Foreign Exchange Licensing and Control
Foreign Exchange Policy
In its capacity as advisor and controller of foreign exchange policy, the Banco de Moçambique has specific powers, functions and duties, in light of its Organic Law and foreign exchange legislation in force. This means that the Banco de Moçambique is the foreign exchange authority and responsible for managing foreign exchange controls in Mozambique.
Among the powers conferred are the powers to authorize banks, foreign exchange offices and other entities involved in the foreign exchange trade and carrying out foreign exchange operations, under certain conditions defined in foreign exchange legislation.
The foreign exchange legislation in force lays down principles, rules and procedures that must be followed by banks, other authorized entities and the general public, when carrying out foreign exchange operations.
The principles and rules are laid down in the Foreign Exchange Law (Law No. 11/2009, of March 11 ) and, to implement them, the Banco de Moçambique, authorized by the Government (Decree No. 49/2017, of September 11 ), issued Notice No. 20/2017, of December 27 , which lays down the rules and procedures to be observed in carrying out foreign exchange transactions and other complementary notices.
As is known, political, economic, financial and social events are changing rapidly. Therefore, in order to maintain the desired level of exchange control, produce economic, financial and statistical information essential to advise the government, prevent or avoid capital flight and to combat money laundering and terrorist financing, control measures must be taken following the tendency of such events. It is in light of these situations that the Banco de Moçambique, as responsible for the management of foreign exchange controls, either through notices or through circulars and communiqués, issues orders and guidelines to the foreign exchange market.
Within the organic structure of the Banco de Moçambique, in accordance with current foreign exchange policy, the Department of Foreign Exchange Licensing and Control (DLC) is responsible for the implementation, discipline, guidance, and monitoring of activities related to foreign exchange licensing and control and foreign debt.
It follows, therefore, that the foreign exchange control by that structure unit of the Banco de Moçambique is carried out through, on the one hand, foreign exchange licensing, for ensuring the licensing and registration of foreign exchange operations and, on the other hand, foreign exchange control, for monitoring foreign exchange operations and monitoring foreign exchange movements.
Foreign Exchange Operations
In the light of Mozambican legislation, foreign exchange operations are considered:
- Acts, business or transactions between residents and non-residents that result or may result in foreign payments or income.
- Acts, business or transactions involving foreign currency, carried out in national territory.
- Acts, business or transactions carried out by residents on goods overseas.
- Acts, business or transactions carried out by non-residents on goods in national territory.
- Transactions related to amounts or rights generated or acquired abroad by residents.
- Operations related to amounts or rights generated or acquired in the national territory, by non-residents.
- All other transactions qualified by law as foreign exchange.
The foreign exchange legislation determines the foreign exchange operations subject to authorization and those that are not subject to authorization by the Banco de Moçambique.
To facilitate implementation and eliminate certain bureaucratic procedures, among the foreign exchange operations subject to authorization, Banco de Moçambique has pre-authorized some, which banks carry out, for they deal directly with their customers, based on the KYC (Know Your Customer) principle, and observing the strict fulfillment of the duties imposed on them.
Pre-authorized foreign exchange transactions include foreign direct investment, opening and handling of non-resident accounts, among others.
All participants in the conduct of foreign exchange operations are subject to the duties imposed by the foreign exchange legislation.
Natural and legal persons are subject to the duties of declaration of foreign exchange assets, repatriation of revenue, using the national banking system to carry out foreign exchange operations, among others.
Banks are required to comply with verification and information duties, registration duties, among others.
All players, each to their own extent and depending on the transaction they intend to carry out, must provide the necessary elements for strict compliance with the rules and procedures that foreign exchange legislation determines.
Foreign Exchange Trading
Entities authorized to trade in foreign exchange:
- Foreign Exchange Office;
- Travel and Tourism Agencies (Limited);
- Hotels and the like (to a limited extent);
- Other entities to be defined by Law.
Exports and Imports
Foreign exchange operations related to foreign trade (entry and exit of goods and provision of services resulting in foreign payments and income) are carried out through banks.
In the case of import and export of goods, banks issue terms of commitment for banking intermediation.
This act is essential for initiating the export or import process. The purpose of its implementation is to ensure that the receipt and payment resulting from those operations are actually carried out for that purpose, thus avoiding capital flight or other capital losses.
The exporter, the importer and the banks are co-responsible for the export and import processes to be carried out in the established terms. Exporters and importers must provide the supporting documents required by the foreign exchange legislation and banks must ensure that the documents are provided and also comply with the duties imposed.
The registration and updating of data relating to a particular export or import is conducted at the Single Electronic Windows (JUE), a platform that the Banco de Moçambique has access to and, through it, monitors the essential procedures for foreign exchange operations to take place.
Classification Table for Foreign Exchange Transactions
The registration of foreign exchange transactions shall be carried out in accordance with the classification references assigned to each foreign exchange transaction in the classification table for foreign exchange operations.
The need to assign references has to do with the purpose of obtaining statistical information which, in turn, is used to create appropriate policies and make macroeconomic and financial forecasts.
In order to carry out specific foreign exchange operations, the foreign exchange legislation requires interested parties to fill out the form for the operation concerned.
The Banco de Moçambique lays down the forms to standardize requests, so as to facilitate control of foreign exchange operations.
Foreign Exchange Reporting Systems
Banks are required to report on foreign exchange operations (integrated into the reporting duty). Reports are made through the Meticalnet system and in accordance with the reporting models laid down by the Banco de Moçambique for this purpose.
The reports are useful for the following purposes:
- Enable the preparation of economic statistics;
- Get balance of payments statistics;
- Obtain external debt statistics to support monetary policy decisions;
- Obtain statistical information on the nature, volume and values of cross-border flows;
- Provide the appropriate information for economic and financial management decisions as well as for policy formulation;
- Get information needed to better advise the government.
OTC Financial Derivatives
It is allowed to trade over-the-counter financial derivatives not cleared by a central counterparty, non-standard, traded off-exchange and directly between the parties, at a specific price for a specific future date;
This product shall only be traded for hedging risks and managing cash directly arising from the counterparties business activities.
The following OTC derivatives may be traded without authorization:
- Fx Forward
- FX Swap (Currency swap)
- Cross-currency Swap
- Forward Rate Agreement (FRA)
The transaction of OTC derivatives other than those described above must be authorized by the Banco de Moçambique.
The rules and conditions for trading OTC derivatives are laid down in the Regulation on Over-the-Counter Financial Derivatives not Cleared by a Central Counterparty (Notice No. 1/GBM/2021 of March 16)
Forex and Cryptocurrencies
The real-time trading of foreign currencies, cryptocurrencies and other assets on virtual platforms, whose domains are not registered in Mozambique, is at the risk of those who practice it.
As these are financial activities, the undertaking of business in national territory, through websites with domains registered in Mozambique, namely through the promotion of the activity or customer gathering, intermediation, negotiation or other form of exercise, does not require authorization from Banco de Moçambique, under the terms of the Law.
The objectives of producing economic, financial and statistical information essential to advise the government, prevent or avoid capital flight and combat money laundering and terrorist financing are achieved by the Banco de Moçambique carrying out the following activities:
- Monitoring of import payment operations and export revenue income;
- Monitoring the implementation of capital operations;
- Monitoring of other foreign exchange operations;
- Assessment of the verification duty exercised by credit institutions and financial companies, through on-site and off-site inspections;
- Monitoring of accounts overseas;
- Monitoring of foreign exchange movements, through computerized exchange control systems.