BDCs set for market dominance, regulatory compliance



The Association of Bureaux De Change Operators of Nigeria (ABCON) recently held a meeting
with officials of the Central Bank of Nigeria (CBN) the Economic and Financial Crimes
Commission (EFCC), DataPro and others to chart a course on the sustainable growth of BDCs in
the country. AMAKA IFEAKANDU reports that despite the challenges, they must comply with
the industry regulations.

The Association of Bureaux De Change Operators of Nigeria (ABCON) recently held a  zoom
 meeting where regulators and stakeholders in the nation’s financial industry commended BDCs
for their contributions to the nation’s economic growth and exchange rate stability.
The meeting which had the backing of the Central Bank of Nigeria (CBN) was attended by the
apex bank directors, representatives of Nigerian Financial Intelligence Unit (NFIU),
Economic and Financial Crimes Commission (EFCC), Financial Action Task Force
(FATF),  DataPro Chief Executive Officer and over 550 top BDC directors, forex traders
and other attendees across the country.


All the financial sector regulators, facilitators at the event took turns to chart a
formidable future for BDCs segment of the foreign exchange market.
They are confident of a future for BDCs built on regulatory compliance, fight against
illicit financial flows, and support for CBN’s exchange rate stability mandate. 
Major steps


The President of ABCON, Alhaji (Dr) Aminu Gwadabe at the gathering listed major steps taken
by the ABCON to ensure that BDC operators comply with all the CBN rules and regulations,
including regular rendition of regulatory returns. 
He restated the prime role played by licensed BDCs in promoting exchange rate
stability, forex liquidity and forex sale to retail end of the market.


Gwadabe spoke extensively on the N1 trillion turnover milestone achieved by BDCs
which reaffirms the sector’s prime position in the economy. He also highlighted some of
the challenges facing the sub-sector, especially the low transaction margins on dollar
sales, which he said has continuously threaten the survival of BDCs businesses. 
ABCON boss expressed the need to foster better and positive image for the BDC sub-
sector, adding that the BDCs need a positive and rewarding image different from what
the nay sayers have fed the public with.


“We need to tell everyone that ABCON members are different. Majority of BDCs are not
criminals. We need respect from members of the public,” he stated.
He said with over 20,000 Nigerians employed by the sub-sector, there was need  to
support the BDC business for sustained economic growth and employment generation.
Speaking on the theme “BDCs Operations: A Trillion Naira Sub Sector, Issues of
Formalisation, Regulation & Way Forward”  Gwadabe said foreign currencies dealt in by
a BDCs are derived from private sources and such other sources which may include the
CBN window as determined by the CBN from time to time for the purpose of funding.

Business Travel Allowance (BTA), Personal Travel Allowance (PTA), School Fees
Payment abroad, Medicals, mortgage and subscription. There are also other
autonomous sources such as Diaspora Remittances, walk in customers and  bank
sources.


Compliance officers
He said ABCON is now training Compliance Officers to ensure they are acquainted with
what is required of them, especially on monthly rendition of results and  tracking illicit
capital flows through compliance.


According to him, BDCs are complying with the rendition of suspicious transactions
reports as directed by NFIU, CBN, and EFCC.
“Directors of BDCs are being trained, and after training, whoever is found wanting will
be recommended for sanctions,” he said.


He said BDCs are required to comply with all extant rules & regulations prescribed by
the CBN, while the CBN closely supervises and monitors their operations.
“In compliance with the provisions of Bank and Other Financial Institutions (BOFIA) as
amended, every BDC renders returns to the CBN in prescribed format and within the
deadline stipulated by the CBN. The records of the BDCs are made readily available to
the CBN examiners as and when requested including carrying out customer due
diligence, corporate governance and tax returns,” he said.
Commitments and sacrifices made.


