On February 23, 2024, the Central Bank of Nigeria (CBN) implemented new guidelines and regulations for Bureau De Change (BDC) operators. This analysis delves into the specifics of these regulations, the importance of digital transformation among BDCs, their significance, the implications for businesses and actionable next steps including how to leverage Dojah’s identity verification infrastructure for KYC and compliance.

New CBN Regulations for BDCs

The latest regulations focus on fortifying corporate governance, enhancing AML and CFT compliance, refining reporting processes, and fostering transparency within BDC operations. 
Key highlights in the updated guidelines include:

1. Licensing and Capital Requirements:
   - Payment of a non-refundable license fee and mandatory caution deposit before obtaining a final license.
   - Introduction of BDC tiers: Tier 1 mandates a minimum capital of N2bn, while Tier 2 requires N500m.
2. Corporate Governance:
   - New board composition requirements for licensed and registered BDCs, including a minimum of 2 independent non-executive directors (Tier 1) and one (Tier 2).
   - Compulsory gender diversity on boards, preventing single-gender representation.
   - Mandatory compliance with the 2020 Companies and Allied Matters Act (CAMA) for publicly listed BDCs.
   - Compulsory gender diversity on boards, preventing single-gender representation.
   - Full disclosure of existing and potential board memberships in other entities, particularly CBN-regulated ones.
   - A shareholder cannot own more than one BDC, thus preventing people from holding more than one license.
3. Reporting and AML/CFT Compliance:
   - Strict adherence to the AML/CFT Act 2011, encompassing customer identification, reporting suspicious transactions to the Nigerian Financial Intelligence Unit (NFIU), and AML/CFT policy implementation.
   - Compulsory implementation of KYC checks.
   - Mandatory reporting through the upgraded Financial Institution Forex Rendition service (FIFX).
   - Digital transition necessitates integration with the CBN reporting platform, FIRS, and NIBSS for BVN verification among other things.
4. Expanded Service Offerings:
   - BDCs can now act as agents for International Money Transfer Operators (IMTOs), with limits on cash receipts and issuance of Naira cards for foreigners.
   - Introduction of Naira cards for foreigners, with cash receipts limited to amounts less than $500.
   - BDCs can now issue PTAs and BTAs.
   - Prohibition of banks and other financial institutions (OFIs) from holding BDC licenses.

Next Steps for BDC Operators

To effectively adapt to the CBN's new regulations, BDCs would be expected to take immediate action:

1. Capitalization and Licensing Requirements: Evaluate current capabilities to meet the new capital and licensing demands imposed by the regulations.

2. Transition to Digital Platforms: Initiate the shift towards digital platforms to enhance operational efficiency and compliance.

3. Compulsory KYC and AML Processes: This is where Dojah comes in to provide KYC and AML checks with our end-to-end identity verification infrastructure that covers all Nigerian government data automated address verification and more.

4. Review Governance Structures: Conduct a thorough review of governance structures to ensure alignment with regulatory expectations.

5. Train Staff on Updated Protocols: Provide comprehensive training to staff members on the updated protocols and reporting procedures to ensure adherence to regulatory standards.

Dojah as Your Strategic Partner for BDC Compliance 

Here's how Dojah's all-in-one suite of identity verification, AML compliance, and fraud prevention solutions can aid you as you digitize your BDC operations in line with the CBN's latest regulations:

Enhanced KYC Processes

Government Data Verification: Dojah allows you to validate customer data like BVN, National Identification Number (NIN), driver's license, voter ID, and passport numbers against official government databases. This instant verification ensures all identifying information is accurate and valid.

Biometric Verification: Dojah enables you to capture and match your customers' biometric data like fingerprints and facial images via our selfie ID and liveness check solutions. This provides a unique biometric trail for each customer that strengthens KYC and secures your platform from bad actors using deepfakes and bots.

Document Verification: Your customers can upload documents like utility bills, International Passports, bank statements, etc. Dojah's document verification system uses machine learning and Optical Character Recognition to validate the documents' authenticity and extract key details for further processing. Automated data extraction improves the efficiency of your operations by eliminating the need for manual data extraction from documents.

Tier-based Verifications

Dojah allows you to split the verification process into tiers and tailor each level to fit your transaction risk profiles and due diligence requirements.

• Tier 1: Low-risk Transactions: Low-risk customers can undergo basic KYC checks like phone number OTP verification.
• Tier 1: Medium-risk Transactions: Medium-risk customers can undergo more robust KYC checks like NIN and/or BVN verification.
• Tier 1: High-risk Transactions: Higher-risk customers can undergo more stringent KYC checks like biometric verification, document verification with passports, and address verification.

Automated AML Screening

Dojah's AML screening solution streamlines compliance by automating AML checks. It gives you access to 42,800+ databases across 200+ countries. Some of the watchlists and sanctions lists you can screen customers against include: 

• Global sanctions lists
• PEP (Politically Exposed Persons) lists
• OFAC's Specially Designated Nationals list.
• Adverse media across

The AML screening solution integrates seamlessly with your existing systems and automates the screening process. This streamlines compliance efforts, reduces manual workload, and minimizes the risk of onboarding high-risk individuals.

Ready to enhance your BDC operations and streamline compliance with Dojah? Create an account today. Contact us at [email protected] if you have any questions or schedule a demo session.