The Nation Newspaper

Tag: BDCs

  • N35m caution deposit: CBN clears 128 BDCs

    N35m caution deposit: CBN clears 128 BDCs

    More Bureaux De Change (BDCs) yesterday scaled the Central Bank of Nigeria’s (CBN’s) N35 million mandatory capital base.

    This followed the removal of the caution deposit for all operators after the regulator stopped dollar sales to BDCs.

    Data released yesterday by the  apex bank showed that 128 BDCs recapitalised in the last one week, bringing the total number of operators to 2,964. There were 2,836 operators previously.

    The CBN is expected to refund nearly  N100 billion to all the BDCs that paid the mandatory N35 million caution deposit that was scrapped last week.

    A circular signed by CBN’s Director, Financial Policy & Regulation, Kelvin Amugo, said the decision was reached following recent development in the in the operations of BDCs in the economy, prompting the apex bank to refund the mandatory caution deposit of N35 million each to all BDC operators.

    He however, said the regulator will retain the N1 million licencing fee paid by each of the operators. Amugo said the eligible BDCs are expected to apply for refund of their caution deposit, attaching evidence of payment and bank transfer details.

    President, Association of Bureau De Change Operators of Nigeria (ABCON), Aminu Gwadabe told The Nation that the cash refund is a welcome development.

    He said the initiative is an indication that the CBN has finally shut its doors to the BDCs. He said since the caution deposit was to enable operators’ access the official forex window, the stoppage of dollar sales to BDCs by the CBN means the fund should be refunded.

    Gwadabe said the operators are still awaiting CBN’s modalities on accessing the autonomous forex market, to enable them continue in business.

    He said the fund will go a long way in boosting capacity of operators to stay in business, and also to source funds from other quarters.

    The CBN Governor, Godwin Emefiele had announced  a new foreign exchange (forex) policy that includes the stoppage of weekly dollar sales to BDCs.

    He said the regulator would henceforth discontinue its sales of foreign exchange to BDCs, adding that operators in this segment of the market, would now need to source their foreign exchange from autonomous sources.

    “They must however note that the CBN would deploy more resources to monitoring these sources to ensure that no operator is in violation of our anti-money laundering laws,” Emefiele said at a news conference on the review of the forex policy in Abuja.

    ”The CBN would henceforth discontinue its sales of forex to BDCs. Operators in this segment of the market would now need to source their forex from autonomous source,” he said.

  • CBN to refund mandatory caution deposits to all BDCs

    CBN to refund mandatory caution deposits to all BDCs

    The Central Bank of Nigeria (CBN) Friday opted to refund the N35 million Mandatory Caution Deposits to the Bureaux De Changes (BDCs) as part of the strategy to curb the excesses of the BDCs  and stop the free fall of the Naira

    But the apex bank will retain the N1 million licensing fee collected from the BDCs.

    The  CBN in a circular  signed by Mr Kevin N Amugo, Director, Financial Policy and Regulation Department said:  “given the recent development in the operations of BDCs in the economy, the CBN has decided as follows: The refund of mandatory caution deposit of N35 million to all BDC operators and the retention of N1 million licensing fee.”

    The CBN asked all eligible BDCs “to apply for refund of their caution deposits, attaching evidence of payment and bank transfer details.”

    What this means is that patrons of BDCs from now on will be at the mercy of the operators and where there is an infraction, the CBN may not step in to intervene on behalf of the customers.

    On January 11, CBN governor Godwin Emefiele while rolling out new forex policies had lamented that “it is almost impossible for the CBN to monitor over 2700 BDCs with its limited number of examiners.

    “It is almost practically impossible and because of inadequate foreign exchange, the BDCs have to source their foreign exchange autonomously. We do not have the resources to cope with over 2,000 BDCs in the country right now.

    “BDCs not happy with this decision are free to return their license and get a refund of the N35 million cautionary fees besides we need more people to go into other forms of businesses like agriculture where we believe there is a lot of scope at this time.”

    Emefiele said that stakeholders in some of the subsectors “have not been helpful in this direction. In particular, we have noted with grave concern that Bureaux De Change (BDC) operators have abandoned the original objective of their establishment, which was to serve retail end users who need US$5,000 or less. Instead, they have become wholesale dealers in foreign exchange to the tune of millions of dollars per transaction. Thereafter, they use fake documentations like passport numbers, BVNs, boarding passes, and flight tickets to render weekly returns to the CBN.”

