CBN Restructures Operations of BDC

The Central Bank of Nigeria is to review the licenses of Bureau de Change (BDC) operators in a move aimed at sanitizing that segment of the foreign exchange market.
Professor Chukwuma Soludo, governor of the CBN said the move formed part of the resolutions of the CBN Financial Sector Surveillance Committee (FSSC) which had a two-day marathon meeting between February 23-24, 2009  to review among other things developments in the foreign exchange market especially the Bureau de Change.
The governor descended on over 1,147 BDC operators which operations it accused of not being consistent with the Anti-money Laundering laws apart from being a major source of leakage in the system.
The apex bank consequently came up with the classification of the market into classes A and B to enhance efficiency and effectiveness of supervision and assigned special transactions to BDCs which may scale through to Class A category.
Also, the operating licenses of the BDCs are being reviewed and the apex bank in no distant time would withdraw the licenses of the defaulting BDCs.
Soludo explained that the apex bank has decided to reform the BDC segment of the foreign exchange to ensure full compliance with all the extant laws and regulations and especially to ensure that money bought from the CBN were not used to fund illegal transactions.
He listed that the BDCs which qualifies for class A category would be allowed to engage in the following conditions including sale and purchase of Forex, prepaid cards, travelers’ cheques, authority to import foreign exchange (subject to compliance with Anti-money Laundering (AML) requirements, money transfer and participation in the CBN foreign exchange cash auction.
The requirements to be in class A include minimum paid up capital of N500 million verifiable at all times, mandatory deposit with the CBN $200,000 non-interest yielding, non-refundable application fee of N100,000, licensing fee of N1 million, annual renewal fee of N250, 000 and minimum IT infrastructure that enables the BDC to make daily returns to CBN.
For class B, the CBN Governor said the BDCs were to continue its operations under the existing guidelines and they can buy and sell foreign exchange while sale is subject to a minimum of $5,000 per transaction.
He assured that the CBN would engage the services of other regulatory agencies including the NDLEA, EFCC and the Police to ensure that BDCs and authorized dealers in the foreign exchange market comply fully with all laws and regulations guiding the market.