KARACHI: The State Bank of Pakistan on Friday amended foreign exchange regulations to enhance transparency in the transactions between exchange companies.
The central bank said the amendment was aimed at promoting documentation and transparency in foreign exchange transactions.
As per the revised regulations, exchange companies, their franchises and exchange companies of ‘B’ category are required “to settle Pakistan rupee consideration of all foreign currency purchase and sale transactions conducted among themselves through their bank accounts”.
Since Pakistan has yet not come out of the grey list of the Financial Action Task Force (FATF), foreign exchange businesses are going through a number of strict measures to improve the situation, particularly those relating to money laundering and terror financing.
On Sept 17, the FATF president said the watchdog would keep Pakistan on the gray list of countries that do not take full measures to combat money laundering and terror financing but raised hopes that its removal would follow an upcoming visit to Islamabad to determine its progress. The visit is expected this month. It was a shock for Pakistan since the country did its best for complying with the FATF conditions.
In order to block money laundering from Pakistan, a number of measures were taken by the government and the State Bank and transparency was maintained at all levels. Due to these measures, Federal Investigation Agency (FIA) was involved to check the transparency in the foreign exchange businesses. The exchange companies complain that their business drastically fell due to FIA involvement as buyers fear that they may come on the radar of the agency.
The circular issued to all banks on Friday said: “Stress has been laid on ensuring that CCTV systems of exchange companies and exchange companies of ‘B’ category should be functional at all times (i.e. 24 hours a day and 7 days a week) as required under existing regulations. However, in order to ensure transparency, it has been advised that exchange companies and exchange companies of ‘B’ category shall not carry out any business activity during the period in which CCTV system is non-functional at any of their outlet for any reason, including technical faults, until the functionality of the CCTV system is restored.”
The SBP said the minimum preservation period of video recording through CCTV system has also been enhanced from two to six months or until the inspection of the company by the SBP, whichever is earlier.
Published in Dawn, October 1st, 2022
