Regulations Governing the Use of Foreign Currency for Opening Letters of Credit (Circular 8/2018)

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Central Bank of Libya P.O. Box 1103 | Telegraphic Address: MisrLibya - Tripoli - Libya

Reference: A.M.N.R. 804 Circular No. (A.M.N. 2018/8) Date: 13 Muharram 1440 (Corresponding to: 23 September 2018)

To the Esteemed General Managers of Banks,

Greetings,,,

Subject: Regulations Governing the Use of Foreign Currency for Opening Letters of Credit.

Based on the provisions of Law No. (1) of 2005 concerning Banks, as amended by Law No. (46) of 2012, and the supervisory and regulatory role of the Central Bank of Libya under these provisions. And referring to the decision of Mr./President of the Presidential Council of the Government of National Accord No. (1) of 2018 regarding the determination of the fee imposed on foreign currency sales. We hereby convey to you the Central Bank of Libya’s instructions regarding the regulations governing the opening of letters of credit, as follows:-

1. Banks shall grant approval for opening letters of credit for all legally permitted goods and services, and the requesting entity must possess a banking code (CBL-key).
2. Verification of the accuracy of data related to the entity requesting the letter of credit, and ensuring no grounds exist that would prevent continuing dealings with them, is required before initiating the letter of credit opening procedures.
3. The upper limit for a single letter of credit value shall be USD 3 million or its equivalent for service activities, USD 5 million or its equivalent for commercial activities, and USD 10 million or its equivalent for industrial activities.
4. The letter of credit value and imposed fees shall be fully covered by the available balance in the account, and granting credit facilities of all types for the purpose of opening letters of credit is prohibited until further notice.

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5. Banks are committed to completing letter of credit opening procedures within three business days from the date of receiving the application.
6. The requesting entity must provide an insurance document for the supplied goods to the opening bank, based on the initial invoice, issued by one of the local insurance companies.
7. Submission of an inspection and survey certificate issued by one of the local or international inspection companies, provided that the inspection company holds a banking code (CBL-Key).
8. Submission of the original certificate of origin for the supplied goods, issued by the competent authority in the exporting country.
9. The initial invoice shall be issued by the exporting or manufacturing company, or one of its authorized agents, and must at a minimum include all data related to the type, description, weight, quantity, and price of the supplied goods or services.
10. The requesting entity must hold a valid, active statistical code.
11. The requesting entity must provide original and recent tax payment certificates and prescribed guarantee dues, as required by law.

General Regulations:-

1. Compliance with anti-money laundering and counter-terrorist financing regulations stipulated in Law No. 2017/1013, and Circular of the CBL Governor No. (1) of 2018.
2. Suppliers are committed to providing original customs declarations as evidence that the supplied goods have entered official Libyan ports, with these original customs declarations submitted to banks within two months from the date of receiving documents. All banks shall notify the Banking and Currency Supervision Department regarding cases of failure to submit the required customs declarations in due time.
3. Circulars issued by the Banking and Currency Supervision Department No. (2016/2) dated 2016/01/07 and No. (2107/2) dated 2017/02/01, and the periodic letter No. A.M.N. (2018/60) dated 2018/04/17, are hereby repealed.

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Therefore, you are requested to take the necessary measures to implement the aforementioned instructions.

Peace, mercy of Allah, and blessings be upon you,,,

Dr. Mukhtar Al-Hadi Al-Taweel Director of Banking and Currency Supervision Department

Copies to the Esteemed:

• Governor
• Director of the Presidential Council Office, Government of National Accord
• Deputy Minister of Administrative Control Authority
• Deputy Minister of Economy and Industry, Government of National Accord
• Director of the Office of the President of the Libyan Court of Audit
• General Director of the Tax Authority
• General Director of the Customs Authority
• Audit Department Manager – Central Bank of Libya
• Banking Operations Department Manager – Central Bank of Libya
• Payments and Settlements Department Manager – Central Bank of Libya
• Legal Affairs Department Manager – Central Bank of Libya
• Accounts Department Manager – Central Bank of Libya
• Director of the Libyan Financial Information Unit
• Branch Managers of the Central Bank of Libya (Benghazi – Sirte – Sabha)
• Deputy Director of Banking and Currency Supervision for Office Supervision and Compliance Monitoring
• Heads of Compliance Units in Banks – For Follow-up
• Banking Supervision and Compliance Monitoring Department
• Archive (Circular 182/2018)

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