Foreign Exchange Bureaux and Their Role in Informal Capital Flight from Nigeria: An Exploratory Study

This study explores the potential role of Bureau de Change operators in facilitating informal capital flight from Nigeria, examining the structural vulnerabilities in the bureau de change regulatory framework that may enable illicit capital outflows. Capital flight from Nigeria has been estimated at hundreds of billions of dollars over recent decades, undermining domestic investment, depleting foreign reserves, and denying the government revenue. Bureau de Change operators, while serving legitimate foreign exchange retail functions, operate within an environment characterised by light-touch supervision relative to commercial banks, creating opportunities for regulatory arbitrage. The study adopts a qualitative exploratory research design, collecting data through in-depth interviews with 20 Bureau de Change operators, CBN regulatory officials, and financial intelligence analysts, supplemented by document analysis of CBN Bureau de Change guidelines and NFIU transaction reports. Thematic analysis is applied. The theoretical framework draws on the capital flight measurement literature and the informal economy and illicit financial flows framework. The study identifies specific operational mechanisms through which bureau de change systems may be exploited for capital flight including structuring of transactions below reporting thresholds, ghost customer transactions, and round-tripping of parallel market foreign exchange. Findings are expected to reveal identifiable regulatory gaps that warrant reform, while acknowledging the critical role legitimate bureau de change operators play in financial inclusion and remittance facilitation. Recommendations include risk-based bureau de change supervision, mandatory beneficial ownership registration, and real-time transaction reporting integration with the Nigeria Financial Intelligence Unit. Keywords: capital flight, Bureau de Change, foreign exchange, Nigeria, financial regulation