If there is one decision for the Nigerian economy that has been long overdue is the stoppage of forex supply of Bureau Du Change operators. This is due to the unpatriotic and audacious abuse of their trade guidelines over the years, which weakens the Naira, encourages money laundering and promotes illicit financial flows from Nigeria to other jurisdictions.
Prior to the stoppage, the CBN sold $20,000 weekly to over 5,000 BDCs, translating to over $100m weekly and $1.57bn annually. To ensure that genuine customers have access, the Bank directed commercial banks to set up FX Teller Points to ensure the direct sale of FX. On the other hand, a “short” position involves borrowing a particular currency at a specific rate to sell and acquire another currency while expecting the borrowed currency to depreciate against the acquired currency so that you can buy it back at a lower rate.
Alternatively, they use platforms where Forex buyers source information by getting them to post rates that would spread pessimism against the currency they wish to manipulate since the power of the currency at parallel market defends significantly on people’s confidence in its value. If the people believe the currency is not worth holding, the CBN is forced into a tight angle. In the end, it caves in.
Based on studies by Financial Action Task Force and United Nations Office on Drugs and Crime , these currency service providers can be used for money laundering, terrorist financing and illicit financial flows. They can serve as a convenient conduit for all sorts of criminality. The BDCs have, over the years, been also a prolific route for the perpetration of corruption .Cases of corruption with BDCs as accomplices have been reported in most cases of public sector corruption – due to the informal, unofficial and cash-based nature of the market.
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