BDL grants money dealers another chance

“Banks closed accounts of most firms”

The Central Bank (BDL) recently decided to give money changers more time to comply with its decision to raise the minimum capital for money exchange institutions.

The BDL’s circular 10853, issued in December 2011, had raised the minimum capital to LL750 million ($500,000) from LL250 million for money dealers in Category A, and to LL500 million ($330,000) from LL100 million for those in Category B.

The circular had stated that money dealing firms which were established before the circular was issued would be given one year to comply, starting December 7, 2011. The BDL now extended this compliance period till the end of June 2013.

The Syndicate of Money Changers was critical of the capital raise fearing that it would prompt many small- and medium-sized money dealing firms to close down. “The extension of the grace period offers money dealers another chance to settle their status,” said Mahmoud Halawi, deputy head of the syndicate.

For a financial institution to raise its capital, it should deposit the additional assets in an account at the BDL. Once the paperwork for the increase is finalized, the BDL transfers the cash to the dealer’s bank account. According to Halawi, the deadline extension came not only to support money dealers: “The procedure for raising the capital was not running smoothly because most money dealers had their bank accounts closed following a money-laundering phobia that struck banks.”

The BDL issued in 2011 a new set of rules for the activities of money changing firms, in line with a tighter anti-money laundering policy. Halawi said the BDL did not order banks to close accounts of money dealers: “Banks did it as an additional precaution.”