CHAPTER
II
AUTHORISED
DEALERS AND MONEY CHANGERS
-
Authorisation
to deal in Foreign Exchange.
-
Application
for Authorised Dealer’s Licence.
-
Authorised
Dealers to engage in Transactions within the Scope of their Authorisations.
-
Authorised
Dealers should satisfy that no Contravention or Evasion
of the Provisions of the Act is contemplated.
-
Authorised
Money Changers (AMCs).
-
Code
of Conduct for Authorised Money Changers.
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Inspection
of Authorised Money Changers.
1.
Authorisation to deal in Foreign Exchange.
(i)
In terms of the
powers vested in it by section 3 (1) & 3 (2) of the Act,
the State Bank may on application authorise any person to deal
in foreign exchange. An authorisation may authorise dealings
in all foreign currencies or may be restricted to authorising
dealings in specified foreign currencies only and may authorise
transactions of all descriptions in foreign currencies or may
be restricted to authorising specified transactions only.
(ii)
Authorisations to deal in all foreign currencies and
in approved transactions of all descriptions are issued to those
scheduled banks which conduct all types of banking transactions.
Authorisations limited to specified transactions are issued
to those Non-bank financial institutions which undertake limited
banking transactions.
2.
Application for Authorised Dealer’s Licence.
(i)
Applications for grant of Authorised Dealer’s Licence
should be made by the Head Office of the bank/NBFI or the Principal
Office in Pakistan in the case of a foreign bank, to the Director,
Exchange Policy Department, stating the nature of transactions
that are desired to be dealt with and it should be confirmed
that trained staff and the required systems and equipments to
handle foreign currency transactions are available.
(ii)
Once the Head Office/Principal Office of a bank or NBFI
has obtained an authorisation to deal in foreign exchange, it
would be free to decide the names of those of its branches,
which would conduct foreign exchange business. In case it is
decided that a branch which was not previously
authorised to deal in foreign exchange, is to be allowed
to start such business, its name and address shall be communicated
to the Director, Exchange Policy Department, who will allocate
a code number to the branch for statistical purpose. The branch
can, thereafter start dealing in foreign exchange.
(iii)
Every Branch of a bank authorised to deal in foreign exchange,
is however authorised to purchase foreign currency notes, coins,
travellers cheques and demand drafts. Such transactions should
be reported to a branch designated by its head office/controlling
office for consolidation and reporting to the State Bank through
the prescribed returns.
(iv)
The State Bank may, without assigning any reason, refuse
to grant an authorisation to deal in foreign exchange. It may
also withdraw an authorisation already granted or prohibit dealings
in foreign exchange by any branch of an Authorised Dealer in
accordance with the powers vested vide section 3B of the Act.
(v)
A list of Authorised Dealers in Foreign Exchange is given
in Appendix IV.
3.
Authorised Dealers to engage in Transactions within the
Scope of their Authorisations.
An
Authorised Dealer shall, in all its dealings in foreign exchange,
comply with such general or special instructions which the State
Bank may give from time to time and shall not engage in any
transaction involving foreign exchange which is not in conformity
with the terms of its authorisation.
4.
Authorised Dealers should satisfy that no Contravention
or Evasion of the Provisions of the Act is contemplated.
An
Authorised Dealer shall, before undertaking any transaction
in foreign exchange within the scope of its authorisation, on
behalf of any person, require that person to make such declarations
and to give such information as will reasonably satisfy it that
the transaction will not involve and is not designed for the
purpose of any contravention or evasion of the provisions of
the Act or of any rules, directions or orders made thereunder.
If any person refuses to comply with any such requirement or
makes only unsatisfactory compliance therewith, the Authorised
Dealer should refuse to undertake the transaction and should,
if it has reason to believe that contravention or evasion of
the provision of the Act is contemplated, report the matter
to the State Bank.
5. Authorised Money Changers
(AMCs).
In
terms of the powers vested by Section 3A of the Act the following
terms and conditions are laid down for grant of AMC’s Licence
to Pakistani nationals and resident Pakistani firms and companies:
-
i)
Application for grant of licence to act as an AMC should be
made to the area office of the Exchange Policy Department where
the applicant’s business is located. The application should
contain full particulars as regards business conducted by the
applicant, location of business premises, name and address of
the proprietor/partners/directors of the applicant and the same
may be routed through an Authorised Dealer/applicant’s banker
who should enclose a confidential report on the financial standing
and creditworthiness of the applicant and its suitability for
grant of AMC’s licence. The grant of AMC’s Licence will be subject
to the following terms and conditions: -
a)
Applicant will be required to pay application-processing
fee (non-refundable) through pay order in favour of State Bank
for grant of fresh licence and for renewal upto 30th June of
each year. Fee for the purpose will be as under: -
aa)
(Single office)
-
Fresh
licence
Rs.100,000/-
-
Renewal
of licence
Rs.12,000/-
bb)
(Multi
Branches)
Fresh licence
-
Head
office
Rs.200,000/-
-
Branch
Rs.100,000/-
each
Renewal of licence
-
Head
office
Rs.60,000/-
-
Branch
Rs.12,000/-each
b)
An applicant for grant of fresh licence will also produce
the following documents: -
aa)Police
verification report to the effect that the applicant was not
involved in any illegal activities. However, this will not be
applicable in case of existing Money Changers. AMC licence will
not be issued to a person who was found involved in illegal
activities or was convicted by a Court of Law.
bb)Copies
of National Identity Card and NTN Certificates of proprietor/partners/
directors.
cc)Wealth
Statement and evidence of being a taxpayer as detailed in the
following sub-paragraphs (ii) and (iii).
dd)Evidence
to the effect that the applicant possesses a suitable business
space built on an area of not less than 10' x 10' in size in
which no other business activity of whatsoever nature will take
place. Proper counter(s) shall be installed for public convenience.