    Emefiele noted that “despite the fact that Nigeria is the only country in the world where the Central Bank sells dollars directly to BDCs, operators in this segment have not reciprocated the Bank’s gesture to help maintain stability in the market.”

    According to him, “whereas the CBN has continued to sell US Dollars at about N197 per dollar to these operators, they have in turned become greedy in their sales to ordinary Nigerians, with selling rates of as high as N250 per dollar.”

    Given this rent-seeking behaviour, Emefiele said “it is not surprising that since the CBN began to sell foreign exchange to BDCs, the number of operators have risen from a mere 74 in 2005 to 2,786 BDCs today. In addition, the CBN receives close to 150 new applications for BDC licenses every month.”

    The CBN, he said, noted  the following unintended outcomes: Avalanche of rent-seeking operators only interested in widening margins and profits from the foreign exchange market, regardless of prevailing official and interbank rates; Potential financing of unauthorized transactions with foreign exchange procured from the CBN; Gradual dollarization of the Nigerian economy with attendant adverse consequences on the conduct of monetary policy and subtle subversion of cashless policy initiative; and Prevailing ownership of several BDCs by the same promoters in order to illegally buy foreign currencies multiple times from the CBN.

    More disturbing to the CBN the governor said was the financial burden being placed on the Bank and the country’s limited foreign exchange.

    The CBN, Emefiele explained, “sells US$60,000 to each BDC per week. This amount translates to US$167 million per week, and about US$8.6 billion per year. In order to curtail this reserve depletion, we have reduced the amount of weekly sales to US$10,000 per BDC, which translates into US$28.4 million depletion of the foreign reserve per week and US$1.476 billion per annum.”

     

  • CBN positions Travelex to replace BDCs

    CBN positions Travelex to replace BDCs

    The Central Bank of Nigeria (CBN) is grooming Travelex, a global foreign exchange (forex) dealer, to replace Bureaux De Change operators (BDCs) to retail forex for end users, The Nation has learnt.

    Travelex is the world’s largest foreign exchange bureau specialised in international payments, bureaux de change and issuing prepaid credit cards for travellers. In 2000, it bought Thomas Cook’s worldwide forex business for £440 million, expanding significantly its international operations.

    Travelex has been opening retail shops at airports and in highbrow areas to enable it meet the rising forex demand, and fill the vacuum created by the CBN’s stoppage of dollar sales to BDCs.

    Some of the outlets are in Lagos, Port Harcourt, Kano and Abuja, Travelex said in a statement last September.

    The CBN on Monday suspended dollar sales to BDCs to conserve the foreign reserves and protect the naira. The move is also meant to enable the apex bank meet forex demand by domestic importers.

    Aminu Gwadabe, Chief Executive Officer, SABIL Bureau De Change Limited, who confirmed the development, said CBN’s desperation to meet dollar demands from banks, government agencies and importers prompted it to give dollar import licence to Travelex.

    Gwadabe, who doubles as the President, Association of Bureaux De Change Operators of Nigeria (ABCON) said Travelex has secured approval to open more offices across the country where dollar will be directly sold to banks, government and other end-users in a move to bridge the supply gap in the economy.

    But CBN spokesman Ibrahim Mu’azu said Travelex will not take the place of BDCs. He, however, said the CBN’s stoppage of BDCs’ funding will create more room for Travelex to control the retail market space.

    He said: “They (Travelex) have been in the market for a long time and will do more retail than before, going forward.”

    Gwadabe insisted that although licensed as a wholesale supplier and forex importer into Nigeria, the intention of Travelex is to take over the retail segment of the forex market, where BDCs operate.

    “In 2001, when the Joseph Sanusi-led CBN decided to allow BDCs sell Travelers Cheques, Travelex received the permission of the CBN to open desks in the branches of some banks to sell Travelers Cheques to the public.

    “On the other hand, Travelex allegedly made it difficult for BDCs to access Travelers Cheques to sell to the public as intended by the CBN,” he said, adding that the CBN’s decision at that time failed to bridge the gap between the official and parallel market exchange rates.

    Gwadabe claimed the long-term plan of the CBN was to replace BDCs with Travelex outlets, which will begin operation soon.

