Regulatory Alerts2022-09-14
Added
FEPD Circular No. 22: Foreign exchange transactions for merchanting trade
Authorized Dealers in Foreign Exchange in Bangladesh are required to facilitate merchanting trade transactions, defined as the direct shipment of goods or services from a source country to a third country, by adhering to specific operational guidelines. These guidelines exempt the use of EXP and IMP forms, mandate that transactions be routed through a single Authorized Dealer, and require counterparties to be from FATF compliant countries. Payments for the import leg must be settled using receipts from the export leg, with traders permitted to use short-term buyers' credit from external sources prior to receipt of export proceeds. Authorized Dealers must verify transaction bonafides, ensure compliance with KYC and AML/CFT guidelines, and report transactions to Bangladesh Bank on a gross basis under the purpose 'merchanting services'.