However, this requirement will not be applicable for hotels,
curio shops, and booths at airports/departmental stores or where
specially permitted by the State Bank on the merit of each case.
The State Bank of Pakistan will have the right to declare any
premises un-suitable for the conduct of money changer’s business,
if it is not suitably located in a public place.
ee)An
undertaking to the effect that the request is being made for
single office/multi branches, as the case may be, and the applicant
has thoroughly studied the Code of Conduct for AMCs and will
abide by all rules and regulations mentioned therein or issued
from time to time.
ff)
Evidence to the effect that the applicant has reasonable
knowledge and experience in the field of foreign exchange business.
c)
Application for renewal of licence should be made to
the State Bank through an Authorised Dealer/applicant’s banker
at least two weeks before the expiry date of relative licence
alongwith the following documents:
aa)
Original AMC’s Licence
bb)
Application processing fee as laid down in sub-para 5
(i) (a).
cc)
Tax Paid Challan/No Demand Certificate issued from Income
Tax Department.
ii)
Where an applicant wishes to establish more than one
branch, its net worth capital
should not be less than Rs 5 million, whereas in case
of a single office it should not be less than Rs 2 million as
per wealth statement filed with the Income Tax Department.
iii)
AMC’s licence shall be granted only to Pakistan nationals
and resident Pakistani firms and companies who are paying Income
Tax. An applicant for more than one branch should be a taxpayer
of at least Rs 70,000/- per annum and for single branch licence
Rs 25,000/- per annum. Tax and bank loan defaulters will not
be eligible for grant of licence.
6.
Code of Conduct for Authorised Money Changers.
i)
AMC’s activities will be restricted to purchase/sale
of foreign currency notes/coins only.
ii)
AMC’s commercial name should not include words such as
bank, financial institution, investment company, trading company,
real estate or any other word indicative of activities other
than money changing business. However, hotels, curio shops,
departmental stores or any other premises specially permitted
by the State Bank can use their original name.
iii)
An AMC shall not be permitted to deal in transfers i.e.
T.Ts, D.Ds etc. However, there will be no restriction on bringing
in foreign currency through banking channels from outside the
country. Further, the money changers shall be prohibited to
undertake any other banking activity such as acceptance of deposits,
advancing of loans, issuance of letters of credit, discounting
bills of exchange, purchases/sales of traveller’s cheques and
stocks/securities, release of foreign exchange for travel abroad
on various accounts as defined in Chapter XVII of Foreign Exchange
Manual as modified through F.E. Circulars from time to time
or purchase/sale of gold and silver in any form or of other
precious metals.
iv)
Dealings between AMCs and customers should be supported
by receipts/ vouchers for all transactions. Every receipt provided
to the customer shall bear the name of Money Changer in printed
form, date, nature of transaction i.e. sale/purchase, currency
dealt, rate, amount and signature of dealer. Further, a notice,
advising customers of the necessity of obtaining receipts for
all purchases/sales of foreign currencies, shall be prominently
displayed by AMCs. AMCs
will also display at a prominent place in the business premises,
rates of foreign currencies applicable to purchases and sales
daily at their counter, in the prescribed format of Exchange
Rate Chart (Appendix V-1) and all deals must be carried out
at the rates specified in the Rate Chart. However, AMCs may
negotiate different rates for large transactions.
v)
All purchases and sales made by AMCs in terms of their
licence will be at their own risk and responsibility. They will
make their own arrangements to procure the stock of various
currency notes and coins for meeting their daily requirements
and also to dispose of their surplus holdings. They should also
make arrangement to ensure that the foreign currency notes handled
by them are genuine. The AMCs will not be entitled to make any
purchases of foreign currency notes/coins from any Authorised
Dealer against payment in rupees.
vi)
AMCs shall maintain proper books of accounts and upon
State Bank's directive, provide all data, information, books
of accounts and other record relating to their business.
vii)
Any change in the business premises/partners/directors
of an AMC which has been granted licence will require prior
approval of the State Bank. Separate fee for each new branch
at the scale prescribed in item (i)(a) above will be required
to be paid.
viii)
The name/title of the business shall be displayed clearly
and in a bold face outside the business premises.
ix)
The business premises should be equipped with Telephone,
Fax and Electronic Cash Registers or some other electronic device
for printing serially numbered receipts of their sales/purchases
transactions.
x)
AMCs will ensure that an effective system of internal
controls and checks and balance is in place.
xi)
AMCs will follow same opening hours as prescribed for
the banks. However, they may observe extended business hours.
xii)
AMCs will be free to trade between themselves domestically
with proper accounting procedure as laid down above.
xiii)
AMCs will submit a weekly statement of sales and purchases,
for weeks ending on 8th, 15th, 22nd and last day of each month
to area office of the Exchange Policy Department within 3 days
in the prescribed proforma (Appendix V-2).
xiv)
AMCs shall be bound by the rules and regulations prescribed
by the State Bank from time to time. Any violation of such rules
may result in penalty, suspension or cancellation of licence.
7.
Inspection of Authorised Money Changers.
The
State Bank shall have the right to visit the premises and inspect
the records and books of accounts of the AMCs. The State Bank
may withdraw the licence of any such AMC who:
i) does
not apply for renewal of licence before its expiry,
ii)
does not commence its activities within three months
from the date of grant of licence,
iii)
stops its activities for a period of three consecutive
months,
iv)
does not submit weekly statement of sales and purchases
of foreign currencies for eight consecutive weeks and,
v)
is declared bankrupt or whose liquidity or solvency is
endangered. |