The foreign exchange industry in Pakistan plays a crucial role in facilitating remittances, currency trading, and cross border business.
To legally operate, every money changer or foreign exchange company must obtain a Foreign Exchange Licence from the State Bank of Pakistan (SBP) under the Foreign Exchange Regulation Act, 1947.
But here’s the challenge: the licensing process can feel complex, especially for new entrepreneurs and small businesses (SMEs).
This blog provides a step by step guide to simplify the SBP licence process, discuss benefits, challenges, required documents, and explain how professional legal advisors like MAH&CO. can help.
A Foreign Exchange Licence is an official authorization issued by the State Bank of Pakistan (SBP) that allows a business to.
Buy and sell foreign currency,
Facilitate inward and outward remittances,
Operate exchange counters for customers, and
Comply with anti money laundering (AML) and counter-terror financing (CFT) laws.
Without this licence, operating as a money changer in Pakistan is illegal and can result in heavy penalties under SBP and Financial Monitoring Unit (FMU) regulations.
You need an SBP money exchange licence if you.
Run or plan to open a currency exchange shop,
Operate an international remittance service,
Want to establish a foreign exchange company (A or B Category), or
Handle overseas money transfers or foreign investments for clients.
Even small scale money changers must transition into licensed entities to continue operations legally.
Below is the official process simplified into practical steps for entrepreneurs and business owners.
Before applying, incorporate your business under the Companies Act, 2017 through the Securities and Exchange Commission of Pakistan (SECP).
Choose a unique name (e.g., “XYZ Exchange Company (Pvt) Ltd”).
Define your business activity as foreign exchange or money changer services.
Obtain a Certificate of Incorporation and Memorandum of Association.
SBP requires applicants to meet minimum paid up capital requirements.
Category A Exchange Company: PKR 200 million minimum capital
Category B Exchange Company: PKR 25 million minimum capital
Also, prepare a feasibility report outlining.!
Business objectives,
Market potential,
Risk mitigation plan,
AML/CFT compliance strategy, and
Branch location details.
Submit the application to the Exchange Policy Department (EPD) at SBP, Karachi.
Include the following.
Incorporation documents (Memorandum & Articles of Association)
Business plan and feasibility report
Proof of paid up capital
NTN and SECP registration
Profile of directors and compliance officers
Proposed operational setup (including security and IT systems)
SBP conducts an inspection and background check of the company’s premises, management, and financial health.
They ensure that.
The company has a secure IT system for transactions.
All directors meet the Fit and Proper Test (FPT) criteria.
There are no violations of AML/CFT laws.
If approved, SBP issues a Foreign Exchange Licence, officially allowing the company to operate.
After licensing, the business must.
Register with the Federal Board of Revenue (FBR) for taxation,
Integrate with SBP’s online monitoring system (WEBOC), and
Submit regular compliance reports.
Legal Authorization: Operate with full compliance under SBP laws.
Trust & Credibility: Customers prefer licensed companies for currency transactions.
Business Expansion: Eligible for foreign partnerships and remittance programs.
Access to Financial Services: Open corporate accounts with major banks.
Government Support: Participate in trade and remittance incentive schemes.
High Capital Requirement: Entry cost may be tough for small operators.
Regulatory Scrutiny: Continuous audits and inspections from SBP.
AML/CFT Compliance Burden: Requires trained compliance teams.
Technology Investment: Must maintain secure and transparent systems.
Despite these challenges, the long term stability and profitability of a licensed foreign exchange business make it worthwhile.
A small exchange shop in Karachi, once operating informally, applied for an SBP Category B licence through professional help.
With assistance from legal consultants, they.!
Drafted a compliant feasibility report,
Met paid up capital requirements,
Installed AML software and CCTV monitoring.
Within six weeks, they secured full approval expanding into three operational branches with SBP endorsement.
Lesson: Professional guidance saves time, reduces rejection risks, and ensures compliance.
At MAH&CO., our legal and corporate advisory experts help clients.
Prepare SBP compliant applications and feasibility plans.
Draft AML/CFT policies.
Handle end to end coordination with SECP, FBR, and SBP.
Our Experience: We’ve assisted several clients in Karachi, Lahore, and Islamabad to successfully secure SBP foreign exchange and money changer licences.
If you’re planning to launch or upgrade your exchange business, contact MAH&CO. today for a consultation and compliance audit.
To get a money exchange licence from SBP, you first need to register your business with SECP as a private limited company. Then, prepare a comprehensive feasibility report detailing your business plan, infrastructure, compliance policies, and capital investment. After meeting the State Bank of Pakistan’s capital and regulatory requirements, you must submit your licence application to the SBP Exchange Policy Department for review and approval.
The capital requirement for a money exchange licence in Pakistan depends on the company category:
Category A: Minimum PKR 200 million paid-up capital.
Category B: Minimum PKR 25 million paid-up capital.
This capital ensures that your company can handle foreign currency operations, maintain liquidity, and meet anti-money laundering (AML) compliance standards set by the SBP.
No, individuals cannot apply for a foreign exchange licence from SBP. Only companies incorporated with the SECP under the Companies Act, 2017 are eligible. SBP only issues licences to registered legal entities that have transparent ownership structures and verifiable financial capacity.
A money exchange licence issued by SBP remains valid until it is revoked or surrendered by the company. However, licensees must stay compliant with SBP’s ongoing monitoring, AML/CFT (Anti-Money Laundering/Counter Financing of Terrorism) obligations, and Fit & Proper Criteria for directors and management, which are subject to periodic review.
When applying for a foreign exchange licence from SBP, you’ll need:
Certificate of incorporation and SECP registration documents
Memorandum & Articles of Association (MoA & AoA)
Business plan and feasibility report
Proof of paid-up capital (bank statement or auditor’s certificate)
Director and shareholder profiles
Tax registration (NTN) and compliance manuals
These documents help SBP verify your company’s financial health, management structure, and operational readiness.
The SBP licence approval timeline generally ranges from 6 to 8 weeks, depending on how complete and accurate your documentation is. In some cases, the process can extend if the SBP’s inspection or due diligence identifies missing details or compliance concerns. Working with professional consultants or corporate lawyers can help expedite the approval process.
Yes, MAH&CO. has a team of experienced corporate and regulatory lawyers who can guide you through every stage of the SBP licensing process — from company incorporation and feasibility preparation to submission and compliance verification. With MAH&CO.’s expertise, you can avoid costly delays and ensure your money exchange licence application meets SBP’s strict standards.
