The attempt to see all Bureaux De Change (BDCs) operators as weakest link in fight against illicit financial flow has been faulted by stakeholders. The BDC sector has for decades, remained a critical component of the Nigerian financial market playing pivotal role in exchange rate stability and job creation. Erring BDC operators have severally been sanctioned by the Central Bank of Nigeria and Association of Bureaux De Change Operators of Nigeria in line with the industry’s zero tolerance for regulatory abuse. The BDCs have also supported Nigeria’s growth agenda and the CBN’s commitment to exchange rate stability, writes COLLINS NWEZE.
CORRUPTION and illicit financial flows are twin evils that no right thinking individual, group or organisation should support. The impact of these societal malaise transcends over $30.4 billion lost by African economies and businesses annually. It has led to poor infrastructure and rise in insecurity.
That explains why the over 5000 Bureaux De Change (BDCs) and their umbrella body, the Association of Bureaux De Change Operators of Nigeria (ABCON) rejected in totality, attempt by certain segment of the economy to label BDCs as economic saboteurs and illicit forex traders.
Analysts insist that money laundering and illicit funds transfer are unwholesome practices that predates the coming of licensed BDCs. These illegal activities are so pervasive and widespread that every segment and all operators in the financial industry is vulnerable to their operations. That is why many prominent financial institutions including global banks, and investment firms have been found culpable in this respect.
Stakeholders have also backed the ongoing investigation of some corporate bodies and individuals by the Central Bank of Nigeria (CBN).
The apex bank under the Godwin Emefiele leadership has set up tough regulations and implemented several policies to tackle illicit financial flows. The regulators has also partnered with ABCON to tackle money laundering and ensure transparency in the financial market.
ABCON also believes that money laundering through the BDCs or any other financial institutions is unacceptable and those found wanting should be punished based on the law. The group supports the need to tighten and strictly enforce regulations in the foreign exchange market , with erring members sanctioned.
Besides, the CBN has been effective in regulating the the BDC sector , hence ABCON and all registered BDCs take exception to the editorial for its outright lies and ignorance of the working of the financial system.
ABCON President, Aminu Gwadabe, said: “We also do not agree with the those that insist that the CBN has been “inexcusably weak in enforcing its own rules”. He said the regulator has in the past, fined erring BDCs and insole extreme cases, withdrew their operating licenses.
Gwadabe said the resumption of dollar sales to BDCs has led to nearly N40 appreciation of the naira in the first week of the exercise, and saved the local currency from continued depreciation.
He said the CBN’s aim of easing pressure on supply and firming up the naira succeeded and will continue to be achieved with improved liquidity in the market.
“The N2 margin earned by BDCs from every dollar sold is barely enough to cover their operating costs and keep over 15,000 Nigerians employed by the sector, hence the assertion that BDCs business is one of the lucrative business in the country is wrong,” he stated.
Gwadabe also said that call from certain segments of the economy for a moratorium on licensing new BDCs is unacceptable as any new operator that meets the requirement for registration should be given the opportunity to operate.
The ABCON boss said that BDCs operate only within the allowable scope of transactions ie Personal Travel Allowances, Business Travel Allowances, school fees, medicals, among others adding that BDCs all over the world are important retail sector of the foreign exchange market.
“The BDCs in Nigeria have over the years remained the most portent tool of exchange rate stability management of the CBN when ever the local currency suffers as seen in 2006, 2009, 2016 and 2020. The BDCs are not illegal operators but licensed with CAC and CBN and pay levies and taxes to the government. The over 5000 BDCs have created huge employment opportunities and remained a big threat to over one million unlicensed operators whose activities are usually misconstrued to represent the licensed players,” he said.
Also speaking, former Executive Director at Keystone Bank, Richard Obire, said servicing the retail foreign exchange market through the BDCs is helping to stabilize the exchange rates.
“Generally, the supply and demand situation of forex shows that the forex rate set by the CBN doesn’t quite reflect demand and supply dynamics. Many who need forex can’t get it at the set rate and so are willing to get it elsewhere ( possibly through BDCs) at higher rates,” he said.
Also, those who have forex to sell also want to get more naira for it, making it very difficult for the CBN to achieve its declared intention of a stabilized rate with no significant arbitrage opportunities.
