The Central Bank of Nigeria has banned the sales of forex on the streets across the country.
The order for the ban of street trading of forex was contained in the revised guidelines for BDC operations released by the apex bank on Wednesday.
The guideline, signed by the bank’s Director Financial Policy and Regulation Department, Haruna Mustafa, stated under its “non-permissible activities” for BDCs that, “A BDC or its franchisee shall not engage in the following activities: Street trading of foreign currencies.”
In addition to banning the street trading of forex, the CBN also stopped BDCs from “dealing in gold or other precious metals” and financing political activities.
Other activities on the bank’s list of “non-permissible activities” for BDCs include, “Maintaining any type of account for any member of the public, including accepting any asset for safekeeping/custody; taking deposits from or granting loans to members of the public in any currency and any form; retail sale of foreign currencies to non-individuals, except for Business Travel Allowance (BTA); carrying on capital market, insurance and/or pension sector activities; establishing subsidiaries; foreign exchange transaction that involves illicit financial flows; and dealing in cryptocurrency or with entities dealing in cryptocurrency, crypto assets or such other virtual assets,” among others.
Sourcing foreign currencies
According to the apex bank, all BDCs must comply with the newly released guidelines on sourcing foreign currencies.
Stating sources from where foreign currencies can be sourced by BDCs, the CBN stated, “A BDC may purchase foreign currency from: tourists; returnees from the diaspora; expatriates with foreign exchange inflows from work, travel, investment or their domiciliary accounts; residents with foreign exchange inflows from work, travel, investment or their domiciliary accounts; International Money Transfer Operators (IMTOs), and hotels that are authorised buyers of foreign currencies.”
Other approved sources are embassies, high commissions and other diplomatic missions in Nigeria – except those whose countries are listed on the United Nations Security Council (UNSC) Sanctions List or any other official list, the Nigerian Foreign Exchange Market (NFEM) subject to meeting the requirements for an authorised dealership licence, and any other source that the CBN may specify from time to time.
Conditions for sourcing foreign currencies
According to the guideline, “The following conditions shall apply for the sourcing of foreign currencies by BDCs: Sellers of the equivalent of USD10,000 and above to a BDC are required to declare the source of the foreign exchange and comply with all AML/CFT/CPF regulations and foreign exchange laws and regulations.
“Customers may sell foreign currencies in their individual domiciliary accounts with Nigerian banks to BDCs. All such sales shall be credited to the BDC’s Nigerian domiciliary account.
“Payments for all digital/transfer purchases of foreign currency by a BDC shall be by transfer to the customer’s Naira account. If the customer is non-resident (whether Nigerian or not), a BDC may issue the customer a prepaid NGN card. Where such a card is issued, relevant maximum credit and cumulative limits, in line with relevant Know Your Customer (KYC) requirements, shall apply.
“Payments to customers for cash purchases of foreign currency, the equivalent of above USD500, shall be by transfer to the customer’s Naira bank account. If the customer is non-resident (whether Nigerian or not), a BDC shall issue the customer a prepaid NGN card.
“Payments to customers for cash purchases of foreign currency of the equivalent of USD500 and below may be made in cash.”
