Islamabad, Dec 29: The State Bank of Pakistan (SBP) has issued an updated Regulatory Framework for Exchange Companies (RFEC), introducing significant revisions to enhance operational standards, governance, and compliance mechanisms across the foreign exchange sector. Effective January 1, 2025, the framework aims to strengthen regulatory oversight, streamline processes, and ensure alignment with international best practices.
Under the updated regulations, Exchange Companies are permitted to sell foreign currency to individuals up to $10,000 per day and $100,000 annually, or the equivalent in other currencies, provided they adhere to strict compliance protocols. Customers must provide a signed undertaking confirming they have not exceeded these limits.
Exchange Companies are required to implement robust information system checks to monitor and enforce these transaction ceilings. Each transaction must be supported by the customer’s identification documents, such as CNIC, NICOP, POC, or a passport with a valid visa.
For transactions of $500 or above, biometric verification through NADRA is mandatory. If NADRA verification fails, companies must obtain an original Verisys slip. Transactions of $1,000 or above require a declaration of purpose and supporting documentation, while those exceeding $2,000 must include a source of funds and be processed via bank transfer or cheque, with detailed transaction records maintained.
Exchange Companies are authorized to process outward remittances strictly for personal financial transactions. Trade or commercial-related remittances are prohibited. Companies may remit up to 75% of inward home remittances mobilized during the previous month, ensuring that funds serve legitimate personal needs.
To enhance financial stability, the SBP has raised the minimum paid-up capital for Exchange Companies from Rs. 500 million to Rs. 1 billion. Incremental targets are set, requiring companies to meet Rs. 600 million by December 31, 2025, Rs. 800 million by December 31, 2026, and Rs. 1 billion by December 31, 2027.
The SBP initially increased the paid-up capital from Rs. 200 million to Rs. 500 million in September 2023. This latest revision underscores the central bank’s commitment to bolstering the financial resilience of the sector.
The framework emphasizes corporate governance by detailing internal controls, IT system requirements, and supervisory protocols. It replaces the existing Exchange Companies Manual and integrates all regulatory instructions into a unified source. Exchange Companies must align their policies, procedures, and systems with the new framework by June 30, 2025.
To ensure transparency and accountability, the SBP has revised reporting requirements and strengthened the supervisory and enforcement regime. Additionally, Exchange Companies must implement measures to retain transaction records and provide detailed documentation for transactions exceeding specific thresholds. This comprehensive regulatory overhaul aims to establish a well-regulated