“There is so much regulation and oversight can do in a situation where supply lags heavily behind demand. The CBN can certainly improve its regulation and oversight activities on BDCs. However policy support is probably also required so we do not rely on regulation and oversight activities for what the right policies are better able to address,” he said.
Understanding the Legitimate BDC Operators
ABCON Executive Council, said it considered the editorial which alleged weak regulation of the BDC sector, linking BDCs money laundering activities and illicit funds transfer; and condemned dollar sales to BDCs by the CBN as unfair, very biased.
It described the editorial as a product of ignorance of the role and contributions of the BDCs sector, as well as the various measures put in place by the Central Bank of Nigeria and ABCON to ensure strict regulation of the sector as well as compliance with all regulatory requirements especially anti-money laundering measures.
The editorial, it added failed to distinguish between licensed BDCs and illegal currency hawkers or money changers, as a licensed BDC is registered as a corporate body with the Corporate Affairs Commission (CAC) and is licensed by the CBN to provide retail forex services across the counter.
“The BDC sector is regulated by the CBN via its various enabling laws which applies to all financial institutions. This include the CBN Act, BOFIA, Anti-Money Laundering and Counter Financing Terrorism guidelines, Know Your Customer (KYC) Requirements. In addition to these is the CBN Guidelines on the Operations of BDCs, which is specific to the scope and operations of the BDCs. To ensure compliance, the CBN requires that each licensed BDC render returns on periodic basis (Daily, Weekly, Monthly and annually). Furthermore, BDCs are also required to render returns to the Nigeria Financial Intelligence Unit (NFIU), which plays a major role in the country’s Anti-Money Laundering, Counter-Terrorist Financing and Counter-Proliferation Financing (AML/CFT/CPF) efforts,” it said.
Furthermore, ABCON created an online real time rendition of returns. The platform is presently used by over 4000 licensed BDCs to render returns to the CBN and NFIU.
Also, to ensure compliance with the Know-Your Customer (KYC) requirement, a critical element of the anti-money laundering guidelines, ABCON partnered with the Nigeria Interbank Settlement System (NIBSS), to onboard BDCs on the NIBSS platform for verification of customer information.
In addition to the above, and also to ensure transparency, ABCON created naijabdcs.com, an online live exchange rate platform, which also contains the addresses and contacts of all licensed BDCs. The platform publishes the ruling exchange rate in the retail foreign exchange segment, so as to ensure, forex end have reliable information to guide them in their transactions with BDC operators.
ABCON’s Role In BDCs Compliance
Gwadabe said ABCON is playing stronger role in the BDC industry by embracing effective self-regulation and ensuring compliance with extant Anti-Money Laundering/Combating the Financing of Terrorism (AML/CFT) laws and regulations to mitigate the risks and vulnerabilities in the sub-sector.
He said that ABCON has also developed and implanting Code of Conduct for members to promote ethical practices and transparency in while also continually advising the apex bank on market intelligence on key industry issues.
He said that ABCON had consistently advised BDCs to put in place and implement, a system of internal policies, procedures and controls including Know Your Customer, Customer Due Diligence and reporting of all suspicious transactions to regulators.
According to Gwadabe, ABCON is also training BDCs on regular basis on the need to keep transaction records, and get a designated compliance officer that has day-to-day oversight over AML/ CFT programme. He said the Compliance Officers have been taught the rules in preparing Suspicious Transaction Reports (STRs), and rendering STRs’ returns to the Nigeria Financial Intelligence Unit (NFIU).
He said that BDCs have met and will continue to meet a number of compliance requirements specified by Financial Action Task Force (FATF) and local regulators. The ABCON boss said that the collation and reporting of foreign currency transactions and suspicious transactions by BDCs are now fully automated. ABCON had in 2019, launched its Live Run Automation Portal in Lagos.
Report Filling by BDCs
ABCON has continued to ensure that BDCs file their reports as and at when due. The BDCs also do customers Know Your Customer (KYC) and due diligence reports.
Contrary to believe that BDCs are not well regulated, , Gwadabe said there are increasing difficulties arising from over regulation and complex documentation requirements that licensed BDC operators are facing in carrying out their daily legitimate operation remain worrisome.
For instance, six units within the CBN are involved with BDC regulations, supervision, licensing, monitoring, saying this constitutes multiple regulation of a unit of the financial sub-sector that is only involved as a small market player”.
– The Nation