    “You know Travelex is a registered BDC operator in Nigeria and is involved in the retailing of forex. They are both importer and distributor of dollar in the country. This function of distributing dollars from the CBN to BDCs is outsourced to Travelex by the CBN for over three years now,” he said.

    A text message sent to General Manager, Travelex Nigeria, Anthony Enwereji, was not responded to. But he had earlier admitted that the company sells dollar at very low rate – in line with regulatory guidelines and that is its advantage over the BDCs.

     

  • No more CBN forex for BDCs

    No more CBN forex for BDCs

    Bureaue de Change (BDC) operators got yesterday a piece of bad news – the Central Bank of Nigeria (CBN) will no longer sell  foreign exchange to them.

    They are to source their foreign exchange from autonomous sources.

    Addressing journalists on the development in Abuja, CBN Governor Godwin Emefiele said BDCs “must, however, note that the CBN would deploy more resources to monitoring these sources to ensure that no operator is in violation of our anti-money laundering laws”.

    The CBN also reversed its decision on the deposit of foreign currency in commercial banks, announcing that it will henceforth “permit commercial banks in the country to begin accepting cash deposits of foreign exchange from their customers”. Both decisions are to take effect immediately.

    These measures, the CBN governor said “are not intended to be punitive on anyone or any group; rather, it is meant to ensure that the CBN is better able to carry out its mandate in an effective and efficient manner, which guarantees preservation of our scarce commonwealth, and that our hard-earned financial system stability remain intact to the benefit of all Nigerians.”

    The apex bank took these decisions because of what Emefiele described as “total disregard of the difficulties that the CBN is facing in meeting its mandate of maintaining the country’s foreign exchange reserves to safeguard the value of the Naira”.

    Emefiele lamented that the CBN has “continued to observe that stakeholders in some of the subsectors have not been helpful in this direction. In particular, we have noted with grave concern that Bureau de Change (BDC) operators have abandoned the original objective of their establishment, which was to serve retail end users who need US$5,000 or less. Instead, they have become wholesale dealers in foreign exchange to the tune of millions of dollars per transaction. Thereafter, they use fake documentations, like passport numbers, BVNs, boarding passes, and flight tickets, to render weekly returns to the CBN.”

    Emefiele noted that “despite the fact that Nigeria is the only country in the world where the Central Bank sells dollars directly to BDCs, operators in this segment have not reciprocated the bank’s gesture to help maintain stability in the market.”

    According to him, “whereas the CBN has continued to sell US Dollars at about N197 per dollar to these operators, they have in turn become greedy in their sales to ordinary Nigerians, with selling rates of as high as N250 per dollar”.

    Given this rent-seeking behaviour, Emefiele said, “it is not surprising that since the CBN began to sell foreign exchange to BDCs, the number of operators have risen from a mere 74 in 2005 to 2,786 BDCs today. In addition, the CBN receives close to 150 new applications for BDC licences every month, indicating that some individuals have identified a lucrative business venture that had become a threat to the Naira”.

    Rather than help the CBN to achieve its objectives for which they (BDCs) were licensed, Emefiele said, “the Bank has noted the following unintended outcomes: Avalanche of rent-seeking operators only interested in widening margins and profits from the foreign exchange market, regardless of prevailing official and interbank rates; Potential financing of unauthorised transactions with foreign exchange procured from the CBN; Gradual dollarisation of the Nigerian economy, with attendant adverse consequences on the conduct of monetary policy and subtle subversion of cashless policy initiative; and Prevailing ownership of several BDCs by the same promoters in order to illegally buy foreign currencies multiple times from the CBN.

    More disturbing to the CBN is the financial burden being placed on the Bank and the country’s limited foreign exchange.

    The CBN, Emefiele said, “sells US$60,000 to each BDC per week.” “This amount translates to US$167 million per week, and about US$8.6 billion per year. In order to curtail this reserve depletion, we have reduced the amount of weekly sales to US$10,000 per BDC, which translates into US$28.4 million depletion of the foreign reserve per week and US$1.476 billion per annum.”

    This, he stressed, “is a huge hemorrhage on our scarce foreign exchange reserves and cannot continue, especially because we are also concerned that BDCs have become a conduit for illicit trade and financial flows.”

    Asked why it has proven difficult or impossible to prosecute erring BDCs, Emefiele said the CBN would now look at that possibility but added that “there are many things that the CBN is mandated to do, we would have lived a situation what people should do is obey and work within extant rules and regulations within which they are supposed to operate and do what is right, but if they begin to do what is wrong, in this case, it becomes a problem”.

