Inbound E-money transfers
must be paid in lira only
Central Bank decision applies to firms like OMT, MoneyGram, and Western Union
Electronic money transfers from abroad will be settled exclusively in lira from now on, according to an intermediate circular by the Central Bank (BDL). The circular does not restrict domestic transfers.
The decision targets companies engaged in electronic cash transfers such as OMT, MoneyGram, and Western Union, said Riad Salameh, Governor of BDL. The circular does not apply to bank transfers.
Salameh said that BDL’s move is in line with international practices and aims to combat money laundering.
Marwan Mikhael, Head of Research at Blominvest Bank, said that when foreign currency transfers are converted into liras, the transaction will come under the control of BDL, reducing the risks of money laundering.
Although electronic cash transfers represent a small portion of remittance inflows, the Central Bank’s decision will also help to reduce the dollarization of the economy, and to strengthen the lira, Mikhael said.
Naji Abou Zeid, Managing Director of OMT – the main local agent of Western Union – said that transfers carried out through electronic cash transfer companies account for 15 to 20 percent of remittance inflows, which are estimated to have reached nearly $8 billion last year. Most of electronic cash transfers are in small amounts, averaging $700.
“These transfers are usually sent by expatriates to their families mainly for consumption purposes,” Abou Zeid said. He said that paying transfers in the national currency is the norm all over the world and recipients of transfers don’t have to pay an additional cost for conversions into liras.
The Central Bank’s move is one of several measures taken recently to support the national currency amid escalating economic and political challenges. In the third quarter of last year, BDL instructed the banks that their lira-denominated loans must not exceed 25 percent of their customer deposits in the local currency. That decision created incentives for the banks to increase their lira deposits which boosted demand for the national currency and thus contributed to a further rise in interest rates on the lira.
Reported by Shikrallah Nakhoul
Date Posted: Jan 16, 2019