A bill to enhance the power and influence of the Central Bank if Iran in better managing the foreign exchange market has been sent to the Majlis (parliament) by President Ebrahim Raisi.
The proposals seek to address several key issues related to the monetary and banking system, particularly in managing the chaotic forex market the stakeholders of which for years been the target of controversy and condemnation, IBENA reported.
According to the bill, all exporters of goods and services must be obliged to declare their overseas proceeds to the CBI, comply with its regulations and procedures and place their export revenue under CBI control.
The central bank would have authority to provide currency to the same exporters or other importers of goods and services based on official exchange rates set by the regulator.
Failure to deposit currency with the CBI would be tantamount to smuggling and those found in breach willface the law.
Furthermore, a new provision has been added to the Anti-Smuggling of Goods and Currency Law, which prohibits any form of intermediation, advertising or promotion of unofficial currency deals via social media and virtual platforms.
Illegal currency trade or any other activity that in any form gives rise to smuggling will result in penalties mentioned in law plus confiscation of the illegal money.
According to the proposed bill, if the CBI comes across a crime related to monetary and banking issues (both forex and rial, the national currency) in banks and credit institutions, it can take preemptive measures such as blocking and restricting transactions and accounts.
In case of wrongdoing investigations must be carried out within 48 hours and the CBI will lift restrictions and unlock the accounts if no crime is committed.
However, if the regulator fails to submit a dossier to the judicial authorities on time, it will be liable to compensate the affected account holders and will seek reimbursement from the party responsible for the delay.
Upholding Transparency
Moreover, banks, non-bank credit institutions, exchange shops and the relevant financial entities and their subsidiaries, as well as other executive entities are obliged to uphold the rules of transparency and submit unambiguous data on their forex funds and operations.
This information should be submitted to the CBI in accordance with rules and procedures announced by the bank. Failure to comply will result in penalties stipulated in the Anti-Money Laundering Law.
Furthermore, the CBI will be responsible for identifying disruption in monetary system emanating from both forex and rial trade.
Lastly, the Islamic Republic of Iran Customs Administration will be obliged to investigate any increase in the value stated in customs documents based on the rates announced on official channels.
In February, the ‘Council for Coordination of the Three Branches of Government’ decided to delegate more authority to the CBI to enable it prop up the sagging rial and stabilize the forex market that has seen high and rising rates unprecedented in the history of the country.
Heads of the three branches (executive, legislature and judiciary) then stressed the need to work in concord to help restore calm to the currency market.
Economy Minister Ehsan Khandouzi said recently the CBI already has enough power over the performance of moneychangers and banks, but “wants extra clout to effectively intervene in the market".
"Listed companies' refusal to repatriate their export revenue has been among the concerns of the CBI. Henceforth all listed companies, including those owned by the government such as oil/ gas firms, are obliged to abide by central bank rules for repatriating export revenue," the minister said.
