SBP notifies stricter rules for inland foreign currency and PKR movement

To ensure compliance with the FATF guidelines, the central bank on Friday announced stricter instructions to be followed by exchange companies for the movement of foreign currency and rupee within Pakistan


LAHORE: In light of the Financial Action Task Force’s (FATF) decision to put Pakistan on the ‘grey’ list, the State Bank of Pakistan (SBP) on Friday notified stricter rules for foreign currency movement and the rupee within the country.

The central bank on Friday published detailed instructions to all the exchange companies (ECs) apprising them to bring all currency movements under its stringent supervision.

To further strengthen the regulatory AML requirements for documentation and record keeping, it has been decided that while carrying out transactions requiring movement of Pakistani Rupees (PKR) and Foreign Currency (FCY) within company’s authorized network, each outlet of ECs and ECs – B shall be allocated working capital keeping in view the business needs by the head office of the respective exchange company, said the central bank.

While speaking to Profit, Pakistan Forex Association President Malik Bostan said “the central bank’s move will cause immense problems as rupee’s value will further erode against the greenback and the requirement of only using bank accounts for currency movements will create headaches for currency dealers and customers.”

Bostan said “We have conveyed our reservations to the State Bank of Pakistan in this regard and a meeting will be held on Monday morning to discuss the matter.”

It added “ECs and ECs – B shall conduct the exchange business only from such premises as approved by the State Bank. ECs and ECs – B shall not provide delivery services to the customers.”

SBP said the purpose for the movement of cash PKR and FCY shall be properly documented and recorded, after necessary authorization in the system on a real-time basis by the head office.

Furthermore, the SBP stated only bank accounts shall be used for the movement of PKR between the cities.

“The movement of cash PKR (within a city) and FCY (across Pakistan) shall be undertaken only by the authorized employee(s) in company’s owned vehicles, through air transit or by cash-in-transit company”, said the central bank.

“The movement of cash PKR and FCY by the franchises of ECs shall be processed under the permission from the head office of respective EC and such movement of cash PKR and FCY shall be documented in their system, said the SBP.

The movement of cash PKR and FCY by the franchises shall only be carried out by the authorized individuals, who have been registered with and authorized by the respective franchiser.

Also, SBP said documentary evidence of travel of authorized employees or registered individuals (for franchises), including tickets issued in their names or receipts issued by Cash-in-Transit Company shall be maintained by ECs and ECs – B.

The exchange company shall develop and implement standard operating procedures (SOPs), duly approved by their Board of Directors, considering the above instructions, said the central bank.

Lastly, SBP shared “ECs and ECs – B shall maintain the record of all transactions relating to the movement of Pakistani Rupees (PKR) and Foreign Currency (FCY) which shall be examined during the course of on-site examinations.”