 
He said that ABCON has over the years established itself as a key player in the BDC
industry, and has also made several commitments and sacrifices to ensure that the
sector continue to thrive despite all odds. 
“The recognition of the role of BDCs in Nigeria financial sector remains the first step to
building a sustainable and viable forex market that is comparable to what is obtainable.
in other developed economies. But getting the Nigerian BDC sector to where it is
desired to be demands hard-work, quality leadership, regulatory foresight and sound
government policies,” he said.

 CBN, NFIU, NIBSS comment on BDCs performance In his presentation, CBN Director, Williams Kanya, said the apex bank acknowledges the support of BDCs under ABCON, adding that the apex bank has key interest in
ABCON operations.


He said: “I am happy that BDCs and ABCON have become more professional. The
ABCON team has understanding beyond what they do and this makes CBN’s work
easy. We are happy with what they are doing to keep the exchange rate stable and
promote sustained economic growth. The CBN remains the biggest supplier of dollars to
BDCs and has pumped enough liquidity to the sector”.

Speaking further Kanya said speculation remains big problem, adding that CBN stands
with ABCON on balancing of rates. “Speculation will be bad business going forward as
people will keep losing money. Also, we need rendition of returns from BDCs not to
witch-hunt  anyone, but to take decisions that will favour the economy with the data”. 
In the same vein, Acting Associate Director, Nigerian Financial Intelligence Unit (NFIU),
Mohammed Jiya, urged BDCs to always file their returns on time, and even where there
are no transactions to report, they can file nil report.


He said the agency needs the data from BDCs returns to know what is happening in the
sector and take decision that would be of best interest of nation’s economy.
“The guideline clearly states that every BDC shall have an AML/CFT policy in
compliance with AML/CFT Act 2011 for, amongst others, identification of customers
using relevant means before carrying out a transaction or establishing a business
relationship,” he said. 


He said compliance officers are to ensure that there is a compliance programme,
prepare suspicious transaction report and render returns on same to the NFIU and
where there are no such transactions, a “Nil Return” shall be rendered monthly. 
“All Licensed/Registered BDCs operating in the country are expected to register on
goAML and NIL Reporting Portal to enable them respectively render Statutory Returns
(STRs, SARs, CTRs and AIF) or NIL Return when there is no report for a given period,”
Jiya advised. 


In its presentation, DataPro, said data protection is about data security. It ensures that
personal data is safeguarded from unlawful access by unauthorized parties. The firm
said that BDCs that collect personal data, have the responsibility of protecting it from
unauthorized access. 
Also, representatives of  Other Financial Institutions Department of the CBN, Nigeria
Interbank Settlement System, FATF among others called for vigilance on the part of
BDCs to ensure they follow regulations by conducting customer due diligence on all
their transactions. 

Digitization/ transaction margin review Gwadabe said that BDCs have achieved major success with the digitization of their operations as operators can now file their reports from convenient point without
clustering at CBN’s offices. 
He said ABCON digitized BDCs operations with the official launch and take off of the
ABCON Live Run Automation Portal in Lagos. The project, which has the backing of the
CBN ended decades of manual filling of regulatory reports by BDCs and enhanced
global competitiveness of operators. 


Gwadabe also called on the CBN to review the transaction margin for  BDCs to enable
operators stay in business as the sector needs profitable margin to sustain operators’
businesses. 


Making BDCs Payments Agents of Diaspora Remittances 

ABCON  President, Gwadabe also suggested to the CBN to make BDCs Diaspora
Remittances Pay Agents. 
He disclosed that the CBN introduced the Investors and Exporters  (I &E) Window which
allows foreign investors to freely bring their funds into the economy at a rate of their
choice. 


Challenges before BDCs
Gwadabe said the BDCs suffer from low level formalization of operations, whereby
street traders are now competing for the forex market with CBN-licenced operators.
“The challenge of poor formalization of BDCs operation makes us inefficient and difficult
to fulfilling CBN’s mandate. We want the CBN to step in and formalize BDCs operations and make it difficult for street forex traders to operate,” he said.

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