SBP Asks Authorized Dealers To Process Import Payments With Due Diligence

State Bank of Pakistan (SBP) allowed authorized dealers, mainly commercial banks, to process import advance payment with appropriate due diligence, without prior approval of SBP, against irrevocable letters of credit or invoices, up to 100 percent of the value of the letter of credit or invoice. Authorized Dealers shall take effect the advance payment against the import of goods subject to appropriate due diligence and compliance of the Trade-Based Money Laundering (TBML) framework, including but not limited to, the following terms and conditions: The amount of the import advance payment shall commensurate with the profile of the customers, the quantity and nature of goods being imported, and the pricing trends prevailing in the international/domestic markets. Authorized Dealers shall be responsible for ensuring that goods are imported within the stipulated time or the funds remitted in advance are repatriated back in a timely manner. Therefore, authorized dealers need to take necessary measures to examine the transactions and verify the bona fides and genuineness of the beneficiaries to mitigate the risk of any misuse. For this purpose, authorized dealers shall obtain an undertaking from the importer(s) on the prescribed form and may seek appropriate collaterals/ guarantees from the customers/beneficiaries to safeguard their interests. Authorized Dealers shall submit the following reports on advance payments against imports: import has not been effected by the due date, or the amount of advance payment is repatriated for any reason, before the due date of import of goods, will be submitted by the Head/Principal Offices of the Authorized Dealers to the Director, Foreign Exchange Operations Department (FEOD), SBP-BSC on the 10th day of the following month as per prescribed format (Appendix V-27A). In case the goods against advance payment are not imported and/or the funds remitted in advance are not repatriated for any reason within 730 days, in case of plant and machinery or (ii) 120 days, in all other cases, from the date of advance payment, the Authorized Dealers shall: The authorized dealers should establish a monitoring mechanism to ensure that the importer does not misuse import advance payment and may take appropriate actions against any delinquent importers, including filing of STRs in cases involving TBML, debarring the importer from making any future advance payments. Import Advance Payments already made prior to issuance of these instructions shall be treated as per previous regulations issued on the subject.