Aden (South24)

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The Central Bank of Yemen in Aden issued a set of regulatory circulars aimed at tightening control over the banking sector and controlling the exchange market, amid a record decline in the value of the Yemeni rial.

In a circular addressed to banks on February 22, the Central Bank decided to halt all foreign currency buying and selling operations through digital platforms and electronic applications, stressing that transfers must be made through cash transactions only.

In another circular, the Central Bank obligated all exchange companies and money transfer agents to strictly implement the regulatory procedures related to recording financial transactions, including basic customer data such as full name, address, phone number, source of funds, and purpose of the transaction.

It also stressed the need to document all financial operations with official receipts that are delivered to customers immediately after any transaction is executed, in order to enhance transparency and reduce potential violations.

As part of the new measures, the Central Bank has directed exchange companies to sell their surplus foreign currencies to licensed local banks by the end of each business day or the beginning of the next day at most, according to the prevailing exchange rate.

It explained that the aim of this measure is to reduce the monopoly of foreign currencies and limit speculation that affects market stability.

The bank also prohibited exchange shops from maintaining credit or debit accounts with other exchange companies, whether in Yemeni riyals or foreign currencies, to limit informal financial transactions that may affect the monetary market.

In the context of tightening control, the Central Bank in Aden announced that it will carry out surprise field inspections of exchange companies, with the aim of verifying their compliance with the new controls.

The bank also stressed the need for exchange companies to liquidate their balances from pending accounts with the Unified Network for Money (UNMoney) or any similar financial network within a maximum period of two weeks.

In February 2024, the CBY-Aden launched the Unified Network for Money Transfers (UNMoney), aiming to boost transparency and control over financial flows. Through a circular, it mandated the use of UNMoney by exchange companies in government-controlled areas, sparking controversy. The STC-affiliated Southern Money Changers Syndicate (SMCS), representing major exchange companies, accused the CBY-Aden of favoring Houthi interests and attempting to eliminate their resources.

The latest measures by the CBY-Aden come as the US dollar exceeded 2,300 Yemeni rials for the first time in history, during the current month of February.