CBN issues operational guidelines for BDCs’ forex purchases, introduces tracking portal

The Central Bank of Nigeria (CBN) has introduced a new framework designed to streamline and increase transparency in the country's retail foreign exchange market. The updated operational guidelines allow Bureau De Change (BDC) operators to purchase foreign exchange directly from authorized dealer banks through the Nigerian Foreign Exchange Market (NFEM).

This initiative, detailed in a circular issued to authorized dealer banks and licensed BDC operators, follows a February directive that granted BDCs access to the NFEM. The new framework provides the necessary regulatory guidance and operational modalities to support sustained liquidity in the retail segment of the market. It takes immediate effect and applies to all licensed BDCs and dealer banks involved in these transactions.

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No Authorised Dealer Bank shall impose exclusivity arrangements, referral fees, or any condition that restricts a BDC’s freedom to select its preferred counterparty bank.

A key component of the new system is the FX BDC Purchase Tracker (FXBT), a centralized electronic platform. This portal will enable BDCs to submit purchase requests electronically, offering real-time transaction data for regulatory oversight. The CBN stressed that BDCs are free to choose their preferred dealer bank and that banks are prohibited from imposing exclusivity arrangements or referral fees.

To ensure compliance, authorized dealer banks must conduct thorough Know Your Customer (KYC) and Customer Due Diligence (CDD) checks before executing any transaction. This includes verifying BDC licenses, tax identification numbers, incorporation documents, and beneficial ownership information. Enhanced due diligence is required for higher-risk BDCs, and KYC records must be updated annually or upon significant changes in ownership or management. Banks must acknowledge purchase requests within two business hours and provide reasons for any rejections, such as incomplete documentation or unresolved compliance issues.

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No foreign exchange shall be disbursed to any BDC that has not satisfied the Bank’s KYC and due diligence requirements.