    Emefiele also said it was almost impossible for the Bank to monitor over 2700 BDCs with its limited number of examiners. “It is almost practically impossible,” he said, adding that “because of inadequate foreign exchange the BDCs have to source their foreign exchange autonomously. We do not have the resources to cope with over 2,000 BDCs in the country right now”.

    BDCs not happy with this decision, the CBN said, “are free to return their licences and get a refund of the N35 million cautionary fees.” “Besides, we need more people go into other forms businesses like agriculture where we believe there is a lot of scope at this time,” Emefiele said.

    On the reversal of its decision to have commercial banks accept foreign currency deposits again, the CBN governor said the banks “stopped deposit of foreign exchange then because we thought Nigerians were fast approaching dollarisation of the economy because a lot of people were speculating, and there was a lot of speculative attack on the currency”.

    The CBN, he added, “saw a situation where people were going into their accounts, took their naira out of their accounts to buy dollars and indeed some were going to their banks to borrow money to buy dollar and stack those dollars in their accounts and, of course, it got to a point where the banks’ vaults were full and the banks wanted us to collect the cash and give them electronic dollar which we said we will not do and so what we had to do at that time was to plug the torrents of flow of the dollar, that has been achieved and at this point, we are beginning to think of opening the tap a little and let’s begin to see whether there will be proper orderly behaviour by operators as well as people in the market.”

    “We believe that there are some people who would love to have the opportunity of depositing their foreign currency cash in their banks rather than in their houses, that is why we decided to open that tap again”, the governor said.

    The immediate impact of the decision to stop selling foreign exchange to the BDCs, Emefiele explained, “it is the dollars that the CBN is giving the BDCs that is being round tripped to the banks; that is the reason why we said at this time because of limited resources we would not be able to fund the BDCs, they will believe there is always autonomous market and, indeed, in every part of the world there is the autonomous market. We believe that the autonomous market should be allowed to flourish and let’s see how it goes with the CBN out of that market.”

  • $2.1b arms cash: EFCC, NFIU probe six BDCs

    $2.1b arms cash: EFCC, NFIU probe six BDCs

    The Economic and Financial Crimes Commission (EFCC) and Nigeria Financial Intelligence Unit (NFIU) are investigating six bureaux de change (BDC) operators involved in converting the $2.1 billion arms cash to naira, The Nation has learnt.

    The Chairman of Association of Bureau De Change Operators of Nigeria (ABCON), Alhaji Aminu Gwadabe, who disclosed this in a telephone conversation, said the group is already monitoring the outcome of the probe to decide sanctions for the unnamed operators.

    He said: “Some of the persons involved in the transactions allegedly exchanged the dollar to naira through the BDC operators. We understand about six operators are involved and we are monitoring the outcome of the investing closely”.

    He said both the EFCC and NFIU are looking at possibility of holding retreat with the BDCs to educate them more on how to better report illicit financial flow and money laundering matters.

    Gwadabe said ABCON has a zero tolerance for non-compliance with regulatory requirement and for unethical conduct amongst its members. He said the group created the office of Compliance Officer in its National Secretariat and in all its zonal offices to ensure its members work within the laws.

    Each of the affected BDCs, he said, exchanged about $350 million, with minimal or no documentation, contrary to regulatory guidelines.

    Such act runs contrary to the Anti-Money Laundering and Counter Financing of Terrorism (AML/CFT) regulations of the Central Bank of Nigeria (CBN).

    For instance, Section 29 of the CBN AML/CFT Regulations, 2013 (as amended) requires financial institutions to maintain all necessary records on transactions, both domestic and international for at least five years after completion of the transactions or such longer period as may be required by the CBN and Nigeria Financial Intelligence Unit (NFIU), provided that this requirement shall apply regardless of whether the account or business relationship is on-going or has been terminated.

    According to the CBN, financial institutions are expected to maintain records of the identification data, accounts files and business correspondence for at least five years after the termination of an account or business relationship or such longer period as may be required by the CBN and NFIU on a timely basis.

    She said that financial institutions are required to forward their AML/CFT Compliance Manual to the CBN for off-site review of the document as well as carry out enhanced customer due diligence for high risk customers and effective Know Your Customer (KYC) processes.

