Information on the regulation of currency exchange operations by currency exchange offices

26-12-2023

26 December 2023, Baku: As a continuation of the amendments made to the Law of the Republic of Azerbaijan "On Currency Regulation" in July 2023, by the Decision of the Management Board of the Central Bank of of Azerbaijan dated December 11, 2023, the "Regulation on Conducting Currency Exchange Operations by Persons Licensed for Currency Exchange Activities and Control of Currency Exchange Activities" (Regulation) was approved.

In addition to the above document, the "Application Form for Obtaining a License (License Supplement) for Currency Exchange Activity" and the "Requirements for the Minimum Amount of Charter (Joint) Capital for Conducting Currency Exchange Activity, the Amount of Collateral and the Form of the Opinion on Redemption" were adopted with the corresponding decision.

In accordance with the relevant Board decision, the above-mentioned documents entered into force on December 23, 2023, and the relevant decisions of the former Financial Markets Supervisory Authority of the Republic of Azerbaijan were annuled.

The main purpose of the amendments is to create a legal framework for a more institutional, organized and safe conduct of currency exchange operations. According to the legislation, persons licensed to engage in currency exchange shall buy and sell foreign currency solely in cash at clients' orders.

In accordance with the new requirements, regional differentiation of capital requirements for legal entities that will provide currency exchange services has been carried out, and in accordance with the goals of ensuring access to financial services for the population of the liberated territories of the Eastern Zangezur and Garabagh economic regions, the relevant capital requirements for the organization of this activity in these territories have been set at the minimum level. In addition, the collateral requirements have been updated and set at 10% of the minimum authorized capital.

In addition, the Regulation updated the organizational, technical equipment and security requirements for currency exchange offices, introduced an additional requirement for internal control programs to combat the legalization of criminally obtained property and the financing of terrorism, and defined a number of other new requirements.

It should be noted that currently there are 5 currency exchange offices operating under the license of the Central Bank of the Republic of Azerbaijan. These organizations must meet the requirements on formation of the minimum charter (joint) capital, as well as the placement of the amount of collateral within 6 (six) months, as determined by the Regulation.

The Regulation can be found at the following link:

Regulation