Standing Committee approves FERA amendments

ISLAMABAD: The Senate Standing Committee on Finance on Wednesday approved amendments into the Foreign Exchange Regulation Act (FERA) for allowing the regulator to impose fine up to Rs0.5 million against exchange companies in addition to existing power of cancelling or suspending their licenses.

The Senate Standing Committee on Finance, which met under the chairmanship of Senator Saleem Mandviwalla at the Parliament House, finally decided to clear this amendment bill as the National Assembly had already approved by reducing penalty amount from one million rupees to Rs0.5 million against exchange companies in case of failing for meeting the compliance requirement of the regulator.

The State Bank of Pakistan (SBP) officials told the committee that under existing powers, they could only cancel or suspend the licenses of exchange companies which they undertook in case of extreme nature of violation such as committing frauds, forgery or money laundering.

Citing an example, they said that if an exchange company does not comply with the instruction of the SBP regarding obtaining CNIC of the person who made a transaction worth $2,500, they did not have a law to proceed against them.  

According to the written brief shared with Senators, the SBP was the regulator of the foreign exchange regime in Pakistan and also responsible for the administration of the Foreign Exchange Regulation Act 1947.

Since the enactment of the Act, the volume of foreign currency transactions to and from Pakistan has considerably increased, it needs to have effective enforcement powers to regulate the foreign exchange business of banks and exchange companies.

Under the existing provisions of the ct, the SBP has no direct power to impose monetary penalties in case of violation of the provisions of the Act, and has to follow a lengthy procedure of adjudication. It could only suspend or cancel the license of a bank or an exchange company on violation of any provision of the Act which often became more severe than the violation warranted.

The SBP has, therefore, requested for amendment in FERA, 1947 by insertion of 23K. The bill was accordingly introduced in the National Assembly twice in 2007 and 2012 but could not be considered by the National Assembly till the completion of its terms. It was introduced in the National Assembly the third time on August 6, 2014 and was referred to the Standing Committee of Assembly on Finance, Revenue Economic Affairs, Statistics and Privatisation.

The National Assembly considered and passed this Bill on April 13, 2016 with some modifications as recommended by the Standing Committee.

The Bill was presented in the Senate of Pakistan on May 13, 2016 and referred to the Senate Standing Committee on Finance which has been considering the bill. The draft amendment bill as passed by the National Assembly along with comments of objects and reasons and comparative statement has been enclosed.