    The acting Chairman of Economic and Financial Crimes Commission, Ibrahim Magu, had said no BDC operator involved in the arms deals will be spared. He asked the operators to have a documentation of their members to enable anti-graft agencies to track down the fraudulent ones.

     

  • BDCs: 2,839 operators cross recapitalisation hurdles

    BDCs: 2,839 operators cross recapitalisation hurdles

    The Central Bank of Nigeria (CBN) has listed 2,839 Bureaux De Change (BDCs) that have met the N70 million regulatory capital base.

    In a circular released at the weekend, the CBN said the BDCs have complied with new N35 million capitalisation requirements and another N35 million cautionary deposit stipulated for operators. The CBN had last June, announced a new minimum capital requirement of N35 million for the operation of BDCs, up from the N10 million it was previously.

    The new capital base, is contained in a new guideline for the industry backed by the CBN Act of 2007 and the Banks and Other Financial Institutions Act 2004 (BOFIA). Both statues, stipulate a non-refundable application fee  of N100,000 and  non-refundable licensing fee  of N1 million.

    The circular, which will come into effect this month, orders retail money exchanges to deposit a mandatory cautionary deposit of N35 million in an account with the CBN, in addition to a minimum capital requirement of N35 million.

    The new guideline said no person should carry on the business of BDC in Nigeria, except with the prior authorisation of the CBN. It also stipulates that a BDC shall be construed as any company that is licenced to carry on small scale foreign exchange business in Nigeria and whose sole object is the carrying on of such business on a stand-alone basis.

    It said the application for BDC licence shall be processed in two stages, namely: approval-in-principle (AIP) and final licence.

    For the AIP, a formal application to the CBN governor to grant the promoters an AIP to carry on the business of a BDC in Nigeria is required. Also, a non-refundable application fee of N100,000 or such other amount as may be determined by the Bank from time to time in bank draft payable to the Central Bank of Nigeria.

    “There also should be an evidence of payment of the prescribed minimum capital of N35 million or any other amount as may be determined by the CBN from time to time, into the designated CBN account. The bank shall refund this amount with interest after the proposed institution has obtained its final licence,” it said.

    The guideline, also said that not later than six months after the grant of AIP has been secured, the promoters of a proposed BDC shall submit application for the grant of a final licence to the Governor, with evidence of payment of a non-refundable licencing fee of N1 million, only or any other amount as may be determined by the CBN from time to time among other conditions.

    “There should also be evidence of payment of N35 million mandatory caution deposit, or any other amount as may be determined by the CBN from time to time, into a designated CBN account and evidence of having suitable office accommodation for the operation of the proposed BDC,” it said.

    It stipulates that the qualifications and experiences of the Managing Director/Chief Executive Officer (CEO) shall be first degree or its equivalent in any discipline with three years post-graduation while the minimum qualifications and experience shall be first degree or its equivalent in any discipline with two years post-graduation experience.

    “One of the Management staff appointed above should be designated as compliance officer for the purpose of ensuring compliance with all regulatory guidelines and circulars,” it said.

    It said any person/individual wishing to sell foreign currency above $10,000 or its equivalent to a BDC shall be required to disclose the source.

    “The maximum amount per transaction for a BDC shall be determined from time to time by the CBN with respect to business and personal travel allowances. The maximum amount currently for Personal Travel Allowance and Business Travel Allowance (BTA)  per quarter is $4,000 and $5,000.

  • Stop funding BDCs, MAN urges Fed Govt

    Stop funding BDCs, MAN urges Fed Govt

    •Manufacturers seek guided deregulation

    The Manufacturers Association of Nigeria (MAN) has urg  ed the Central Bank of Nigeria (CBN) to stop funding Bureau de Change (BDC) operators.

    Its President, Dr. Frank Udemba Jacobs, wondered why BDCs should depend on official allocation of foreign exchange (forex) from the CBN, instead of exploring alternative funding windows.

    Jacobs also questioned the real functions of BDCs with the kind of arrangement the nation is running. “They act as mere distributive conduit pipes by simply getting forex allocation from the CBN and selling to every Nigerian out of the multitude that need forex thereby making their profits without making value addition,” he said.

    In a statement, the MAN chief said forex allocated to the BDCs should rather be channelled to the productive sectors of the economy, especially manufacturers for the importation of essential inputs and machinery that are not locally available, as well as to the social welfare segment of the society, such as hospitals and schools, among others.

