Central Bank of Azerbaijan Implements Stricter Guidelines for Currency Exchange Licenses

The Central Bank of Azerbaijan (CBA) has taken decisive steps to enhance regulatory oversight in the realm of currency exchange activities, as outlined in the recent approval of new licensing parameters. The Board, under the leadership of Chairman Taleh Kazimov, has endorsed key documents, including the "Application form for a license (appendices to the license) for carrying out currency exchange activities" and guidelines on the "Requirements for the minimum amount of authorized (share) capital for carrying out currency exchange activities, the amount of collateral, and the form of conclusion for the return of collateral."

This strategic move involves the annulment of prior decisions made by the now-defunct Chamber for Supervision of Financial Markets, specifically those related to the application process and collateral return protocol dated December 21, 2017.

The newly approved framework introduces a tiered system for the minimum authorized capital, a pivotal requirement for entities seeking licenses for currency exchange activities. For operations in Baku, the capital threshold is set at 600 thousand manats, with an additional 300 thousand manats for each supplementary facility. Other regions, including Absheron, Sumgayit, Ganja, and territories beyond, have varying capital requirements, reflecting the geographic scope and market considerations.

Notably, in territories like Eastern Zangezur and Karabakh, recently liberated from occupation, a symbolic minimum capital requirement of 300 thousand manats is imposed, with no additional capital stipulation for new facilities.

The guidelines extend to branches of non-resident legal entities, deeming their funds equivalent to authorized capital. Furthermore, applicants are mandated to secure collateral in an authorized bank, equivalent to 10% of the minimum authorized capital.

Licensees are subject to a strict timeline, requiring the formation of minimum authorized capital, collateral placement, and document submission to the Central Bank within six months from the effective date of these regulations.

The CBA, underscoring its commitment to transparency and legal conformity, has directed its Legal Department to promptly forward the decision to the Ministry of Justice for inclusion in the State Register of Legal Acts. This move not only reinforces the regulatory framework governing currency exchange activities but also underscores the Central Bank's vigilance in adapting to evolving economic landscapes.—0—