The Bank of the Lao PDR has come up with a new administrative rule designed to administer currency exchange businesses amid the appreciation of international currencies against the Lao kip.
Governor of the central bank, Sonexay Sitphaxay on July 2 signed the bank’s Decision on Currency Business as the national currency depreciated against the Thai baht and US dollar.
The Bank of the Lao PDR made a strong commitment at the recent session of the National Assembly that it would try its best to maintain the value of the Lao kip against major international currencies within a five percent range.
According to the new decision on currency exchanges, which is accessible on the central bank’s official website, individuals and legal entities, who want to operate a currency exchange business must obtain a licence from the central bank.
Only legal entities which conduct business in connection with hotels and tourism and meet the requirements are eligible to obtain the currency exchange business licences from the central bank under this new rule.
Once approved, the businesses must strictly comply with rules and orders imposed by the central bank or face serious penalties, including fines and cancellation of their business operating licence.
Based on Chapter 7 of the currency exchange business decision, money exchange service providers who defy the rules of the central bank will be warned first with repeat offenders issued with fines or even forced to close.
According to the rules, currency exchanges must not offer services outside of their declared business venues or face fines of three million kip ($332.50) per infringement.
Money exchange service providers are also banned from engaging in direct currency exchanging with commercial banks. Otherwise, they face fines of five million kip per instance.
Another rule the businesses must follow is setting their exchange rates in line with the regulations and the central bank’s rate or face fines of five million kip per infringement.
In addition, the businesses must display their exchange rates so that central bank officials can easily inspect fluctuations of the rate. They also need to report their exchange rate to the central bank daily or face fines of 100,000 kip per day.
Under the bank’s Decision on Currency Exchange Business, the Bank of the Lao PDR has made the business licensing and approval process transparent as part of measures to encourage money exchange service providers to obtain an operating licence.
The Currency Exchange Business decision also details the requirements and timeframe used to consider and approve the licences.
VIENTIANE TIMES/ASIA NEWS NETWORK