    Dr. Jacobs, who commended the Federal Government for combating the challenges faced by the country as a result of falling oil prices, also advocated the use of guided deregulation of the economy such that the naira would be left to flow freely within a bracket determied by the CBN.

    He said the nation cannot afford to allow the naira to fall freely without any check. “MAN believes that this arrangement will allow the exchange rate to be determined by the market but with some moderation and also leave room for investors to be attracted to invest in the country.

    “This will also assist in checking the ugly situation that took place during the Structural Adjustment Programme (SAP) era where, as a result of devaluation, over 60 per cent of small and medium scale industries closed down because of inability to sustain their operations,” he said.

    He said restriction on dollar inflow should be lifted but this should not preclude CBN’s duty of investigating sources of such incomes.

    The MAN chief said to avoid perceived abuse of forex allocation and save the naira, the management of forex, which is vested on a Committee chaired by the Governor of the CBN should monitor the utilisation of forex by recipients by remitting funds directly to the beneficiary company overseas.

    On how to grow the economy, he said emphasis should be placed on the productive sector in order to raise and sustain the tempo of industrialisation. He said export of manufactured products and indeed, other finished products should be encouraged in order to make up for the deficit the nation is currently witnessing in the forex market, while exporters should be encouraged to repatriate accrued funds home.

    While urging government to explore other avenues of forex inflow other than oil revenue by giving incentives to exporters, Dr. Jacobs stresed the need to encourage the manufacturing sector to grow in view of the critical role it plays in job and wealth creation as well as technology for skill acquisition.

    He argued that except all these are adhered to, Nigeria’s quest to increase her forex reserve and strengthen the naira may remain a pipe dream.

    While speaking against the subsidy regime, Jacobs observed that a major source of forex wastage in Nigeria is through the on-going subsidy on importation of petroleum products.

    He said the country has no business relying on fuel importation to meet local needs, given the number of refineries in the country, which are currently lying idle.

  • BVN for BDCs: Naira weakens to 234 against dollar

    The naira fell from 225 to 234 against the dollar at the parallel market on Monday, 10 days after the Central Bank of Nigeria (CBN) mandated Bureaux De Change (BDC) operators not to sell foreign exchange (forex) to customers without Bank Verification Numbers (BVNs).

    The policy implementation, which started on November 1, has reduced the volume of dollars sold by BDCs and created dollar scarcity in the market.

    However, the CBN has been able to monitor the naira’s movement at the interbank market, keeping it between 197 and 197.5 on the interbank market in the last one week.

    The CBN insists that the adoption of BVN as a condition for the purchase of forex is expected to reduce multiple purchases, round tripping and illicit transfer of funds, facilitate enforcement of authorised limits of forex sales to end users, sanitise the retail segment of the market and engender policies that will facilitate better allocation of forex, based on genuine demands.

    It insisted that the BVN provides the unique identity of each customer for the purpose of achieving effective “Know Your Customer” (KYC) principle and fraud prevention.

    It said the BVN is neither a payment instrument nor an account number and therefore, could not be used to access any account by unauthorised users. The banks, BDC operators and even regulators use the BVN to validate the identity of a customer, using some biometric information such as finger prints and photographs obtained at the point of enrolment.

    Also, BDC owners have called on the CBN to make forex transactions relating to Personal Travel Allowance (PTA) and Business Travel Allowance (BTA) exclusive businesses of BDCs. This call was made during the second BDC Owners Forum’s meeting held in Lagos last weekend.

    Presently, the banks and BDCs are being allowed to sell foreign exchange for PTA and BTA. The BDC owners, however, said: “The CBN should disengage banks from the sales of PTA and BTA and make it an exclusive preserve for BDC operation.”

    The BDC owners also called on the CBN to extend the deadline for use of BVN as criterion  for foreign exchange transactions. Consequently, they mandated the leadership of the Association of Bureaux De Change Operators of Nigeria (ABCON) to write a position paper on the CBN’s re-introduction of the BVN. “The position paper should seek for an extension in the deadline for compliance on the use of the BVN while emphasising the resolve of ABCON members to comply with the CBN circular and that we are indeed ready to partner with the regulatory authority on its monetary and fiscal policies”, they stated.

    The meeting however lamented the gap between the official and parallel market exchange rates and resolved to take measures to reduce the gap drastically.

