The argument that all Bureaux De Change (BDCs) operators are the weakest link in the fight against illicit financial flow may not hold water after all.
For one, the BDC sector has, for decades, remain critical component of the Nigerian financial market playing pivotal role in foreign exchange (forex) rate stability and job creation. Erring BDC operators have severally been sanctioned by the Central Bank of Nigeria (CBN) and Association of Bureaux De Change Operators of Nigeria (ABCON) in line with the industry’s zero tolerance for regulatory abuse. Two, the BDCs have also supported Nigeria’s growth agenda and CBN’s commitment to exchange rate stability and regulation for the industry.
Corruption and illicit financial flows are twin evils that no right thinking individual, group or organisation should support. The impact of these societal malaise is more than $30.4 billion, lost by African economies and businesses annually. It has led to poor infrastructure and rise in insecurity.
That explains why the over 5000 BDCs and their umbrella body, ABCON, rejected a label by a national daily , in its editorial, as economic saboteurs and illicit forex traders.
The fact remains that money laundering and illicit funds transfer are illegal practices that predates the coming of licensed BDCs. These illegal activities are so pervasive and widespread that every segment and all operators in the financial industry is vulnerable to their operations. That is why many prominent financial institutions including global banks, and investment firms have been found culpable in this respect.
ABCON leadership backs the apex bank’s ongoing investigation of some corporate bodies and individuals. It also believes that money laundering through the BDCs or any other financial institutions is unacceptable and those found wanting should be punished based on the law.
ABCON believes and has supported the need to tighten and strictly enforce regulations in the forex market, and taken steps to punish erring members including recommending them to the CBN for sanctions.
Besides, the CBN has been effective in regulating the BDC sector. ABCON President, Alhaji Aminu Gwadabe, said: “We also do not agree with the newspaper that the CBN has been “inexcusably weak in enforcing its own rules”, as the regulator has in the past, fined erring BDCs and , in some extreme cases, withdrew their operating licences”.
He said that contrary to the editorial, the resumption of dollar sales to BDCs has led to nearly N40 appreciation of the naira in the first week of the exercise, and saved the local currency from continued depreciation.
He said the CBN’s aim of easing pressure on supply and firming up the naira succeeded and will continue to be achieved with improved liquidity in the market.
“The N2 margin earned by BDCs from every dollar sold is barely enough to cover their operating costs and keep over 15,000 Nigerians employed by the sector, hence the assertion that BDCs business is one of the lucrative business in the country is wrong,” he stated.
Gwadabe also said that the newspaper’s call for a moratorium on licensing new BDCs is unacceptable as any new operator that meets the requirement for registration should be given the opportunity to operate.
The ABCON boss said that BDCs operate only within the allowable scope of transactions ie PTA, BTA, School fees, medicals, among others adding that BDCs, all over the world, are important retail sector of the forex market.
“The BDCs in Nigeria have over the years remain the most portent tool of exchange rate stability management of the CBN when ever the local currency suffers as seen in 2006, 2009, 2016 and 2020. The BDCs are not illegal operators but licensed with CAC and CBN and pay levies and taxes to the government. The over 5000 BDCs have created huge employment opportunities and remained a big threat to over one million unlicensed operators whose activities are usually misconstrued to represent the licensed players,” he said.
In a statement, ABCON Executive Council said it considered the editorial which alleged weak regulation of the BDC sector, linking BDCs money laundering activities and illicit funds transfer; and condemned dollar sales to BDCs by the CBN as unfair, very biased.
It described the editorial as a product of ignorance of the role and contributions of the BDCs sector, as well as the various measures put in place by CBN and ABCON to ensure strict regulation of the sector as well as compliance with all regulatory requirements especially anti-money laundering measures.
The editorial, it added, failed to distinguish between licensed BDCs and illegal currency hawkers or money changers, as a licensed BDC is registered as a corporate body with the Corporate Affairs Commission (CAC) and is licensed by the CBN to provide retail forex services across the counter.
“The BDC sector is regulated by the CBN via its various enabling laws which applies to all financial institutions. This include the CBN Act, BOFIA, Anti-Money Laundering and Counter Financing Terrorism guidelines, Know Your Customer (KYC) Requirements. In addition to these is the CBN guidelines on the operations of BDCs, which is specific to the scope and operations of the BDCs. To ensure compliance, the CBN requires that each licensed BDC render returns on periodic basis (daily, weekly, monthly and annually). Furthermore, BDCs are also required to render returns to the Nigeria Financial Intelligence Unit (NFIU), which plays a major role in the country’s Anti-Money Laundering, Counter-Terrorist Financing and Counter-Proliferation Financing (AML/CFT/CPF) efforts,” it said.
Furthermore, ABCON created an online platform, www.abconng.com, an online real time rendition of returns. The platform is presently used by over 4000 licensed BDCs to render returns to the CBN and NFIU.
Also, to ensure compliance with the Know-Your Customer (KYC) requirement, a critical element of the anti-money laundering guidelines, ABCON partnered with the Nigeria Interbank Settlement System (NIBSS), to onboard BDCs on the NIBSS platform for verification of customer information.
In addition, ABCON created naijabdcs.com, an online live exchange rate platform.