SBP acts to curb ‘undesirable’ forex outflows

KARACHI: The State Bank of Pakistan (SBP) Wednesday has taken a number of measures to curb undesirable foreign currency outflows and as per fresh directives, persons travelling to Afghanistan will be allowed to carry only USD1,000 per person per visit with a maximum annual limit of USD6,000.

In order to enhance transparency in the foreign currency transactions by exchange companies and to curb undesirable outflow of cash foreign currency, the SBP has introduced some new regulatory measures.

Exchange rate was volatile for the last few days in the domestic market, that has forced the SBP to take measures to curb undesirable foreign currency outflow.

Now, the Exchange Companies will be required to conduct biometric verification for all foreign currency sale transactions equivalent to USD500/- and above and outward remittances. This requirement will be applicable with effect from October 22, 2021.

Exchange Companies will sell the cash foreign currency and make outward remittances, equivalent to USD10,000/- and above, against receipt of funds through cheque or banking channels only.

SBP believed that these regulatory measures will help to improve documentation of sale of foreign currency by exchange companies and place a check on undesirable outflow of foreign currency.

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According to a circular, in order to strengthen regulatory regime for Exchange Companies, it has been decided to amend/change the applicable regulations relating to scope of business of Exchange Companies and Exchange Companies of ‘B’ Category. Accordingly, the relevant instructions in Exchange Companies Manual have been replaced.

As per the amendment, all foreign currency sale transactions equivalent to USD 500 or above, Exchange Companies shall retain copies of identification documents i.e., Computerized National Identity Card (CNIC)/National Identity Card for Overseas Pakistanis (NICOP)/Pakistan Origin Card (POC)/Passport (having valid visa on it or any other proof of legal stay of a foreigner in Pakistan) after having seen the document in original. In addition, Exchange Companies shall also carry out biometric verification of Pakistani Nationals for all such transactions and maintain the record thereof.”

All sale transactions of USD 10,000 or above (or equivalent in other currencies) shall be conducted by the Exchange Companies through Cheque/Bank Transfer from the personal account of the customer. Instrument/transaction reference number and issuing bank’s name shall be mentioned on the transaction receipt along with identification document number of the customer.”

Exchange Companies will also be required to retain copies of identification documents i.e., Computerized National Identity Card (CNIC)/National Identity Card for Overseas Pakistanis (NICOP)/Pakistan Origin Card (POC)/Passport (having valid visa on it or any other proof of legal stay of a foreigner in Pakistan) for conducting transfers/remittances transaction regardless of the amount. The name, address and identification document number of the customer shall also be mentioned on the receipt after due verification and with stamp of “original seen”. In addition, Exchange Companies shall also carry out biometric verification of Pakistani Nationals for all transactions and maintain record thereof.

All outward transactions of USD 10,000 or above (or equivalent in other currencies) shall be conducted by the Exchange Companies through Cheque/ Bank transfers from the personal account of the customer. Instrument/transaction reference number and issuing bank’s name shall be mentioned on the transaction receipt along with identification document number of the customer.

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According to SBP, for all foreign currency buy and sale transactions equivalent to USD 500 or above, Exchange Companies of ‘B’ Category shall retain copies of identification documents, ie, Computerized National Identity Card (CNIC)/National Identity Card for Overseas Pakistanis (NICOP)/Pakistan Origin Card (POC)/Passport (having valid visa on it or any other proof of legal stay of a foreigner in Pakistan) after having seen the document in original. In addition, Exchange Companies of ‘B’ Category shall also carry out biometric verification of Pakistani Nationals for all such sale transactions and maintain the record thereof”.

As per fresh directives, all sale transactions of USD 10,000 or above (or equivalent in other currencies) shall be conducted by the Exchange Companies of ‘B’ Category through Cheque/Bank Transfer issued from the personal account of the customer. Instrument/transaction reference number and issuing bank’s name shall be mentioned on the transaction receipt along with identification document number of the customer.”

SBP mentioned that all these instructions are applicable with immediate effect. However, for implementing the requirements for biometric verification, Exchange Companies and Exchange Companies of ‘B’ Category shall make necessary arrangements, including procurement of hardware and software and establishing connectivity with Nadra latest by October 21, 2021, while the instructions shall be applicable with effect from October 22, 2021.

Copyright Business Recorder, 2021