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High Hope for higher Transaction Margin as BDCs Digitalise Operations

Bureau De Change (BDC) operators have for long complained of low transaction margin. Through the Association of Bureaux De Change Operators of Nigeria (ABCON), they consistently called on the Central Bank of Nigeria (CBN) to review their transaction margin upward to five per cent.

To them, the current one per cent they take is not sufficient and falls below global standard of 10 per cent. However, the regulator had based its reluctance to review the margin on the BDCs poor operating standards, especially non-digitisation of their operations.But all that changed last week, following the launch of the ABCON Live Run Automation Portal in Lagos, which is seen as a good step in getting the regulator to consider raising the transaction margin for them.

For decades, the BDCs were filling their weekly regulatory reports to the CBN and Nigerian Financial Intelligence Unit (NFIU) manually.

They 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 damage to their reputation in the eyes of international community.

But when the ABCON Live Run Automation Portal was unveiled on  February 5, to allow over 4,500 BDCs digitise their operations, the wrong perception people and the international community had changed for good.

The portal is the final phase to automating all BDCs’ operations and integrating their operations with those of the CBN, NFIU and the Nigeria Inter-Bank Settlement System (NIBSS) for improved compliance with regulation and seamless operations.

ABCON President, Dr. Aminu Gwadabe, who unveiled the platform at the event attended by over 4,000 BDCs, regulatory agencies and players in the financial sector, described it as a game changer in the Nigeria BDC industry.

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

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

The ABCON boss said: “The objective of this launching is firstly, to change the negative perception towards the 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.”

According to Gwadabe, even foreign investors look at the perception of every country before deciding to do business with such country. “So, 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 said.

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 said.

The ABCON boss said the world is going digital, and BDC operators under his leadership are committed to staying ahead of the competition by deploying time-tested technology in delivering effective services to forex end-users.

According to him, the portal will sustain transparent transactions in the BDC corridor, boost the morale of its members and ensure sustained operations.

The CBN was represented at the event by Assistant Director, Trade and Exchange Department, Mrs. Adebola Ayedun; Samuel Oluyemi represented NIBSS Acting Managing Director, Niyi Ajao; and NFIU was represented by Adangbe Williams while Tony Ewerem represented Travelex Nigeria

Higher Transaction Margin for BDCs

Travelex Nigeria General Manager, Tony Enwereji, who also spoke on the transaction margin, said in other countries where the company operates, transaction margin is always around six per cent. “Our least 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, adding that ABCON and Travelex have come a long way.

He thanked the BDCs for their support, praising the ABCON management led by Gwadabe for its foresight and ideas that have continued to lift BDC business in the country.  “ Where you are taking ABCON to 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.

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

NIBSS representative, Samuel Oleyemi, said ABCON and NIBSS started the automation journey when everyone was doubting its possibility. He said 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 ABCON to ensure that only 36.6 million people in Nigeria with BVN will buy dollar from BDCs,” Oleyemi said.

Representative of Head Compliance at NFIU, Adamgbe Williams, urged the 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 the power to act,” he stated.

The IMTOs’ challenge

The ABCON boss said the group is  still 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 looked at that criterion 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,”he said.

He continued: “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 said.

According to Gwadabe, forex business is a live business that has direct impact on the economy and the livelihood of every family.

He said forex inflows through the IMTOs window are sustainable, because Nigerians in Diaspora will keep sending money home to cater for the families. “That is why ABCON has taken this bold move to ensure that forex business is sustained through automation and by regulatory compliance, to keep the business going,” he said.

The ABCON boss also said the automation is a form of rebranding for the group, and separating genuine BDCs from fake, adding that in 2014, there was a CBN circular where the regulator increased the BDC’s capital base from N10 million to N35 million and compulsory deposit of N35 million. It also promised in a circular that it will make BDCs IMTOs direct agents.

