Back to the complete issue
Thursday, 12 March 2020

FX brokers now need to follow bank-style KYC rules when selling foreign currency

EXCLUSIVE- FX brokers now need to follow bank-style KYC rules when selling foreign currency: The Central Bank of Egypt (CBE) imposed new restrictions on foreign exchange companies, requiring them to follow know-your-client procedures similar to those used by banks when changing currencies for clients, secretary-general of the foreign exchange bureau division at the Federation of Egyptian Chambers of Commerce Ali Al Hariri told Enterprise. The new measures, put in place three months ago, require foreign exchange companies to verify the identity of the customers and the reason for the transaction.

Individuals, companies, expats, and diplomats are subject to the new rules: Individuals seeking to exchange EGP for foreign currency have to provide justification for the exchange, including the national ID, workplace information, passport with a valid visa, and airline tickets. Companies also have to provide the commercial registry information, while foreigners living in Egypt have to show a valid residence visa, and diplomats have to provide verification of the workplace before obtaining foreign currency. Data on the transactions and copies of the paperwork for each are sent on a daily basis to the CBE.

The move comes as part of the CBE’s ongoing bid to clean up the exchange bureau industry, which it believes was not a constructive actor in the period running up to the devaluation of the EGP. “We can now act like banks and turn down the customers that we think may be suspicious, which we were unable to do in the past,” Al Hariri added.

The new restrictions are contributing to a slowdown in business at exchange offices caused by the recent volatility in the currency markets. “The appreciation of the EGP pushed many customers to sell part of their holdings, but then when it started to depreciate, customers started holding onto their funds,” Al Hariri said. “With lower liquidity at hand and more strict rules on granting FX, our business has been slowing down."

Enterprise is a daily publication of Enterprise Ventures LLC, an Egyptian limited liability company (commercial register 83594), and a subsidiary of Inktank Communications. Summaries are intended for guidance only and are provided on an as-is basis; kindly refer to the source article in its original language prior to undertaking any action. Neither Enterprise Ventures nor its staff assume any responsibility or liability for the accuracy of the information contained in this publication, whether in the form of summaries or analysis. © 2022 Enterprise Ventures LLC.

Enterprise is available without charge thanks to the generous support of HSBC Egypt (tax ID: 204-901-715), the leading corporate and retail lender in Egypt; EFG Hermes (tax ID: 200-178-385), the leading financial services corporation in frontier emerging markets; SODIC (tax ID: 212-168-002), a leading Egyptian real estate developer; SomaBay (tax ID: 204-903-300), our Red Sea holiday partner; Infinity (tax ID: 474-939-359), the ultimate way to power cities, industries, and homes directly from nature right here in Egypt; CIRA (tax ID: 200-069-608), the leading providers of K-12 and higher level education in Egypt; Orascom Construction (tax ID: 229-988-806), the leading construction and engineering company building infrastructure in Egypt and abroad; Moharram & Partners (tax ID: 616-112-459), the leading public policy and government affairs partner; Palm Hills Developments (tax ID: 432-737-014), a leading developer of commercial and residential properties; Mashreq (tax ID: 204-898-862), the MENA region’s leading homegrown personal and digital bank; and Industrial Development Group (IDG) (tax ID:266-965-253), the leading builder of industrial parks in Egypt.