Amendment About Exchange Offices

Subject: Amendment about Exchange Offices to the Decree on the Protection of the Value of Turkish Currency Numbered 32
 
 
Introduction
 
Authorized institutions, in other words, Exchange Offices; they are joint stock companies that carry out several foreign exchange transactions, including the determination of the value of Turkish currency against foreign currencies, within the framework of the procedures and principles determined by the Ministry of Treasury and Finance (“Ministry”)."Communique No. 2021-32/62 on Amendments to The Communique No. 32 on the Amendment to the Decree on the Protection of the Value of Turkish Currency (Communique No: 2018-32/45)” (“Amendment Communique”) which brought changes in the working order of the authorized institutions by the Ministry was published and entered into force in the Official Gazette on 12.10.2021.
 

1. Main Changes Introduced for Authorized Institutions with the Amendment Communique:

 

  • Each transaction will be given a transaction number and without a lower limit, each transaction will be registered with the customer's ID number, passport number, or tax identification number, and the date, time, and amount of the transaction will be recorded in a separate account or book.

  • Authorized institutions are prohibited from accepting Turkish currency, foreign currency, documents providing payment, precious metals, items made of precious metals, any movable or real estate as trust, and keeping them in the name of someone else.

  • The minimum paid-in capital of authorized institutions has been increased and this amount has been increased from 5 million Turkish Liras to 10 million Turkish Liras for Group A and from 1 million Turkish Liras to 5 million Turkish Liras for Group B. It is obligatory that the total amount of shareholders' equity of authorized institutions should not fall below the minimum paid-in capital amount.

  • The amount of capital required to be added for each branch to be established by authorized institutions has been increased from 2 million Turkish Liras to 3 million Turkish Liras. (Group A and Group B authorized institutions to have to fulfill this capital requirement until 31.12.2022. Institutions that do not fulfill the capital requirement until this date will be given an additional period of 90 days, and at the end of the period, the permits of authorized establishments that do not fulfill their obligations will be revoked without further warning.)

  • Authorized institutions that have been granted an operating license by the Ministry and are operating as of the effective date of this article are obliged to report the information of all their employees until 01.03.2022.

  • Authorized institutions are prohibited from acquiring any immovable property other than the workplace in which they operate.

  • Unless authorized institutions obtain permission from the Ministry, they cannot charge commissions or fees under any name other than the prices calculated from the exchange rates they freely determine and announce in foreign currency trading transactions.

  • No interest or dividends will be charged to foreign currency trading accounts under any name, and bank accounts that are not owned by an authorized institution cannot be used in foreign currency trading transactions.

  • Authorized institutions were allowed to make forward transactions with banks on their behalf and accounts.

  • It is forbidden for authorized institutions to use expressions in their trade names, business licenses, advertisements, business cards, workplaces, signboards, websites, and other documents that give the impression that they are performing transactions other than those specified in the legislation.

  • Authorized institutions that do not have an operating permit or that have been revoked will not be able to engage in authorized institution activities, nor will they be able to use expressions in their other documents including their working license, that will create an impression that they are dealing with foreign currency.

  • Applications for change of address and title will be made to the Ministry and the permissions for share transfers that cause changes in the shareholders of the company will be obtained from the Ministry.

 

2. Regulations That Caused Reaction in the Amendment Communique:

 
Authorized institutions reacted to regulations such as the obligation to present an identity card of the person who carries out the transaction without a lower limit in foreign exchange transactions, the high capital requirements paid by authorized institutions, and the requirement to fulfill the capital requirement within approximately one year. Thus, with these regulations, it is thought that with these regulations, many authorized institutions will have to close due to failure to fulfill their obligations, and also this will cause unofficial foreign exchange trading in the market.  In other respects, it was underlined by the Ministry with the Public Statement on 13.10.2021 the regulations that made are scope at recording all transactions in the authorized institutions’ sector, increasing the level of institutionalization and harmonizing the segment with international practices.
 
Conclusion
 
Under the Amendment Communique, the regulations introduced in the Decree on the Protection of the Value of Turkish Currency Numbered 32, the authorized institutions should be harmonized within the periods determined for the authorized institutions and the proposed amendments should be implemented because the authorized institutions that do not fulfill the changes will face the result of canceling their operating permit.