“We are working with Travelex, and Western Union to see how we can become direct agent of Western Union. And there is a benefit to that. Right now, the IMTOs are selling their proceed at N355 to dollar. So, we will be part of that rate, and that will also enhance price discovery, transparency and more inflows will come. We are playing a role in the Investors’ and Exporters’ (I &E) Forex window, whereby we advise the CBN that instead of the investors saying they will not come because of multiplicity of rates, why not give us  those inflows. And today, that is what we are doing and that’s why we have recorded this level of success,” he said.

The BDCs, Gwadabe said, have unified the street rate and the official BDC rate. “We are talking of N358 to dollar official rate and even N360 to dollar, which is the benchmark of the CBN. So, I congratulate our members and we are celebrating ourselves and that’s why we are coming with IT to ensure that we record more successes,”he said.

According to him, with this development, the NFIU, EFCC and the CBN supervision officials do not need to physically visit BDC offices to look at their books and ascertain the level of compliance. He added 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.

“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 advised.

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

How the portal works

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.

EFCC, ABCON deepen anti-money laundering fight

The Economic and Financial Crimes Commission (EFCC) and the ABCON have taken the campaign against money laundering and terrorism financing to BDC operators at the Murtala Muhammed Airport 2 (MM2), Lagos.

Speaking during the sensitisation programme against money laundering and terrorism financing campaign at MM2, which was attended by many BDC operators, EFCC Chairman, Ibrahim Magu, called for continuous sensitisation on issues around Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT) reporting  to improve transparency in BDCs operations. He said the EFCC will continue to campaign for financial integrity and transparency in BDCs’ operations.

Other stakeholders at the event also spoke on the use of BDCs for illicit political transactions, illegal border cash evacuation, reporting of suspicious transactions, fraud accounts transactions and cash dollar deposits on domiciliary accounts.

Independent sources alleged that the choice of MM2 was because the centre remains a major spot for illegal funds transfer and border cash evacuation in the country.

Speaking at the event, Gwadabe said the BDC sector is part of the financial system and is seen as the weakest link in the financial system. He appealed to the regulators to approve  the group’s request  for the establishment of the institute’s Training Centre  and building capacity of over 4,500 BDC operators for better understanding of the menace of money laundering and terrorism financing.

Gwadabe, said the anti-money laundering sensitisation programme  was intended to familiarise BDC operators with the process of money laundering – the criminal business used to disguise the true origin and ownership of illegal cash – and the laws that make it a crime.

He  said the programme was also meant to help BDCs maintain minimum standard of record keeping and increasing level of investors’ confidence for the economy.

He said the group will continue to pursue Nigeria’s admission into the Financial Action Task Force (FATF) due this year.

The  FATF is an inter-governmental body established in 1989 by the Ministers of its Member jurisdictions.

The FATF is therefore a “policy-making body” which works to generate the necessary political will to bring about national legislative and regulatory reforms in these areas.

Gwadabe said the sensitisation of BDCs and other capacity building for BDCs will create awareness on the need to check money laundering and terrorist financing in this period of electioneering; ensure that BDCs are not used to launder funds by Politically Exposed Persons (PEPs).

It will also upscale BDCs’ compliance with the Anti-money Laundering and Combating the Financing of Terrorism (AML/CFT) for Banks and other Financial Institutions in Nigeria Regulations, 2013.

ABCON has for years been an active group in the financial services sector, concentrating more on the BDC segment of the market and ensuring that global best practices are followed in BDCs operations.

The association has on its own, organised trainings for its members, and partnered NFIU and the EFCC to build capacity for operators. BDC operators have been trained on how they can help in tackling money laundering, terrorist financing and the benefits of keeping records of their transactions.

The anti-money laundering training, which ABCON organised with NFIU in Lagos was meant to familiarise BDCs with the process of money laundering—the criminal business used to disguise the true origin and ownership of illegal cash—and the laws that make it a crime.

The EFCC/ABCON goal is to ensure that BDCs are not used to launder funds by politically exposed persons (PEPs), especially at this period of electioneering.Thenation

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