…Mandates FX sellers of above $10,000 to declare sources
The Central Bank of Nigeria (CBN) has pegged the payment of cash dollar purchase to a customer at $500 saying that the foreign currency (FX) exceeding this amount will be made through a transfer to their Naira bank account.
If the customer purchasing the foreign currency is a non-resident, regardless of whether they are Nigerian or not, a Bureau De Change (BDC) will issue them a prepaid Nigerian Naira (NGN) card instead of transferring money to a bank account.
The card will serve as a means for non-resident customers to receive their funds. There are specific limits on the amount of credit and the total amount that can be loaded onto the prepaid NGN card. These limits are set in accordance with relevant Know Your Customer (KYC) requirements, which are measures designed to verify the identity and suitability of customers.
The CBN stated these in the revised regulatory and supervisory guidelines for bureau de change operations in Nigeria, released on Friday.
“The idea is to sanitise that space because a lot of malpractices are going on in the BDC ecosystem,” Muda Yusuf, director/CEO, Centre for the Promotion of Private Enterprise, said.
Yusuf noted that the BDCs are too many and regulating them becomes an issue. He said the guidelines will reduce the number and ensure regulatory effectiveness, much better monitoring, due diligence, and mainstreaming the BDCs into the entire FX system.
He was concerned that in the BDC space, there is no transparency, no documentation and that there is a lot of money laundering activities. He said the guidelines is a good idea as it will help reduce the level of speculative activities in the sector.
According to the guidelines, sellers dealing in USD 10,000 or more are now mandated to declare the source of the foreign exchange. This measure aims to monitor large transactions closely and prevent potential misuse of foreign currency.
It says in customer-present transactions, all Naira proceeds must be electronically credited or transferred to the customer’s Naira account or prepaid card. This directive aims to promote digital payment solutions and enhance transaction traceability.
BDCs are authorized to sell foreign currency up to the equivalent of USD 4,000 and USD 5,000 for Personal Travel Allowance (PTA) or Business Travel Allowance (BTA), respectively, to individuals once every six months. This measure aims to regulate the amount of foreign currency sold to individuals for specific purposes and prevent currency hoarding.
Foreign currency sales to intending travellers must be supported by various documents, including BVN/TIN, completed e-Form A, valid international passport and visa, valid international return ticket, and additional documentation for BTA, such as a letter of request from the corporate body, business registration or incorporation certificate, invitation letter from the overseas business partner, and tax clearance certificate.
Additionally, the amount of foreign currency sold and the date of sale will be endorsed on the traveller’s passport, and relevant documents will be filed sequentially by the BDC for record-keeping purposes.
“BDCs may sell foreign currency up to the equivalent of USD5,000 to a customer for medical bill once a year. Such bill, which shall be transferred from the BDC’s domiciliary account with a Nigerian bank, shall be paid directly to the hospital and supported by the following documents ….,” the guidelines stated.
