The Association of Bureau de Change Operators of Nigeria, in collaboration with the Nigeria Interbank Settlement System, recently organised a programme for BDC operators on the use and deployment of the Bank Verification Number Validation Portal. Obinna Chima highlights the benefits of this system to the foreign exchange market
In exercise of its powers and in line with its desire to promote and facilitate the development of efficient and effective payment systems in the country, the Central Bank of Nigeria (CBN) recently issued the regulatory framework for the bank verification number (BVN) operations.
This was part of the overall strategy of ensuring effectiveness of the Know Your Customer (KYC) principles, and the promotion of a safe, reliable and efficient banking system.
Clearly, the BVN has become a veritable tool for fighting fraud also in the foreign exchange (forex) market as it has also been deployed by the CBN to achieve transparency in forex deals and sustain exchange rate stability.
While the Nigeria Interbank Settlement Systemâ€™s (NIBSS) powered BVN Validation Portal used by BDCs to promote transparency in forex deals has also been helpful.
This was why the Association of Bureaux De Change Operators of Nigeria (ABCON) and the NIBSS recently organised sensitisation programmes across the six geopolitical zones for over 3,500 BDC operators. The programmes were meant to enlighten BDCs on the usage and deployment of BVN Validation Portal for industrial benefits. The NIBSS BVN Validation Portal helps BDCs to ascertain the genuineness of BVNs of customers wanting to buy forex. The CBN had directed BDCs to validate the authenticity of BVN that clients wanting to buy forex submit to them.
The ABCON President, Alhaji Aminu Gwadabe, said the sensitisation programme was part of the associationâ€™s confidence-building agenda to ensure that BDCs abide by forex rules.
â€œThe programme held in the six geopolitical zones â€“ namely Kano, Lagos, Awka and Abuja, among others is our input to CBNâ€™s policy implementation. It is an opportunity to take confidence-building in BDCsâ€™ operations to greater heights. ABCON leadership has zero tolerance for its members that breach operational guidelines,â€ he said.
But Gwadabe appealed to the CBN to help BDCs reduce rising bank charges associated with their transactions.
â€œBDCs are charged N1,000 per N1 million transaction and with each operator paying as much as N67,000 for the N67 million monthly transactions. These charges are too high, and I urge the CBN to help reduce the charges which are becoming huge burden on BDC operators,â€ he said.
He disclosed that this fee has made it difficult for many BDCs stay profitable in the business because of the rising operating costs and including overhead. â€œI appeal to the CBN to address this challenge so that the market will continue to enjoy ongoing stability,â€ he said.
The BVN captures customersâ€™ biometric data, such as fingerprints, provides unique identification number for the customers and protects their accounts from unauthorised access, identity theft and fraud.
The CBN had ordered that customers desiring to purchase forex through all channels must provide their BVN, which shall be validated by the CBN authorised forex dealer through the NIBSS platform before the transactions are consummated.
The regulator said any authorised forex dealer that fails to provide the required information in its returns or provides a wrong BVN would be penalised; this may include the termination of the forex dealership authorisation.
The information must be included in the forex returns to the regulator. In the case of corporate customers, the BVN of a director of an authorised signatory of the entity must be provided to the BDC.
Gwadabe explained that to ensure a hitch-free implementation of the central bankâ€™s directive, the CBN has continuously provided list of all licensed BDCs to the NIBSS to enable the firm make available the necessary hardware token that would be used by the BDC in accessing the NIBSS portal.
The NIBSS has subsequently made the portal available on its website to facilitate access for the confirmation/validation of the BVN number of the BDCsâ€™ customers.
Gwadabe disclosed that all forex-buying customersâ€™ BVNs must be validated by the CBN authorised forex dealer through the NIBSS portal before all transactions are consummated. He said that ABCON carried out the sensitisation to ensure that BDCs effectively comply with the directive.
The CBNâ€™s rule requires that a token transaction fee of N100 would be paid for each access on the portal. The NIBSS will also provide the necessary training manual for an â€œeasy to useâ€ operation of the system,â€ the CBN said.
The CBN also directed that any BDC that fails to provide the required information in its returns, or provide a wrong BVN would be penalised. First offenders will be required to pay a fine of N1 million while any subsequent violation of requirement may lead to the revocation of the operating license of the BDC.
Benefits to BDCs
Analysts have said BDCsâ€™ compliance with the NIBSSâ€™s BVN Validation mandate would be positive for the forex market as it would help in sanitising the system.
It is expected to increase the level of patronage of BDCs in the country.
Gwadabe explained: â€œEven local and international investors, including Diaspora agencies are more likely to commit their funds to BDCs as the sector becomes more transparent.â€
He explained that in many advanced countries, BDCs are direct agents of International Money Transfer Operators (IMTOs) because of the established transparency and infrastructure in those countries.
The ABCON leader said the BVN Validation portal is one of the infrastructure now available for BDCs to compete favourably and take over the retail-end of the forex market that rightly belongs to them.
According to him, the platform is also expected to promote financial inclusion, and get more people into the financial services net.
â€œPeople who are not connected to the financial system but want forex will have no option than to open account with commercial banks and obtain their BVNs. It is our own contribution to CBNâ€™s financial inclusion project and determination to take financial services to the grassroots,â€ Gwadabe said.
On his part, the NIBSS Managing Director, Mr. Ade Shonubi explained that the portal was developed to enable BDCs comply with the CBNâ€™s directive that BDCs customers provide their BVN before buying forex.
He also agreed that such exercise would bring about transparency in the market and prevents multiple supply of forex to single individual.
Shonubi said NIBSS had deployed two services on the Web and phone that would make BVN verification for BDCs customers and others as easy as possible.
Explaining the process for the exercise, he said in accessing the phone for the verification, the first step is for customers to dial a designated number, enter the BVN code type, date of birth and click on send. While for the web portal, the customer needs to visit the NIBSS website.
Shonubi said customers would be charged N10 for USSD transactions through their phones and N20 for the web portal which the customer would be required to pay either with credit card or internet banking.
According to him, the essence of the verification is to checkmate sharp practices among BDCs operators and customers.
He, however, noted that once a customer carries out the verification either on phone or the Web portal, such customer does not need to verify again when dealing with the same BDC operators.
These were some of the issues addressed Gwadabe said these were some of the issues that BDCs that participated in the sensitisation programme were taught.
Also, Gwadabe, praised the CBNâ€™s drive to stabilise the forex market, stem the rampant cases of forex leakages and illicit money transfer from the country.
He said that ABCON aligns with the CBNâ€™s vision of providing a stable framework for the economic development of Nigeria through effective, efficient, and transparent implementation of monetary and exchange rate policy, and management of the financial sector.
Gwadabe said the ABCON would continue to work closely with the CBN to ensure BDC operators abide by regulatory rules. He further promised to ensure strict compliance to the provisions of the anti-money laundering laws observance of appropriate Know-Your-Customer (KYC) principles in the handling of forex transactions.