Automation: BDCs rebrand for efficiency, regulatory compliance

For many years, Bureau De Change (BDC) operators were filing their weekly regulatory reports manually to the Central Bank of Nigeria (CBN) and Nigerian Financial Intelligence Unit (NFIU). The operators also lacked the technology to test the genuineness of documents presented to them by foreign exchange end-users and this had severally led to sanction, loss of revenues and damaged the reputation of Nigerian BDCs in the eyes of international community. But that changed on Tuesday, February 5, 2019 when the Association of Bureaux De Change Operators of Nigeria (ABCON) Live Run Automation Portal was unveiled to over 4,500 BDCs in Lagos.

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

ABCON President, Alhaji (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: ‘Digitising 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 that has been confronting operators for decades.

The ABCON boss said: “The objective of this launching is first, 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.”

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 filings to the CBN. To the NFIU, we conduct our Cash Transfer Report, CTR. 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 stated.

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 to deliver 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.

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,” he said.

The second layer borders 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 for forex sale.

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 complaint of CBN is whether the BDCs have the right infrastructure in place. The IMTOs look at that criterion too. They want to know if BDCs have internet, computers and scanners to capture their transactions. And all our members here today have put those structures in place. And there is about $24 billion that comes into Nigeria annually from the Diaspora.”

Continuing, he said: “The CBN only captures six per cent of the Diaspora remittances and the rest goes under the counter without any trace.  And the BDCs, with our number of 4,500, 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 said that forex business is a live business that has direct impact on the economy and livelihood of every family.

According to Gwadabe, the BDCs 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 we record more successes.”

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.

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.

He said 10 per cent transaction margin is the common global practice. He said the automation of BDCs’ operations is a good step needed to get the regulators consider raising the transaction margin for Nigerian BDCs.

Also speaking on the transaction margin, General Manager, Travelex Nigeria, Tony Enwereji, said that 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 and 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.

He said that ABCON and Travelex had come a long way, thanking the BDCs for their support.

He praised 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 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.

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

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 recognized 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 of 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 about. 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.