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."