NIGERIA’S FOREIGN EXCHANGE MARKET: RECENT REGULATORY REQUIREMENTS FOR BDC OPERATORS AND BANKS

BY ADERONKE ALEX-ADEDIPE & HILLARY OKOROTIE

Introduction

On February 10, 2026, the Central Bank of Nigeria (CBN) issued a circular on the Participation of Licensed Bureau De Change Operators in the Nigerian Foreign Exchange Market, permitting licensed Bureau De Change (BDC) operators to participate in the Nigerian Foreign Exchange Market (NFEM).

Following the commencement of BDC operators’ participation in the NFEM, the CBN, on July 15, 2026, issued the Guidance on the Purchase of Foreign Exchange by Bureau De Change Operators Through Authorized Dealer Banks in the Nigerian Foreign Exchange Market (the “Guidance Notice”). The Guidance Notice establishes the procedures governing the purchase of foreign exchange by BDC operators through authorized dealer banks and outlines the obligations of dealer banks in facilitating such transactions.

In this newsletter, we provide insights on the obligations of BDC operators and authorized dealer banks.

What Are the Obligations of Dealer Banks and BDC Operators Under the Guidance Notice?

Under the Guidance Notice, dealer banks and BDC operators are required to undertake the following:

1. Due Diligence Processes
   Under the Guidance Notice, dealer banks are required to conduct Know Your Customer (KYC) and Customer Due Diligence (CDD) checks  before engaging in any foreign exchange transaction with a BDC operator. As part of this process, dealer banks must obtain and verify the BDC operator’s incorporation documents, valid operating license, as well as beneficial ownership information. Where a BDC operator is identified as presenting a higher risk following the due diligence assessment, the dealer bank is required to apply Enhanced Due Diligence (EDD) measures before proceeding with the transaction. 
2. Fulfilment of Foreign Exchange Purchase Requests
   Requests by BDC operators to purchase foreign exchange must be submitted through the CBN’s Foreign Exchange Purchase Tracker Portal (the “Portal”) to the preferred authorized dealer BDC operators are required to register on the Portal and provide real-time updates of all foreign exchange purchase transactions. . Upon receipt of the BDC’s purchase request, the dealer bank may either approve or reject the request through the Portal. Where a request is rejected, the dealer bank must state the reason for the rejection on the Portal.The Guidance Notice also permits BDC operators to submit multiple foreign exchange purchase requests within a week, provided that the value of the purchases does not exceed the prescribed weekly purchase limit of US$150,000.

    

3. Disbursement of Funds to BDC Operators
   In processing and fulfilling a foreign exchange purchase request, dealer banks are required to disburse foreign exchange only into foreign exchange settlement accounts maintained by the BDC operators with licensed financial institutions. Dealer banks must ensure that all disbursements are made solely to the BDC operator’s designated settlement account and not to the account of any third party. Any disbursement of foreign exchange to a third-party account constitutes a breach of the Guidance Notice and may attract sanctions against the dealer bank by the CBN. 
4. Retention of Purchased Foreign Exchange
   BDC operators are required to sell all foreign exchange purchased through the NFEM within 24 hours. Any outstanding balance must be sold within 24 hours. Failure to comply may result in regulatory sanctions, including the forfeiture of the outstanding balance to the CBN or the suspension of the BDC operator’s license. In addition, BDC operators are required to disclose any outstanding balance in their foreign exchange purchase request for the following week. 

What Are the Penalties for Non-Compliance?

The CBN has prescribed sanctions for breach of its circular on the Participation of Licensed Bureau De Change Operators in the Nigerian Foreign Exchange Market and the Guidance Notice. BDC operators that fail to comply with these directives may be subject to monetary penalties, suspension or revocation of their operating license, or suspension of their access to the NFEM.

Similarly, dealer banks that fail to comply with the CBN’s directives when transacting with BDC operators may have their status as authorized dealer banks revoked. Where a breach involves suspected criminal conduct, the CBN may also refer the matter for criminal investigation and prosecution to the appropriate authorities

Conclusion

The CBN’s objective in permitting BDC operators to purchase foreign exchange through authorized dealer banks in the Nigerian Foreign Exchange Market (NFEM) is to improve liquidity within the formal foreign exchange market. The framework is also intended to curb abuses and arbitrage in the foreign exchange market. If properly implemented therefore, it is expected that these policies will sustain the current stability in the market.

For more information on the participation of BDC operators in NFEM, please see our previous newsletter.