State Bank plans to relax banking rules for freelancers

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KARACHI: The State Bank of Pakistan (SBP) plans to relax bank account opening rules for freelancers by simplifying documentary requirements to attract foreign currency inflows through official channels, thereby increasing remittances, a source said on Friday.

The freelance community is struggling to maintain bank accounts in Pakistan. As self-employed workers, they cannot provide a valid source of income as they are not employed by the organization they work for. They just provide online services.

These obstacles have forced a majority of freelancers not to import foreign currency into the country so that they keep their payments in foreign bank accounts.

In contrast, banks are required to follow standard operating procedures to facilitate the account opening process for their clients without compromising the strict due diligence requirements prescribed by the SBP as part of the anti-money laundering regime. and the financing of terrorism. They must comply with the Know Your Customer Obligation (KYC).

Banks have put strict regulations in place in financial transactions as Pakistan struggles to get off the gray list of the FATF (Financial Action Task Force) of the global watchdog body against money laundering.

The SBP has sought the advice of the banking industry to facilitate the process of opening freelance bank accounts with the aim of generating more funds through formal banking channels, the source told The News.

“The SBP accepted the recommendations of the banks to facilitate and simplify the opening of an account with the bank for the self-employed,” added the source.

Many freelancers make their payments using international payment platforms designed for them and service providers, and the SBP wants to channel those funds through bank accounts, according to the source.

“Bank representatives will soon have a meeting with the SBP to discuss this matter and the SBP is expected to announce some measures by the end of this month, forcing banks to ease their restrictions on providing proof of employment and documents on the source of funds in self-employed or self-employed.

“The banks have submitted two proposals to the SBP, which are currently being examined by it. One allows freelancers to open a bank account by submitting self-report documents for the source and ownership of funds. Second, it’s about setting a specific threshold limit for the amount / income coming into their accounts. “

The SBP did not respond to a request for comment.

Banks have a long list of documents required for account opening and KYC. They require a commitment from the client regarding sources of funds and sufficient account income in lieu of proof of profession. Banks assess the risk factor and make decisions based on the risk.

SBP fined eight commercial banks Rs 524.24 million in the quarter ended June 30, 2021, for deficiencies in foreign exchange and general banking operations, as well as for failure to comply with due diligence reasonable with regard to customers and not knowing the requirements of your customers.

The bank’s suggestions come as the government approved the National Remittance Loyalty Program, incentives to offer Pakistanis overseas to maintain an upward trend in remittances.

In addition, the government announced a package for the information technology and telecommunications sector to stimulate exports in this sector.

“A majority of banks do not allow freelancers to open accounts solely on the basis of income received from their services, despite the fact that evidence of these payments is abundantly available,” said Syed Qumber Hussain, a working freelance writer. for some international companies as a content creator.

“Banks refuse to accept statements from websites through which freelancers receive payments as a valid source of income.” “This can be a challenge as the payment ultimately needs to be received into an appropriate bank account,” Hussain added.

Currently, freelancers use mediators like Payoneer who can process the payment, but ultimately this service is also linked to a bank account. JazzCash recently made Payoneer payments easier and freelancers can withdraw their balances through these accounts, but the mobile wallet has its own limits as well.

Pakistan’s current freelance market consists of over one million people working in various specialist fields. Various reports from different sources have ranked the country quite high in terms of freelance growth, as the industry can sometimes provide a lucrative income.

Pakistani freelancers are spread across various fields like content management, search engine optimization, social media management, creative design and website development, etc.

Most of the projects received are through websites like Upwork, Fivver, and PeoplePerHour, which feature gigs and projects that freelancers can work on. Others also work on a temporary or part-time basis with international and local clients.


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