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

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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.

 

KEY REGULATORY UPDATE IN NIGERIA: THE CBN FOREIGN EXCHANGE MANUAL 2026

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BY SEUN TIMI-KOLEOLU & OLUWAYEMI IBIRINDE

Introduction

On June 1, 2026, the Central Bank of Nigeria (CBN) implemented the Fourth Edition of the Foreign Exchange Manual (the “2026 Manual”), replacing the Foreign Exchange Manual 2018 (the “2018 Manual”). The 2026 Manual introduces significant changes to currency and trade rules and consolidates various foreign exchange policies and directives into a single framework governing foreign exchange transactions in Nigeria. While the 2026 Manual introduces measures intended to improve access to foreign exchange and facilitate cross-border transactions, it also strengthens regulatory oversight and significantly increases the consequences of non-compliance.

In this newsletter, we highlight some of the key changes introduced by the 2026 Manual and their implications for financial institutions and other stakeholders.

Key Operational Adjustment

Increased Flexibility for Trade and Foreign Exchange Transactions

  1. Import and Export
    Under the 2018 Manual, importers were generally permitted to make advance payments of up to 15% of the Free on Board (FOB) value of physical imports. However, under the New Manual the permissible advance payment threshold for physical imports has been increased to 30% of the Free on Board (FOB) value of the goods. This adjustment provides importers with greater flexibility in negotiating payment terms with foreign suppliers and may reduce procurement challenges associated with international trade transactions.Also, to incentivize international trade and reduce processing hassles, the New Manual mandates that the processing of Form NXP for exporters shall now be entirely free of charge.  These measures are expected to simplify access to foreign currency held in domiciliary accounts and reduce administrative blockages associated with remittance transactions.
  2. Tuition Remittances
    Under the 2018 Manual, International tuition fee remittances were restricted to USD 15,000 per semester, capped at two semesters per year. However, the 2026 Manual raises this threshold to USD25,000 per semester. This provision provides greater clarity regarding the amount that may be accessed through official channels for educational expenses.

  3. Domiciliary Account Holders
    Also, the 2026 Manual removes the Form A requirement for outward remittances for holders of self funded domiciliary accounts.

    Similarly, Domiciliary account holders may now initiate direct telegraphic transfers of up to USD10,000 per day without triggering exhaustive trade documentation.

Export Proceeds and Inbound Remittances

The 2026 Manual provides that all exporters shall ensure that export proceeds are repatriated and credited to their export domiciliary account in the bank where the NXP was established, within 180 days from the Bill of Lading date for oil and gas exports and 90 days for non-oil exports. Failure to adhere to this timeline imposes a penalty of 1% of the amount involved.

Furthermore, the Manual provides that inbound foreign currency transfers shall be paid to beneficiaries in Naira or such other currency as may be determined by the CBN from time to time.

It further provides that cash withdrawals relating to inbound transfers shall not exceed the Naira equivalent of USD200, while amounts above this threshold must be paid through a bank account.

Revised Travel Allowance Framework

CBN previously prohibited cash payments of Personal Travel Allowance (PTA) and Business Travel Allowance (BTA) under its 2024 cashless directive. However, Under the 2026 Manual, 25% of the PTA and BTA may now be disbursed in physical foreign currency cash while the remaining 75% must be disbursed through electronic channels such as debit or credit cards. This policy shift aims to balance the digital payment objectives of the apex bank with the practical cash liquidity demands faced by international travelers.

Domestic Transactions and Naira Denomination Requirements

The 2026 Manual reaffirms the requirement that transactions involving goods and services exchanged between Nigerian entities must generally be denominated and settled in Naira.

However, exemptions continue to apply to certain sectors and transactions, including specified activities within the oil and gas, maritime, aviation and free trade zone sectors.

Regulatory Compliance and Enforcement

The New Manual introduces a high-stakes environment for Authorized Dealer Banks (ADBs) and corporate entities:

  1. Financial Sanctions: Banks processing transactions without adequate documentation face a ₦100 million flat fine, plus ₦10 million per affected transaction.
  2. Export Penalties: A 1% penalty applies to exporters failing to repatriate proceeds within the mandatory 90 days (non-oil) or 180 days (oil/gas) windows.
  3. Strict Documentation: The CBN has codified the use of the Electronic Certificate of Capital Importation (eCCI). Capital must be registered within 24–48 hours of inflow; failure to do so may permanently compromise the legal standing of the investment.
  4. Domestic Denominations: All domestic transactions must be priced and settled in Naira. Exemptions are strictly limited to specific sectors, including Oil & Gas, Maritime, Aviation, and businesses within Free Trade Zones.

Conclusion

The 2026 Foreign Exchange Manual represents an important development in Nigeria’s foreign exchange regulatory framework.

On one hand, the Manual provides businesses and individuals with greater flexibility through higher import payment thresholds, increased tuition remittance limits, simplified domiciliary account operations, and reduced export transaction costs. On the other hand, it introduces a more stringent compliance environment characterised by enhanced documentation requirements, stronger reporting obligations, and substantial penalties for non-compliance.

