medical expenses;

Strengthened Anti-Money Laundering Measures.

Also, to combat financial crimes, the Bank has mandated BDCs to maintain proper records, including the Bank Verification Number (BVN) of end-users.

It also directed them to endorse disbursed amounts in beneficiaries’ international passports; Strictly comply

with Anti-Money Laundering (AML) laws and Know Your Customer (KYC) requirements.

To enhance transparency, both ADBs and BDCs must submit reports to the CBN.

They must send weekly reports of FX sales to BDCs in a specified Excel format via teddmo@cbn.gov.ng.

The CBN noted that BDCs must render daily returns on forex purchases and utilisa-tion through the Financial Institutions Forex Reporting System (FIFX).

The CBN further warned that any BDCs, or Authorised Dealer Bank found violating these guidelines, including Forex diversion, would face severe sanctions, like the suspension of their dealership licence.

CBN extends BDCs’ access to NFEM

In a related development, the CBN has extended the deadline for BDC operators to access the Nigerian Foreign Exchange Market (NFEM) for weekly FX purchases.

Initially set for January 31, 2025, the deadline has been pushed to May 30, 2025.

The extension is expected to stabilise the parallel market, improve liquidity, and reinforce the CBN’s commitment to ensuring forex accessibility while maintaining regulatory oversight.

These new measures align with the apex bank’s broader strategy to stabilise the Naira, curb speculative activities, and enhance forex market transparency, according to report.