  • BDCs begin BVN validation on NIBSS’ portal

    Bureaux De Change (BDC) operators have begun the validation of their customers’ Bank Verification Numbers (BVNs) on a portal created by the Nigeria Interbank Settlement System (NIBSS).

    The BVN, which captures customers’ biometric data, such as fingerprints, provides unique identification number for the customers and protects their accounts from unauthorised access, identity theft and fraud.

    NIBSS Managing Director Ade Shonubi, who disclosed this said the firm developed the platform to enable BDCs comply with the Central Bank of Nigeria (CBN) directive that BDCs customers provide their BVN before buying foreign exchange.

    The CBN had ordered that, with effect from November 1, customers desiring to purchase forex through all channels must provide their BVN, which shall be validated by the CBN authorised forex dealer through the NIBSS  platform before the transactions are consummated.

    The regulator said any authorised forex dealer that fails to provide the required information in its returns or provides a wrong BVN would be penalised; this may include the termination of the forex dealership authorisation.

    The policy, Shonubi said, is in line with CBN’s drive to stabilise the forex market, stem the rampant cases of forex leakages and illicit money transfer from the country.

    He said NIBSS had deployed two services on the Web and phone that would make BVN verification for BDCs customers and others as easy as possible.

    Explaining the process for the exercise, he said in accessing the phone for the verification, the first step is for customers to dial *565*1#, enter the BVN code type, date of birth and click on send. While for the Web portal, the customer need to type: www.nibss-plc.com.ng, a space will show where to enter the BVN code, date of birth and send.

    Shonubi said customers are charged N10 for phone transaction and N20 for the web portal which the customer would be required to pay either with credit card or internet banking.

    According to him, the essence of the verification is to checkmate sharp practices among BDCs operators and customers. He, however, noted that once a customer carries out the verification either on phone or the Web portal, such customer does not need to verify again when dealing with the same BDC operator.

    Data obtained yesterday from the NIBSS which handled the project, showed that over 2.5 million customers have so far enrolled on the BVN network and had their numbers linked to their accounts.

     

  • BDCs fault use of BVN for forex transactions

    Association of Bureaux De Change Operators of Nigeria (ABCON) has faulted the Central Bank of Nigeria (CBN’s) decision to make biometric verification number (BVN) a requirement for foreign exchange transactions.
    The CBN forex, issued a circular stipulating the use of BVN for all forex transactions from November 1. It also said it would discontinue the sale of forex to BDCs, which fail to provide BVN of its directors by that date.
    In a statement, ABCON faulted the November 1st deadline, saying it is too close. It also said making BVN mandatory for foreign exchange transactions, so soon, without adequate publicity, training and other measures will enhance activities of the parallel market operators and widen the gap between the official exchange rate and the parallel market exchange rate.
    According to the statement, “The return of the CBN directives on the use of BVN on sales of foreign exchange to BDC clients will lead to confusion and delay in the use of applicable codes for processing of ‘Form M’.
    If adopted, the policy will also lead to cancellation of foreign credit lines by correspondent banks; increase mistrust between regulators and operators and increase misery level of majority of Nigerians already in a significant poverty level.
    The policy shift, it added, would lead to decline in public confidence in CBN’s ability to sustain its macroeconomic objectives; set the pace for growing foreign interference in Nigeria’s monetary policies; loss of jobs; increased fraud and other related financial crimes.
    The association noted that while it is not totally opposed to the use of the BVN for foreign transactions, it believes that the November 1st date is too early for such policy, in view of the preparations required for smooth implementation.
    Consequently, the association, among other things, recommended some measures that would facilitate the introduction of BVN for foreign exchange transactions.
    “The CBN should resume training of BDC operators for the use of the BVN platform, and there should be massive sensitisation of the public on the new policy. There should be a CBN/ABCON taskforce to monitor compliance and eliminate non-compliant BDCs, adding that this must be complimented with enhanced security surveillance at the airports and boarders,” it said.
    The association also called for harmonisation of the different operational guidelines by the CBN and the National Financial Intelligence Units (NFIU), as well as a review of the scope of BDC operations as defined by the CBN guidelines to reflect current market realities.
    The group has also written to the apex bank governor, highlighting the various factors responsible for the sudden rise in the parallel market exchange rate from N212 to N224 per dollar within the last three weeks.