CBN orders BDCs to endorse dollar sales on passports

.mandates $25,000 weekly purchase from autorised dealers at NFEM rate
.BDCs to sell PTA/BTA at 1%

The Central Bank of Nigeria (CBN) has issued new directives for Bureau de Change (BDC) operators, mandating that records be maintained for all transactions showing the Bank Verification Numbers (BVNs) of end-users and endorsing dollar sales on international passports.

The new regulation aims to enhance tracking, transparency, and anti-money laundering efforts in the foreign exchange market operated by BDCs.

In a circular signed by W. J. Kanya, acting director of the Trade and Exchange Department, the CBN stated that these guidelines include a weekly purchase cap of $25,000 per BDC from authorised dealers.

“Authorised dealers shall sell foreign exchange cash to BDCs subject to a maximum of $25,000.00 to a BDC per week,” the circular noted. “A BDC shall approach its preferred authorised Dealer Bank (ADB) and can only procure the said amount from only that bank of its choice in a week. Any breach of this condition will attract appropriate sanction.”

The CBN further clarified that the foreign exchange purchased by BDCs must be sold to end-users at a rate not exceeding a 1 percent margin above the buying rate. This margin will apply to all funds, regardless of the source.

“Foreign exchange cash purchased by BDCs from Authorised Dealer Banks shall be sold to foreign exchange end-users at a rate not exceeding 1 percent margin above the buying rate,” the CBN said.

BDCs are also required to provide daily returns on their foreign exchange purchases from authorised dealers and other sources, as well as sales, through the Financial Institutions Forex Reporting System (FIFX).

Funds purchased by BDCs are restricted to specific eligible transactions, including Business Travel Allowance (BTA), Personal Travel Allowance (PTA), overseas school fees, and overseas medical fees. The maximum disbursement per transaction is set at $5,000 per quarter.

Additionally, records of all transactions must include the BVN of the end-user and the endorsement of the amount disbursed in the International Passport of the beneficiary.

“It is to be noted that Authorised Dealer Banks and BDC operators shall ensure strict compliance with the provisions of Anti-Money Laundering Laws and observance of appropriate KYC principles in the handling of these transactions,” the CBN stated.

The circular concludes by warning that any Authorised Dealer or BDC that violates these guidelines or diverts funds will face appropriate sanctions, including the suspension of their dealership license. “Any Authorised Dealer and BDC that diverts funds or violates the provision of these guidelines shall attract appropriate sanction,” the CBN noted.