The Central Bank of Nigeria (CBN) has maintained restrictions on Bureau De Change (BDC) operators’ access to the official foreign exchange market, reinforcing its preference for a bank-led FX distribution system amid ongoing concerns about regulatory compliance and market stability.
Market insights from forex traders and operators indicate that the apex bank remains cautious due to past abuses in the segment, including arbitrage and round-tripping, which have long affected transparency in the foreign exchange market.
According to members of the Association of Bureau De Change Operators of Nigeria (ABCON), the restrictions are largely driven by concerns around anti-money laundering compliance and the perceived high-risk nature of the sector.
“The characterization and generalization of lack of compliance measures to Anti-money laundering and Terrorism financing rank the sector highly risky, resulting in CBN preference for fewer channels,” a senior ABCON official said, noting that the regulator continues to favour tighter control through commercial banks.
Another licensed forex trader, Umar Barkinzuwo, explained that the central bank’s approach is rooted in concerns over control and previous market abuses.
“The issue appears to revolve around concerns over control and past market abuses… authorities have preferred to channel foreign exchange through the banking system, where oversight is more centralized,” he said.
He added that fears of arbitrage and round-tripping have further influenced the regulator’s reluctance to fully reintegrate BDCs into the official FX framework.
Despite repeated appeals from operators for greater participation in the formal market to improve liquidity and stability, the CBN has continued to prioritise oversight through banks as a means of reducing leakages and improving monitoring of foreign exchange flows.
In December 2024, however, the regulator granted temporary relief by allowing BDCs to access up to $25,000 weekly from the Nigerian Foreign Exchange Market (NFEM), subject to prevailing market rates and a capped 1 per cent spread on retail sales.
BDC operators say they have since introduced reforms such as improved automation, compliance training, and self-regulation to address regulatory concerns and rebuild confidence in the sector.
However, analysts note that the continued restrictions reflect deeper structural concerns around transparency and governance in the FX market, which continue to shape the CBN’s cautious stance on broader BDC integration.
