KARACHI:State Bank of Pakistan, Wednesday, taking notice of unauthorized activity of digital platforms offering offshore foreign exchange trading products and services declared them prohibited and against the laws.
Simultaneously authorised dealers were advised to ensure compliance of FERA and take all necessary measures to stop payments to all such forex trading, CFD trading, margin trading websites/apps/platforms by their customers through any payment channel.
The Central bank through a statement here asked public to refrain from making such transactions by unauthorized platforms which are prohibited and against the laws of the land.
The SBP warned of proceedings under Foreign Exchange Regulation Act, 1947 (FERA) against any person in Pakistan buying products or services of such offshore platforms and remitting foreign exchange directly or indirectly to them through any payment channel.
A number of offshore foreign exchange trading websites, mobile applications and platforms such as OctaFX, Easy Forex, etc. are luring people through social media advertisements to buy/invest in their products or services including foreign exchange
trading, margin trading, contract for differences.
The SBP further advised public to be careful and refrain from buying or investing in products and services of such offshore platforms to avoid any potential loss as such platforms are regulated neither by the SBP nor by the Securities & Exchange Commission of Pakistan.
The instructions aimed at addressing matters pertaining to the digital transactions and platforms are circulated to the banks as well in which referring to section 4(1) of the FERA 1947, which, limits buying, borrowing, sell and lend and exchange of any foreign exchange to authorised dealers with the previous general or special permission of the State Bank, in and outside Pakistan, the regulator has also derived attention of authorised dealers towards section 5((1(a)) of the FERA.
The section which provides for prohibition of any payment to or for the credit of any person resident outside Pakistan.
The central bank maintained that “remittance of foreign exchange directly/ indirectly outside Pakistan to overseas foreign exchange trading, margin trading, and CFD trading apps/ websites/ platforms through any payment channel is not allowed as no general or special permission has been granted by the State Bank under section 5(1) of the FERA.”
The AD’s were urged to inform their customers regarding inherent risks and illegality of such trading and also institute a mechanism of ongoing monitoring whereby such trading websites/ apps/ platforms are identified and blocked from making payments through any payment channel.
The circular letter indicated to pecuniary or administrative action in case ADs failed to carry out the measures and has facilitated the barred transactions.