CBN Orders BDCs To Pay BTA, PTA Beneficiaries 75% FX Electronically, 25% Cash

The Central Bank of Nigeria has ordered Bureau De Changes (BDCs) to pay 25 percent of foreign exchange purchased for Business Travel Allowance or Personal Travel Allowance in cash while the remaining 75 percent should be transferred electronically to the customer’s Nigerian domiciliary account or prepaid card.

However, the apex bank noted that such customers receiving $500 or less than $500 should be paid fully in cash.

CBN also directed BDCs to retrieve resident customers’ Bank Verification Number, BVN, or Tax Identification Number, TIN before carrying out foreign exchange transactions.

CBN gave this direction today among others in its Revised Regulatory Supervisory Guidelines for BDCs operations in Nigeria.

Section 5.0 of the guidelines stated: “A beneficiary of BTA or PTA shall receive up to 25 per cent of the foreign currency in cash.

“In other words, at least 75 per cent of any sale of foreign currency by a BDC shall be transferred to the customer electronically (to the customer’s Nigerian domiciliary account or prepaid card).

“Notwithstanding ‘b’ above, a beneficiary of BTA or PTA of the equivalent of $500 or less may receive his/her BTA or PTA in cash.”

On non- permissible activities, CBN said among other things: “A BDC or its franchisee shall not engage in the following activities: Street-trading, 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 in any form;

“Retail sale of foreign currencies to non-individuals,except for BTA International outward transfers; Engaging in off-shore business or maintaining foreign correspondent relationship with any foreign establishment; Opening or maintaining any account with any bank or financial institution outside Nigeria;

“Acting as custodian of foreign currency on behalf of customers; International inward transfers, except for operators that serve as cash-out points for IMTOs;

Borrowing sums which in aggregate exceed the equivalent of 30 percent of its shareholders’ funds unimpaired by losses, in the BDC’s audited financial statements of the preceding year; Engaging in forwards, futures, options, or other derivative/speculative transactions; “Obtaining foreign exchange from sources other than those listed in Section 4.0; Granting of loans and advances in any currency; Selling foreign exchange on credit to any customer; Engaging in any trade-related import activities; Serving as payment or collection agents on behalf of customers;

“Dealing in gold or other precious metals; Carrying on capital market, insurance and/or pension sector activities; Establishing subsidiaries; Any foreign exchange transaction that involves illicit financial flows;

Financing of political activities; All other businesses not expressly permitted by this Guidelines; “Any other activity as may from time to time be termed “non-permissible” by the CBN.”

On BVN and TIN retrieval, CBN stated: “Transactions by residents shall only commence after electronic retrieval of the potential customer’s BVN or TIN from the NIBSS or Federal Inland Revenue Service (FIRS) databases, respectively, and the details confirmed to match with the potential customer’s standard identification document.

“All transactions by non-residents shall only commence after obtaining a copy of the potential customer’s passport identification document and validation with the relevant Nigerian agency.

“For foreign currency cash purchases:

Sellers of $10,000 and above shall be required to declare the source of the foreign exchange.

“For all customer-present transactions, all the Naira proceeds shall be electronically credited or transferred to the same customer’s naira account, or prepaid card.”