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August 7, 2020

State Bank allows foreign currency account on declared assets

Business

August 7, 2020

KARACHI: The State Bank of Pakistan (SBP) has allowed banks to open foreign currency account of a non-resident and a resident Pakistanis who have duly declared assets held abroad, it said on Thursday.

“Authorised dealers (banks) will allow operations in the account through the digital channels e.g. internet/mobile banking, ATM/ debit cards,” the SBP said in a statement.

“The ADs may also issue cheque book to the account holder, if required.”

The SBP introduced a separate category of foreign currency account to facilitate non-resident and resident Pakistanis, who have assets abroad duly declared with Federal Board of Revenue (FBR) for investment in foreign currency denominated government registered debt securities on repatriable basis.

“The resident individual desirous to open FCVA shall have to provide the declaration of his/her assets held abroad, including latest wealth tax statement filed with the FBR,” it said.

“The ADs are encouraged to provide online real time convertibility from FCY to PKR based on the request made by the account holder digitally for the eligible debits from the account. For the sake of transparency, the ADs shall indicate the exchange rate applicable to the transaction.”

The SBP said ADs would devise a mechanism, aligned with applicable regulations to reactivate the account digitally in case of non-resident account if the account becomes dormant due to non-operation.

“However, for resident FCVA (foreign currency value account), the ADs may reactivate the account digitally or otherwise in compliance with the applicable regulations and their own policy,” it said.

“Banks will ensure ongoing monitoring of these accounts to mitigate money laundering and terror financing risks.” The SBP has revised regulation for foreign exchange operations to simplify the existing instructions, adopt international practices and remove redundancies.

The resident outside Pakistan could open non-resident rupee account-repatriable and non-resident rupee account-non-repatriable.

These accounts could be opened by the banks without prior approval of the SBP. Banks should follow their standard operating procedures for opening and maintaining of such accounts and ensure compliance of all applicable anti-money laundering and combating the financing of terrorism guidelines, including identification of ultimate beneficial ownership and purpose of the account.