SBP documents foreign currency transactions over $2,000

KARACHI: The State Bank of Pakistan (SBP) on Friday made foreign currency transactions above $2,000 compulsory through banking channels to document foreign currency sales and purchases.

In this regard, the central bank has amended the handbook of exchange companies to ensure documentation of the purchase and sale of foreign currencies.

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In a statement, the SBP said that to further improve transparency and promote documentation in foreign exchange transactions, the central bank has informed foreign exchange companies that all foreign currency sales transactions of $2,000/- or more (equivalent in other currencies) against Pakistani Rupee (PKR) should only be made by payment methods, such as bank transfer/cheque from the customer’s personal bank account.

“This step is also intended to encourage the general public to use various, generally safer, banking channels to meet their genuine currency needs,” the SBP added.

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The central bank has issued a circular in this regard drawing the attention of exchange companies and class “B” exchange companies to the instructions contained in paragraph 9 (i) (g) and paragraph 9 (iii). ) (g) of Chapter 3; and Paragraph 12(i)(d) of Chapter 8 of the Exchange Company Handbook.

In order to further strengthen the regulatory regime of exchange companies and encourage customers to use banking channels for the purchase of currencies from exchange companies, the existing regulations prescribing the scope of business of exchange companies have been amended, which will take effect immediately:

Paragraph 9(i)(g) Chapter 3 of the Exchange Companies Handbook

All foreign currency sales transactions of USD 2,000 or more (or equivalent in other currencies) against PKR will be carried out by the exchange companies by bank transfer/cheque to the client’s personal account. The transaction/instrument reference number and the name of the bank transferring the funds/issuing the instrument must be mentioned on the transaction receipt along with the client identification document number.

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Paragraph 9(iii)(g) Chapter 3 of the Exchange Companies Handbook

All foreign currency sales transactions for an outgoing deposit of USD 2,000 or more (or equivalent in other currencies) against PKR must be carried out by the exchange companies by bank transfer/cheque to the client’s personal account . The transaction/instrument reference number and the name of the bank transferring the funds/issuing the instrument must be mentioned on the transaction receipt along with the client identification document number.

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Paragraph 12(i)(d) Chapter 8 of the Exchange Company Handbook

All Foreign Currency Sell Transactions of $2,000/- or more (or equivalent in other currencies) against PKR will be processed through Class “B” Exchange Companies by wire transfer/cheque from customer’s personal account. The transaction/instrument reference number and the name of the bank transferring the funds/issuing the instrument must be mentioned on the transaction receipt along with the client identification document number.

The SBP has warned that failure to comply with these instructions will result in regulatory action under the relevant provisions of the Foreign Exchange Regulation Act 1947.