Accordingly, all stakeholders involved should undertake a comprehensive review of their foreign exchange policies, documentation procedures, transaction monitoring systems, and internal controls to ensure alignment with the new framework. Given the scale of the sanctions introduced by the Manual, compliance failures may no longer be viewed as routine administrative lapses but as material regulatory risks with potentially significant financial and operational consequences.

As implementation of the Manual progresses, we expect that further regulatory guidance will be put in place to provide additional clarity on the application of the 2026 Manual provisions.

Key Changes at a Glance

Area 2018 Manual 2026 Manual
Advance Import Payments 15% of FOB Value 30% of FOB Value
PTA/BTA Disbursement More restrictive cash framework 75% Electronic / 25% Cash
Tuition Fee Remittances Lower limits Up to USD 25,000 per Semester
Domiciliary Account Remittances Form A Required Form A Removed
Form NXP Processing Processing Fees Applicable Free of Charge
Documentation Violations Lower sanctions ₦100m + ₦10m per affected transaction
Export Proceeds Repatriation Existing obligations 1% penalty for non-compliance
Inbound Money Transfers Less detailed framework Enhanced payment and withdrawal restrictions

 

New CBN Measures on Diaspora Remittances: What They Mean for Market Participants

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BY ADERONKE ALEX-ADEDIPE AND PROMISE ITAH

Introduction

On March 24, 2026, the Central Bank of Nigeria (CBN) issued a circular on Measures to Further Deepen Diaspora Remittances and Compliance (the “Circular”). The Circular, which is effective from May 1, 2026, builds on the CBN’s revised guidelines for international money transfer services in Nigeria, and is aimed at enhancing  diaspora remittances, strengthening transparency, traceability, and effective monitoring of all remittance related transactions.

In this newsletter, we highlight the measures introduced by the CBN and assess their practical implications for participants.

What Are the New Measures?

The following measures have been prescribed by the CBN.

  1. Designated Naira Settlement Accounts: All transactions related to International Money Transfer Operators’ (IMTO) operations, including payments to beneficiaries and any settlements, must be processed through designated settlement accounts held with authorised dealer banks (ADBs or Banks). IMTOs may either open new accounts or use existing ones for this purpose and can maintain multiple naira settlement accounts based on their business needs. However, they are required to regularly provide the CBN with an updated list of these designated accounts through the Director of the Trade and Exchange Department.
  2. Account Funding Restrictions: The circular makes it clear that these settlement accounts can only receive money from remittances or foreign exchange transactions carried out by the IMTOs or their agents through authorized participants in the Nigerian Foreign Exchange Market (NFEM). This means that no other funds are allowed to be deposited into these accounts.
  3. Authorised Transfers to Other Market Participants and BDCs: To improve the flow of foreign exchange and support fair pricing, ADBs are permitted to process foreign currency transfers from IMTO settlement accounts to other ADBs and approved market participants, including licensed Bureau de Change (BDC) operators.
  4. Real-Time FX Pricing: IMTOs must set their remittance rates to reflect current market prices from Bloomberg’s BMatch platform rather than being set independently. By doing this, the CBN aims to ensure more accurate pricing, reduce information gaps between banks and IMTOs, and encourage greater use of the official FX market.
  5. Compliance and Record Keeping: In addition to complying with the above measures, all IMTOs (and ADBs) must strictly comply with anti‐money laundering and counter-terrorism financing rules. Detailed records of all remittance transactions (origins, amounts, beneficiaries, conversions, etc.) must also be kept for regulatory review and audit purposes.

 

What Are the Practical Implications?

The new measures may require certain operational changes. We have set out below, some key implications and action points for IMTOs, banks, BDCs and other stakeholders:

  1. IMTOs (Money Transfer Operators):

    In view of the above regulatory measures, IMTOs may require system upgrades and staff training and must also strengthen record-keeping and AML/KYC processes, maintaining detailed transaction logs for regulatory review.

  2. ADBs (Commercial Banks):

    ADBs should prepare for increased demand from IMTOs to open and manage multiple naira settlement accounts and streamline onboarding processes accordingly. Banks will also need to closely monitor these accounts to ensure they are used solely for remittance flows and comply with FX funding requirements, while supporting IMTOs in meeting AML/CFT obligations.

  3. BDCs:

    Since ADBs are permitted to process foreign currency transfers from IMTO settlement accounts, BDCs may engage ADBs and their IMTO partners to access this FX liquidity.

  4. General Market Effects:

    In general, the measures are expected to improve transparency by channeling remittance flows through the formal banking system, giving the CBN greater visibility into FX inflows. In the medium term, it is expected that this will reduce reliance on informal markets, support better rate alignment, and contribute to improved liquidity and stability in the FX market.

Conclusion

The CBN’s new measures on diaspora remittances are part of a series of significant steps toward formalising diaspora remittance flows and improving transparency in Nigeria’s foreign exchange market. By mandating designated settlement accounts, real-time pricing, and stricter compliance standards, the framework is expected to enhance liquidity, strengthen regulatory oversight, and reduce reliance on informal channels. While stakeholders will need to adjust their operations to meet the new requirements, the CBN expects that the reforms should, over time, support better price discovery and contribute to greater stability of the naira.