Nigeria’s central bank has revoked the licenses of 4,173 currency traders, known as bureaux de change (BDC), for failing to comply with regulatory requirements. The move is part of the bank’s efforts to curb illegal activities and stabilize the exchange rate of the naira, the local currency.

The Central Bank of Nigeria (CBN) said in a statement on Friday that the affected BDC operators did not renew their licenses, submit regular reports, or follow the anti-money laundering and counter-terrorism financing rules. The bank said it exercised its powers under the Bank and Other Financial Institutions Act 2020 and the Revised Operational Guidelines for BDCs 2015.

The CBN also said it was revising the guidelines for BDC operations in Nigeria, and that the new rules would be mandatory for all stakeholders in the sector. The bank advised the public to be aware of the development and to conduct business only with licensed BDC operators.

The list of the revoked BDC licenses is available on the CBN website.

The CBN has been cracking down on the BDC sector, which it accuses of being a conduit for illicit financial flows and currency speculation. In July 2023, the bank stopped selling foreign exchange to BDCs, saying they had deviated from their original purpose of serving retail customers and small businesses.

The bank said it would instead channel the foreign exchange through commercial banks, which it said would offer better services and rates to customers. The bank also said it would monitor the banks closely to ensure compliance and transparency.

The CBN’s actions have sparked mixed reactions from the public and the BDC operators. Some have welcomed the measures as necessary to protect the naira, which has been under pressure from low oil prices, the coronavirus pandemic, and insecurity. Others have criticized the moves as harsh, arbitrary, and counterproductive, saying they would create shortages, drive up prices, and fuel the parallel market.

The naira has been trading at around 410 to the US dollar on the official market, and around 500 on the parallel market, according to the latest figures from the CBN and abokiFX, a website that tracks the exchange rates.

The CBN has vowed to defend the naira and to maintain a stable and predictable exchange rate regime. The bank has also pledged to support the economic recovery and diversification efforts of the government, which aims to reduce the dependence on oil revenues and boost the non-oil sectors.

The bank said it would continue to collaborate with the BDC operators and other stakeholders in the foreign exchange market, and to provide them with the necessary guidance and support. The bank said it hoped that the revocation of the BDC licenses would serve as a deterrent and a wake-up call for the remaining operators to comply with the rules and regulations.

The bank said It also hoped that the action would enhance the efficiency and integrity of the foreign exchange market, and contribute to the stability and growth of the Nigerian economy.

Source: BusinessDay