All
Authorised Dealers
in Foreign Exchange,
All Authorized Money Changers
Dear
Sirs,
CODE
OF CONDUCT FOR AUTHORIZED
MONEY CHANGERS IN FOREIGN EXCHANGE
Attention
is invited to the amendments made in the Foreign Exchange
Regulation Act, 1947 (VII of 1947) vide Finance Bill, 1999,
as reproduced in Annexure ‘A’ to this circular.
The amendments empower the State Bank to regulate the foreign
exchange business of "Money Changers". While the
longer-run strategy of granting licences, formulating rules
and regulations for the conduct of business and maintaining
records and supplying information to the State Bank is to
be developed by the State Bank in consultation with bankers,
money changers and representatives of the private sector,
the present speculative activity in the "kerb market"
has necessitated the adoption and enforcement of the following
immediate measures. These instructions are being issued
in exercise of the power vested in the State Bank by the
Foreign Exchange Regulation Act and shall become effective
immediate.
No
person or institution that does not hold a valid licence
from the State Bank for dealing in foreign exchange as "money
changer" or as "authorized dealer" shold
engage in the business of buying and selling of foreign
exchange in any place anywhere in Pakistan.
Those
who have valid licence as "money changer" under
the existing procedures can continue to conduct foreign
exchange business by strictly adhering to the rules and
regulations and instructions issued by the State Bank of
Pakistan from time to time. Any violation of the instructions
would make them liable for action under the relevant laws.
In
supersession of the instructions laid down in paragraph
6, Chapter II of the Foreign Exchange Manual as amended
from time to time, the Authorized Money Changers shall conduct
business, inter-alia. In accordance with the following instructions:-
Authorized
Money Changers’ activities will be restricted to purchase
and sale of foreign currency notes and coins only. They
shall not buy or sell travellers cheques.
No
transfer of funds abroad shall be made through illegal channels
such as "Hundi system". All transfer of funds
shall take place through banking channels, following the
instructions given to the banks from time to time for the
purpose.
The
Authorized Money Changers shall prominently display the
rates for purchase and sale of major currencies daily at
their places of business.
The
Money Changers shall maintain permanent books of accounts
to record all sales and purchases and every transaction
must be recorded in such books on a daily basis. Failure
to maintain such records would prompt action by the State
Bank of Pakistan. State Bank inspection teams can examine
records. Books and accounts at any time and those must be
made available to the inspectors without hesitancy or hindrance.
Dealing
between Authorized Money Changers and customers should be
supported by receipts/vouchers for all transactions. A transaction
done without a proper receipt will be treated as illegal
transactions.
The
financial institutions, including commercial banks, are
prohibited from selling or purchasing foreign exchanges
from the money changers, on their own account or on the
account of their clients except when they may be explicitly
allowed by the State Bank. Similarly, no public sector institution
and no government agency shall sell or purchase foreign
exchange from the market other than the inter-bank market.
Diplomats and home-based members of Diplomatic Missions
and expatriate employees of international organizations
should also sell and purchase foreign exchange only in the
inter-bank market.
A
weekly statement of sales and purchases, for weeks ending
on the 8th, 15th, 22nd
and the last day of each month will be submitted to the
area control office of the State Bank within three days
in the proforma attached as Annexure B.
ANNEXURE ‘A’
1.
Amendment of Act VII of 1947: The following further
amendments shall be made in the Foreign Exchange Regulation
Act, 1947 (VII of 1947), namely: -
-
In
Section 2, after sub-section (aa) the following new
sub-section shall be added, namely: -
"(ab)"
authorized money changer" means a person for the
time being authorized under section 3A to deal in foreign
currency notes, bank notes, coins and travellers cheques".
-
In
section 3, sub-section(5) shall be ommitted.
-
After
section 3, the following new sections shall be inserted,
anmely;-
"3A
Authorised Money Changers in foreign exchange: -
-
The
State Bank may, on application made to it in this
behalf, and on payment of a fee prescribed by it,
from time to time, authorize any person to deal in
foreign currency notes, bank notes, coins and travellers
cheques.
-
The
power conferred under sub-section(1) shall be exercised
on the basis of criteria prescribed, and recommendations
made, by a committee consisting of such official and
non-official representatives as may be nominated by
the State Bank.
-
An
authorization made under this section may be for a
specific period of time, which may be renewed thereafter.
-
An
authorized money changer shall, in all his dealings
under the authorization, comply with such general
or special directions or instructions as the State
Bank may, from time to time, think fit to give including
those for supply of data, the rate and code of conduct
in doing business. Failure to comply with the instructions
may lead to suspension of the licence or other actions
as necessary".
"3B,
Cancellation of Authorization: -
Without
prejudice to the provisions of section 23B, if an authorized
dealer or money changer commits a contravention of any term
of authorization or uses, it for any purpose other than
the purpose, or after the expiry of the period, for which
it was given or contravenes or attempts to contravene or
abets the contravention of the provisions of, or the general
or special directions or instructions or permissions issued
by the State Bank from time to time under any provisions
of, this Act or any rules made the reunder or engages in
transactions not in conformity with the terms of authorization
or fails the comply with any of the provisions of this Act
or any rules, directions, instructions, or permissions made,
issued or given thereunder or in the public interest it
is necessary so to do or there otherwise exist reasons appearing
sufficient to the State Bank, after giving a reasonable
opportunity of being heard to the authorized dealer or money
changer cancel the authorization.
Provided
that, if, in the opinion of the State Bank, any delay would
be prejudicial to the public interest, the State Bank may,
at the time of giving an opportunity as aforesaid or at
any time thereafter and pending the hearing as aforesaid
if any, by order suspended, for a period specified in the
order, the authorization either wholly or to such extent
as may be so specified".
STATEMENT
OF FOREIGN CURRENCY
TRANSACTIONS
FOR THE WEEK ENDED.
Name
and Address of the Money Changer_________________________________
____________________________Licence
No.___________________________________
Date
of Issue ___________________________.
Currency
Opening Balance Total Purchases Total Sales
Closing Balance
___________________________
Authorised
Signature