437 Bureau De Change (BDC) operators have been suspended from accessing its weekly dollars sales from the foreign exchange (forex) market by the Central Bank of Nigeria (CBN).
They have been denied access to the $30,000 weekly allocations to operators and slammed with a N2 million fine each for non-rendition of their monthly returns to the apex bank.
They are said to have defaulted in providing detailed reports on how previous dollars sourced from the CBN were utilised.
Sources said the level of abuse was so massive that the CBN decided to impose sanctions to serve as deterrent to others.
“Given that the BDCs were long viewed as a potential source of forex leakage in the system, these measures should boost confidence in the sustainability of the forex band,” one of the sources said.
According to the President, Association of Bureaux De Change Operators of Nigeria (ABCON), Alhaji Aminu Gwadabe confirmed the development, and described the sanctions as punitive.
Gwadabe said the CBN would make over N1 billion when the 437 BDCs pay the stipulated penalties and that will add undue pressure on the finances of the operators already wailing from the burden of increased capital base and N35 million mandatory cautionary deposit.
“My suggestion to the CBN is that instead of demobilising the affected BDCs for non-rendition by denying them access to forex market, their N35 million cautionary deposit should be debited with the penalty sum,” he said.
This is coming as CBN had last week, licensed additional 70 BDCs, bringing the total approved operators to 2,688 since the request that operators increase their capital base from N10 million to N35 million plus another cautionary deposit of N35 million kept with the CBN. There were 3,208 registered BDCs before the apex bank ordered them to recapitalise latest by July 31, 2014.
The regulator has, however, kept updating its list of BDCs, even though the deadline elapsed since July last year despite earlier stand that it would cease to fund any BDCs that failed to beat the initial deadline.
The CBN has consistently urged banks, BDCs and Other Financial Institutions (OFIS) on the importance of rendition of returns and compliance with anti-money laundering regulations.
CBN Director, Banking Supervision, Mrs. Tokunbo Martins said during the Chartered Institute of Bankers of Nigeria (CIBN) anti-money laundering workshop held in Abuja, that the CBN always wants to ascertain if lenders are complying with Anti-Money Laundering and Counter Financing of Terrorism (AML/CFT) regulations.
Matins said: “Section 29 of the CBN AML/CFT Regulations, 2013 (as amended) requires financial institutions to maintain all necessary records on transactions, both domestic and international for at least five years after completion of the transactions or such longer period as may be required by the CBN and Nigeria Financial Intelligence Unit (NFIU), provided that this requirement shall apply regardless of whether the account or business relationship is on-going or has been terminated”.
She said financial institutions are expected to maintain records of the identification data, accounts files and business correspondence for at least five years after the termination of an account or business relationship or such longer period as may be required by the CBN and NFIU on a timely basis.
She said that financial institutions are required to forward their AML/CFT Compliance Manual to the CBN for off-site review of the document as well as carry out enhanced customer due diligence for high risk customers and effective Know Your Customer (KYC) processes. “The KYC means knowing the identity of the customer and understanding the kinds of transactions in which the customer is likely to engage in. By knowing one’s customers, financial institutions can often identify unusual or suspicious behaviour, termed anomalies, which may be an indication of money laundering,” she explained.
The CBN director said most challenges with the rendition of returns center around quality, accuracy, completeness and timeliness of the returns being rendered.