Compliance Requirements for Banks in Turkmenistan: A Look into the Country’s Banking System and Foreign Exchange Controls
Turkmenistan’s banking system is heavily regulated, with foreign exchange controls that make it challenging to repatriate profits or make payments to foreign suppliers. Understanding compliance requirements for banks in Turkmenistan is crucial for companies operating in the country.
The Banking System in Turkmenistan
The banking system in Turkmenistan is dominated by state-owned banks, which have narrow specializations:
- Vnesheconombank: focused on foreign trade
- Dayhanbank: focuses on agriculture and social infrastructure
- Turkmenbashy Bank: provides services related to foreign trade and export-import activities
- Turkmenistan Bank: offers general banking services for businesses and individuals
- Halk Bank: provides banking services to the population, particularly in rural areas
In addition to these state-owned banks, Senagat Bank is a local bank that provides general banking services for businesses after taking over Garagum Bank in 2017. The government also established the State Development Bank in 2011 to provide loans to state-owned and private enterprises implementing projects that increase production and create jobs.
Foreign Commercial Banks
There is only one foreign commercial bank operating in Turkmenistan, which is a partnership between Ziraat Bank (Turkmen-Turkish Bank). Other European banks like Deutsche and Commerz do not provide general banking services but instead offer European bank guarantees for companies and the Turkmen government.
Payment System
Companies dealing with vendors in cash are increasingly common due to difficulties accessing money in bank accounts. For more information on the payment system, interested parties can visit the website of the Central Bank of Turkmenistan (https://www.cbt.tm/en/).
Foreign Exchange Controls
The country’s foreign exchange controls pose significant challenges for banks and companies operating in the country. The black market rate is around 19 manat/dollar, roughly five times the official rate, making it extremely difficult to repatriate profits or make payments to foreign suppliers.
Important Considerations
- There are no U.S. banks in Turkmenistan, making it essential for companies and individuals looking to do business in the country to understand the unique banking landscape and compliance requirements.
- Companies should also be aware of the investment climate in Turkmenistan. For additional information, interested parties can visit the U.S. Department of State Investment Climate Statements.
By understanding the banking system, payment system, and foreign exchange controls in Turkmenistan, companies can better navigate the challenges of doing business in this country.