The Central Bank of Nigeria (CBN) has issued a draft Revised Regulatory and Supervisory Guideline for BDC Operations in Nigeria. This is a 51-page document that you should review over the weekend. However, I believe the following points may be of interest to you.
1. Bureaux de Change (BDCs) now have tiers: Tier 1 requires a minimum capital of N2bn (this is for a national license), while Tier 2 has a minimum capital requirement of N500m (these can only operate within one state and are allowed a maximum of 3 branches).
2. A shareholder cannot own more than one BDC, thus preventing people from holding more than one license.
3. BDCs can now serve as agents to disburse funds on behalf of International Money Transfer Operators (IMTOs). Only amounts less than $500 can be received in cash, while larger amounts should be deposited in bank accounts. For foreigners, a card will be issued. Essentially, BDCs will now be able to issue Naira cards.
4. BDCs can now issue PTAs and BTAs.
5. BDCs are going digital and will need to integrate the Central Bank of Nigeria (CBN) reporting platform for transaction and Anti-Money Laundering (AML) purposes. They will also integrate Federal Inland Revenue Service (FIRS) and Nigeria Inter-Bank Settlement System (NIBSS) for Bank Verification Number (BVN) verification, among other things.
6. As a Tier 1 BDC, you must have a minimum of 5 board members and a maximum of 9. Tier 2 should have 7 members. The draft guideline provides for gender equality, so a board cannot be constituted with only one gender. The CBN must now approve of directors serving on the board of a BDC and another regulated financial institution. New qualifications now require board members to have experience working in financial institutions. In particular, independent directors must have worked on the management team of a BDC.
- Banks and Other Financial Institutions (OFIs) cannot hold Bureau De Change (BDC) licenses. It remains to be decided whether some of the permissible activities of BDCs under the draft regulation, such as the issuance of Business Travel Allowance (BTA) and Personal Travel Allowance (PTA), will be exclusively reserved for the BDC.
8. There is now a very extensive requirement for licensing. It’s a whole lot. It is very similar to what the CBN would demand from a finance company or bank, with increased scrutiny.
