Enhancing Compliance among Currency Dealers

The recent digitisation of Bureaux de Change operations with the launch of the association’s live portal is expected to enhance compliance by the currency dealers, writes Obinna Chima

The Association of Bureaux De Change Operators of Nigeria (ABCON) recently unveiled its live run automation portal to over 4,500 Bureau De Change (BDCs) in Lagos.

The initiative which has the backing of the Nigerian Financial Intelligence Unit (NFIU), the Central Bank of Nigeria (CBN) and the Nigeria Interbank Settlement System (NIBSS), is expected to improve compliance and ensure seamless operations of the currency dealers.

ABCON President, Alhaji Aminu Gwadabe, described the initiative as a game changer for the sub-sector.

Gwadabe who spoke on the theme: ‘Digitising BDC Operations for Efficiency, Transparency and Regulatory Compliance,” said the project would enhance BDCs compliance with set regulations, restore their lost glory and promote market integrity.

The platform, Gwadabe explained, allows BDCs to send their reports online real time, thereby removing the challenge of manual rendition of reports that has been confronting operators for decades.

“The objective of this launching is firstly, 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 has 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,” the ABCON boss explained.

Gwadabe added: “This is our own way of improving the image of Nigeria in the eyes of international community. Remember that this year will witness the visit of Financial Action Task Force (FATF) to Nigeria for the assessment of the country.

“The FATF views BDCs as one of the weakest links in the Nigerian financial services value-chain. So, because of that, we want to improve the entire perception of BDCs in Nigeria more importantly by putting tested IT infrastructure for our members to utilise.”

He further explained that the automation integrates three of Nigeria’s regulatory agencies. First, it addresses the CBN, NIFU and the NIBSS platforms.

“We send our Suspicious Transactions Reports (STRs) daily utilisations and purchases fillings to the CBN. To the NFIU, we conduct our Cash Transfer Report, STR. The NIBSS platform will capture Know Your Customers (KYC) validation and Bank Verification Number (BVN) validation of our clients. So, you can see, it is robust and all-encompassing in addressing anti-money laundering and terrorism financing.

“The anti-money laundering and terrorism financing is fast damaging the image of financial institutions, and BDCs are no exceptions. That is why we are putting this automation for our members to be empowered to compete globally, and comply with regulations with ease,” Gwadabe added. The ABCON boss said the world was going digital, and BDC operators under his leadership was committed to staying ahead of the competition by deploying time-tested technology to deliver effective services to forex end-users.

According to him, the portal would sustain transparent transactions in the BDC corridor, boost the morale of its members and ensure sustained operations. Gwadabe explained that the project came with three layers and stages. 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.

He said that with this development, the NFIU, EFCC and CBN supervision officials do not need to physically visit BDC offices to look at their books and ascertain the level of compliance adding that the technology driving the project is cloud-based. He said the scheme will enable the BDCs to save cost and make more money from their operations.

He advised: “If you remove compliance, we become enemies of NFIU, CBN and even EFCC. So, operators have to give priority to compliance and following due process in their work. Remember, the ABCON members are the key drivers of the forex market and their contributions to exchange rate stability are being acknowledged by the regulators, hence the level of quality representation we have seen at today’s event”.

He explained that once a BDC operator violates set regulation due to non-compliance, it will adversely affect such operator and could even lead to outright withdrawal of operating licenses.

NIBSS Representative, Samuel Oleyemi, said ABCON and NIBSS started the automation journey when everyone was still doubting the possibility of making it happen. He said that BDC business is globally recognised and contributes immensely to financial system growth.

“The financial system is incomplete without BDCs. We at NIBSS want you to continue to comply with set regulations. NIBSS will partner with ABCON to ensure that only 36.6 million people in Nigeria with BVN will buy dollar from BDCs,” Oleyemi said.

Also speaking, representative 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 you 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 sanction if we lack to power to act,” he stated.

Exchange Rate Stability

According to the currency dealer, it is because of various initiatives introduced by ABCON the years that have supported the stability of the naira.

This, he pointed out was why the naira has been stable at both the official and parallel markets despite huge campaign spending by political parties. He also linked the stable exchange rate to measures instituted by the central bank to ensure that foreign exchange demand at the retail end of the market was met. Gwadabe listed such measures to include the sustenance of dollar supply to over 4,100 BDC operators across the country through the International Money Transfer Operations (IMTOs) forex window, which he said had helped the status of the local currency.

“The naira remains stable despite political party’s campaigns and spending across the nation. The strategic partnership, actions and pre-actions of the CBN and ABCON have stopped distortions to the exchange rate due to ongoing politicking and campaign spending in the country

“ABCON has on its part, ensured that its members continue to make dollar accessible to critical end-users like travellers demanding personal and business travel allowances, school fees and medical bills payment abroad among others,” he said.

He said ABCON was aware that money laundering and terrorist financing posed not only enormous threat, but also enormous challenges to the economy, security, and social life of Nigerians, the West Africa region and globally.

Owing to this, he disclosed that a joint study conducted by the Global Financial Integrity (GFI) and the African Development Bank (AfDB) had shown that between 2000 and 2009, about $30.4 billion was illicitly transferred out of Africa each year. Over a longer period of 30 years, calculated from 1980, the resource drain was between $1.2 and $1.3 trillion.

According to this, outflows from West and Central Africa stood at 37 per cent, followed by North Africa -31 per cent and Southern Africa – 27 per cent. The illicit financial flows (IFFs) are derived from various predicate offences of money laundering.

“I want to assure you that BDCs under ABCON do not want to be part of the groups contributing to the IFFs and therefore, we are doing everything within our power to ensure we comply with AML/CFT rul

The IMTOs Challenge

The ABCON boss said the group was discussing with the CBN on making BDCs International Money Transfer Operators (IMTOs) direct agents 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 annually from the Diaspora.

“The CBN only captures six per cent of this diaspora remittances and the rest goes under the counter without any tracing. And the BDCs with our number of 4,500, (only China that has 1,500 in the world), we are actually the best to utilise the inflow of IMTOs. They are about 60 now, and we are still pushing to the CBN, letting them know that we can do it and the full automation of BDCs’ operations launched today is another milestone and proof that we are ready to play that role in the interest of the economy,” he stated.

Gwadabe also called 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, General Manager, Travelex Nigeria, Tony Enwereji, said in other countries where the company operates, transaction margin is always around six per cent.

“Our lest margin globally is six per cent. But your patience 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.