CBN Pegs the Payment of Cash Dollar Purchases to a Customer at $500

The Central Bank of Nigeria (CBN) has announced its move to peg the payment of cash dollar purchases to a customer at $500, stating that the foreign currency that exceeds this amount will be made through a transfer to their Naira bank account.

The CBN said that if a customer who wants to purchase foreign currency approaches any Bureau De Change (BDC) operators, whether they are non-residents or not, the BDC will give them a prepaid Nigerian Naira (NGN) card instead of transferring money to a bank account.

The Central Bank of Nigeria stated that the prepaid card will act as a means for non-resident customers to receive funds. However, there are limits on the amount of credit and the total amount that can be loaded onto the prepaid NGN card. The limit is placed according to the Know Your Customer (KYC) requirements, which are levels designed for customer verification and suitability.

This was announced on Friday after the CBN issued revised regulatory and supervisory guidelines for Bureau de Change operations in Nigeria. Following the release, Muda Yusuf, the Director/CEO of the Center for the Promotion of Private Enterprise, said, "The idea is to sanitise that space because a lot of malpractices are going on in the BDC ecosystem."

READ ALSO: Naira Wins Against the Dollar as CBN and EFCC Goes After BDC Hoarders and Binance

He further stated that the BDC group is large, and regulating them becomes problematic due to the population. He said the CBN's guidelines will help reduce the number and ensure regulatory effectiveness, good monitoring, due diligence, and mainstreaming of BDCs into the entire FX system.

He said his concern was that there was no transparency in the BDC space, and lots of money laundering activities were being carried out there. He commended the guidelines as a brilliant idea taken by the CBN, which will help reduce the level of speculative activities in the sector.

With the current BDC guidelines from the CBN, currency sellers transacting $10,000 or more are now mandated to state their source of FX earnings. This measure will help monitor large transactions closely and prevent potential misuse of foreign currency.

The guidelines also read that all naira proceeds must be electronically credited or transferred to the customer's naira account or prepaid card in customer-present transactions. This measure will help promote digital payment solutions and enhance transaction traceability.

However, BDCs can sell foreign currency up to the equivalent of $4,000 and $5,000 for Personal Travel Allowance (PTA) or Business Travel Allowance (BTA) to individuals once every six months. This measure will help 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, a completed e-Form A, a valid international passport and visa, a valid international return ticket, and additional documentation for BTA, such as a letter of request from the corporate body, a business registration or incorporation certificate, an invitation letter from the overseas business partner, and a 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 $5,000 to a customer for medical bills 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 partly read.

READ ALSO: Practical Tips That Will Help You Land a Job in Nigeria with a Competitive Skill

Back Story
The Economic and Financial Crimes Commission (EFCC) has continued its raid on Bureau de Change operators in the tradition of hoarding dollars. On Monday last week, it was reported on the news that the intelligence unit intercepted some BDC operators in the Wuse Zone 4 area of Abuja and arrested over 50 illegal operators.

On Wednesday, the same week, about seven (7) BDC operators, along with some illegal vendors, were arrested by the operatives of the EFCC in Kano State. They were intercepted at the popular forex exchange WAPA market in the Fagge local government area of Kano State. The news was confirmed by the market chairman, who briefed reporters in Kano following the incident.

Also, Bayo Onanuga, the special adviser to President Tinubu, in his post on X, formerly Twitter, accused Binance, a trading platform, of manipulating the value of the naira. In the post, he said that Binance was now in complete control of deciding the exchange role, which is to be handled by the Central Bank of Nigeria (CBN).