Updated: Nov 5, 2021
The State Bank of Pakistan (SBP) has implemented a deadline for exchange companies in Pakistan to implement the biometric verification system to monitor purchases of $500 or above. All exchange companies of categories A and B are required to implement the system latest by June 30, 2022, as mentioned in the circular issued by SBP.
The biometric verification system will be implemented with the help of the National Database and Registration Authority (NADRA) and all exchange companies are required to coordinate with the authority for a smooth transition.
Beyond the deadline of June 30, 2022, an extension will be granted only to those exchange companies which will provide a valid reason for the delay along with implementation and a timeline.
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The exchange rate of the US dollar against the Pakistani Rupee is following an upward trend and one of the reasons behind this is the smuggling of dollar bills to the neighbouring country Afghanistan. The demand for dollar bills in Pakistan has significantly increased since the political situation of Afghanistan changed a few months ago. The outflow of US dollars through smuggling has caused a destabilized exchange rate against which the State Bank of Pakistan has taken necessary measures. One of these measures has been recently implemented by making biometric verification necessary for US dollar buyers.
In this blog, we will see why this step is important and how Pakistan will benefit from it.
Biometric Verification Mandatory For US Dollar Buyers
Prior to the compulsion of NADRA’s biometric verification for buying foreign currency for money exchanges in Pakistan, the citizens only needed a copy of their national identity card. People could buy foreign currencies including US dollars easily but the new development is to maintain a better record of transactions which includes identification of personnel buying USD.
SBP has taken several steps to control the steep depreciation of the local currency and as reported by a media outlet, exchange companies have highlighted a huge outflow of USD to Afghanistan. The SBP has directed all exchange companies to make biometric verification mandatory for US dollar buyers who are buying USD 500 or more. This step will not only help in better monitoring but also stop objectionable cash outflow of foreign currency that is smuggled and illegally transferred out of Pakistan.
Importance Of Biometric Verification
Biometric verification at point of sale in money exchanges will help in screening individuals and entities who are buying USD 500 or more. People buy dollars from the open market for travelling and other purposes but in the past few months, dollar buying and its outflow to the neighbouring country has increased. Previously, exchange companies were depositing 90 percent of their surplus to banks; however, now they are only depositing 50 percent while the other half is being sold out, as reported by the head of the Exchange Companies Association of Pakistan.
The compulsion of biometric verification is only for the buyers and sellers can easily sell their currency without going through the procedure.
As per the instructions of the SBP, people travelling to Afghanistan can only carry up to USD 1,000 with them. The annual limit however is USD 6,000 a year if someone frequently travels to Afghanistan.
Where Can You Buy US Dollars?
The US dollars can be bought at any registered money exchange in the country. The SBP had directed money exchanges to implement biometric verification by October 22nd, 2021 but due to the unavailability of the system to connect with NADRA, the deadline was not met. In order to implement the compulsory biometric verification system and give a grace period to develop the system, SBP has allowed money exchanges to use biometric certification from NADRA’s e-Sahulat franchises till November 5, 2021. Post this new deadline, exchange companies will use NADRA’s android application for biometric verification for sale of USD 500 and above.
NADRA e-Sahulat
NADRA developed the e-Sahulat platform back in 2008 as an e-commerce platform to perform different electronic transactions. These services include paying utility bills, giving donations, submitting fees and transferring domestic remittances. The government-run platform is one of the largest in the country with 12,000 franchises across Pakistan that not only increases the services outreach to citizens, especially in underprivileged areas but is also responsible for biometric verification of the citizens. The e-Sahulat programme is also used by the government for the disbursement of payments such as zakat and pension.
This is all about the new guidelines of SBP for mandatory Biometric Verification of US dollar buyers on an amount of USD 500 or more. To keep an eye on the new initiatives of the government in Pakistan, keep following Zameen Blog. If you are an investor and looking for potential investment options, subscribe to Zameen Newsletter for regular updates and new investment opportunities in the country.
