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BDC reforms and pursuit of compliant forex operators

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The first point in a typical blame game during a volatile foreign exchange (forex) rate regime is the BDC sub-sector.

Granted, few have been found wanting, but the market structure has made the licensed operators indispensable each time they are shoved aside.

For one thing, the forex retail services they provide is so direct and fast to calm market volatility. So, the missing link has been strategic reforms.

The admittance to the missing link by both the operators and regulators is evident in the recent engagements in the sub-sector, aimed at improving the knowledge-base, involving use of technology and understanding the legal framework.

Already, gains have been trickling in terms of forex market stability and renewed confidence on the operators by the regulator.

Under the aegis of the Association of Bureaux De Change Operators of Nigeria (ABCON), the currency dealers embarked on three-phase reforms in the last three years, in line with regulatory requirements and approvals.

First layer is on online real time registration of our members with a success rate of over 4,500 BDCs registered nationwide. This layer is to enable our members conduct their membership registration from any of their location without coming physically to ABCON Secretariat.

The second layer bothers on automation of ABCON’s operational process, book keeping, issuance of receipt, preparation of accounts, balance sheets, ledgers and sales/purchase registers.

The most important of this layer is the online real time rendition of returns to regulatory agencies.

Another important feature of this layer is the BDCs on-boarding and integration of the BVN platform on the NIBSS portal for verifications and validation of clients’ BVNs, which is a most vital requirement forex sale.

Last week, the culmination of the phased projects was the launch of the “Live Run Automation” project by the group. As usual, the regulators turned up to witness another feat in the turnaround of a sub-sector nearly written off in a hurry.

Specifically, CBN was represented at the event by an Assistant Director, Trade and Exchange Department, Mrs. Adebola Ayedun; Samuel Oluyemi represented the Acting Managing Director of the Nigeria Inter-Bank Settlement System (NIBSS), Niyi Ajao; and the Nigeria Financial Intelligent Unit (NFIU), was represented by Adangbe Williams; while Tony Ewerem represented Travelex Nigeria, a major International Money Transfer Operator.

ABCON President, Alhaji Aminu Gwadabe, said the digitisation of BDC operations has taken off with the backing of the Central Bank of Nigeria (CBN) and ended decades of manual filling of regulatory reports by operators, enhances their global competitiveness and raises hope of higher transactions’ margin.

He also said it is a boost for financial system and the economy ahead of the Financial Action Task Force (FATF) assessment for Nigeria later this year.

“The operators also lacked the technology to test the genuineness of documents presented to them by foreign exchange end-users and this had severally led to sanctions, loss of revenues and damaged the reputation of Nigerian BDCs in the eyes of international community.

“But that has now changed. The portal is the final phase of automating all BDC operations and integrating them with the operations of CBN, NFIU and Nigeria Inter-Bank Settlement System (NIBSS) for improved compliance with regulation and seamless operations. This is the game changer.

“The objective of this launching is first, to change the negative perception towards BDCs in Nigeria. We have a very negative perception from the public and regulators. This is due to the nature of our operations, which have been manually-driven for decades.

“Today, we are by this ABCON Live Run Automation Portal project, automating BDCs operations nationwide. This will not only bring efficiency to our business, but change the local and global perception of our operations for good,” he said.

He added that the platform is their own way of improving the image of Nigeria in the eyes of international community, as FATF views BDCs as one of the weakest links in the Nigerian financial services value-chain, hence they want to improve the entire perception by putting tested IT infrastructure.

According to Gwadabe, the BDCs have unified the street rate and the official BDC rate, now around N358 to dollar and N360 to dollar, which is the benchmark of the CBN. “So, I congratulate our members, to ensure we record more successes”.

He reiterated call on the CBN to review the transaction margin for BDCs upwards to five per cent adding that the current one per cent that operators take is not sufficient and falls below global standards.

Also speaking on the transaction margin, the General Manager, Travelex Nigeria, Tony Enwereji, said that in other countries where the company operates, transactions’ margin is always around six per cent.

“Our least margin globally is six per cent. But your patience and perseverance will pay off one day. I believe that once this automation is completed, your margin of transaction will go up because I believe that the leadership of ABCON is heading in the right direction,” he said.

“Where you are taking ABCON is a good place. It is future full of possibilities of growth and expansion for BDCs. I urge all BDCs to be part of this automation which is a proactive move by the ABCON leadership to take BDC operation to the next level of growth, compliance with set regulations and profitability,” Enwereji said.

An Assistant Director, Trade and Exchange Department of CBN, Ayedun, who represented the CBN, said ABCON has taken a laudable step to support the economy, adding that the apex bank is fully in support of the automation project.

For the NIBSS Representative, Oleyemi, ABCON and NIBSS started the automation journey when everyone doubted the possibility of making it happen.

He said that BDC business is globally recognised and contributes immensely to financial system growth and “the financial system is incomplete without BDCs. We at NIBSS want you to continue to comply with set regulations.

NIBSS will partner ABCON to ensure that only 36.6 million people in Nigeria with BVN will buy dollar from BDCs,” Oleyemi said.

Part of the routines for BDCs, which were done manually before now include sending Suspicious Transactions Reports (STRs), daily utilisations and purchases fillings to the CBN and Cash Transfer Report and STR to financial intelligent unit.

Also speaking, the representative of the Head Compliance at NFIU, Adamgbe Williams, urged BDCs to always comply with set regulations.

“File your reports as and at when due. File reports on all transactions from N10 million for companies and N5 million for individuals. File these reports on weekly basis to NFIU and then, you would have done your work.

“Always do your KYC and due diligence report. Once you do that, there is nothing to worry. But when you fail to file your reports to us, we will sanction you or report you to the CBN for sanctions, where we lack the power to act,” he stated.

Complains about money laundering and terrorism financing is fast damaging the image of the Nigerian financial institutions, with no exception of the BDC operators, hence achieving the automation of their operations now is timely, as well as empowerment for the members to compete globally, and comply with regulations with ease and an assurance of transparency.

Perhaps, the currency dealers are now in good stead to press home their point on the long-standing request for participation as direct agents of the International Money Transfer Operators (IMTOs). The group said it is still discussing with the CBN on certifying BDCs, after the regulator approved additional agents for the country.

“Partly, the complain of CBN is whether the BDCs have the right infrastructure in place. The IMTOs look at that criteria too. They want to know if BDCs have Internet, computers, scanners to capture their transactions. And all our members here today have put those structures in place. And there is about $24 billion that come into Nigeria yearly from the Diaspora,” he stated.


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