SBP Wants Banks to Properly Monitor Finances of IT Companies

State Bank of Pakistan (SBP) has directed all commercial banks and money transfer agencies to monitor remittances and authenticate the source of funds/modes of transactions of the customers and companies with a business of software exports.

In its recent circular issued, it said banks and foreign exchange dealers and money transfer agencies (authorized dealers) should conduct customer due diligence, maintain a profile of the company and customers of IT industry in pursuance of regulations under Anti-Money Laundering/Combating the Financing of Terrorism (AML/CFT).

Banks and authorized dealers are advised to maintain the consolidated data for such transactions at their head offices and produce to SBP teams during the course of an inspection. They also need to ensure proper reporting of computer and information services under the specified purpose codes in their monthly foreign exchange returns to the State Bank.

Banks and authorized dealers should facilitate software exporters – the registration requirement for software houses/companies with the respective area office of Foreign Exchange Operations Department, SBP Banking Services Corporation is being dispensed with.

They shall, interalia, obtain a copy of software export agreement or invoice besides obtaining a prescribed statement of export earnings from the software exporter on monthly basis.

According to the updated Foreign Exchange Manual, Software houses/companies will get themselves registered with the concerned area office of the Foreign Exchange Operations Department, SBP-Banking Services Corporation.

It is permissible for exporters of software to retain amounts up to 35% of their export earnings in Special Exporters Foreign Currency accounts opened with the Authorized Dealers exclusively for payment of commission/discount to the overseas agents/buyers and to use the same to meet other expenses such as promotional activity, import of Hardware/Software, foreign consultant’s fee etc.

Software houses, entrepreneurs and freelancers working with foreign clients could get their remittances registered against IT services with the forms available here.