FRIDAY JULY 29: SBP to tighten exchange companies' monitoring: new rules on the cards

KARACHI: The State Bank of Pakistan has decided to further tighten the monitoring of exchange companies and to introduce some new regulations to curb money laundering, Hundi/Hawala and smuggling of foreign currency. First meeting of the special joint committee of SBP and exchange companies for corporate governance and financial discipline was held on Thursday at SBP head office to review the performance of exchange companies and to develop such new policies in the light of current performance.
This special eight-member committee comprising four SBP directors was announced in May 2011 on the directives of former governor Dr Shahid Kardar to curb money laundering, Hundi and Hawala systems. Sources told Business Recorder that during the meeting various issues related to exchange companies were discussed and detailed deliberations were held on Hundi/Hawala and Anti-Money Laundering Laws.
"The meeting highlighted the issues such as online reporting to SBP, corporate governance, financial discipline, internal control of exchange companies, Anti-Money Laundering (AML) measures, Hundi/Hawala and smuggling of foreign currency," they added.
SBP officials said online reporting to SBP by exchange companies is not proper as some franchises and booths of exchange companies particularly "B" category companies are not fulfilling the reporting requirements of the SBP. They directed the companies to ensure compliance to the report requirement of SBP.
During the meeting the representatives of exchange companies also raised the issue of ban on network expansion and asked SBP officials for lifting the ban. The State Bank had imposed a ban on the expansion of exchange companies' network in May this year.
The SBP representatives clarified that since the meeting is not for ban issue, it will be discussed later. However, they asked exchange companies to help the central bank in this regard and provide details of those areas, which required booth or franchisees of exchange companies.
During the meeting, SBP officials also revealed that some companies are facing huge losses and despite these losses they are applying for network expansion, which raises questions. They also informed the representative of exchange companies that there is lack of financial discipline and corporate governance in exchange business, which is creating problems.
During the meeting, the SBP officials requested the exchanges companies to submit their recommendations to curb Hundi/Hawala and money laundering and hinted that some new regulations are under process to strictly monitor the companies and curb the AML.
"There is need to change some regulations for the development of this sector and the limit of $5000 fixed for reporting of dollar buying/selling is at much lower level and should be enhanced," exchange companies demanded. They also asked the central bank to co-ordinate with Dubai customs to control the smuggling of currency.
During the meeting representatives of exchange companies made several requests such as utility bills payment facility at exchange companies, payment of commercial TT for importers, home remittances payment on airport booths and rebate on home remittances. The SBP officials assured the delegation that all the issues will be discussed with relevant department to resolve the matters.
The meeting was chaired by Ali Sultan, Director Exchange Policy Department and from SBP Shaukat Zaman Director DFIs and ECs Inspection Department, Mansoor Hassan Siddique Director BP&RD, and Nadeem Jami attended the meeting. From exchange companies, Malik Boostan of Pakistan Exchange Company, Haji Haroon of H&H Exchange Company, Tahir Qayyum of HBL Exchange Company and Naeemuddin Advisor Exchange Companies Association of Pakistan participated.