BDCs seek easing of regulatory requirements

Against the background of the Central Bank of Nigeria (CBN)’s recent suspension of 437 Bureaux De Change (BDCs) from accessing dollar sales at the Interbank Foreign Exchange Market (IFEM), the Association of Bureau De Change Operators of Nigeria (ABCON) has appealed to the apex bank to ease some of the regulatory requirements for BDC operations in the country. In a letter to the CBN Governor, Mr. Godwin Emefiele, signed by ABCON’s Acting Chairman, Aminu Gwadabe, made available to New Telegraph, the association stated that the BDC subsector of the foreign exchange market was being hindered from performing its mandatory role in the financial sector because of what it described as “overregulation and complex documentation requirements.”

ABCON said that the myriad regulations have made it difficult for BDC operators to effectively comply with statutory and regulatory requirements. It pointed out that as many as six departments of the apex bank are involved with BDC regulations, supervision, licensing and monitoring, a situation it said “constitutes multiple regulation of a unit of the financial subsector that is only involved as a small market player.” Besides, it noted that a BDC operator is expected to render daily, monthly, quarterly, half yearly and annual returns to these various departments of the same corporate body, which could be very cumbersome, repetitive and time consuming for both the operator and the regulator.

In addition to the above mentioned reports, the BDC, according to ABCON, is also under obligation to render same returns to the Economic and Financial Crimes Commission/ Nigeria Financial Intelligence Unit (EFCC/NFIU), while also reporting to other statutory government establishments such as the Federal Inland Revenue Service (FIRS) and the Corporate Affairs Commission (CAC) respectively. Also, obviously referring to the recent suspension of some its members, ABCON identified the high penalties imposed on members by the regulator for infractions as one of the major challenges facing the sub-sector. According to the association, some of its members have had to pay high penalties to different departments of the CBN where regulations were violated.

“The result of this is heavy burden on the BDC considering the little margin of profit allowed on their transactions,” it stated. Moreover, ABCON pointed out that the financial pressure on BDCs had increased in recent times because apart from the review of the operational requirements, which made it mandatory for every BDC operator to recapitalise and upgrade their documentation with the CAC, the Commission also hiked incorporation fees, thereby charging enormously for the perfecting of documents. Also, ABCON noted that the documentation requirement to process a Personal Travelling Allowance (PTA) of $1000, for instance – international passport, valid visa, ticket etc- usually made the process, “cumbersome, complex and inconvenient for both the buyer and the BDC operator.” Other challenges cited by the association include, network issues with the Electronic Financial Audit Sub-System (E-FASS), limited scope of operations for BDCs due to, “lower allowable margin of 3.5per cent” and also, what it describes as “inadequate regulatory oversight.” Consequently, it called on the CBN to convene a stakeholders’ forum where the issues it had raised would be discussed.