The Expanding Role of Exchange Companies in Sudan: Between Complementarity and Legal Boundaries
Walid Dalil – Banking Expert
In recent years, exchange companies in Sudan have assumed an increasingly prominent role in addressing gaps within the formal banking sector. Their expansion has been particularly visible in foreign exchange management and the facilitation of remittances from Sudanese expatriates — especially during the period between 1995 and 2005 — effectively positioning them as a complementary arm to banks in providing liquidity and foreign currency.
Despite this growing influence, exchange companies remain legally and operationally distinct from banks. Their activities are regulated by the Central Bank of Sudan (CBOS), and recent legislative reforms have reinforced the separation between the two sectors.
From Currency Dealers to Key Financial Intermediaries
Exchange companies have evolved beyond their traditional function of buying and selling foreign currency. They have become significant actors in attracting foreign exchange resources and facilitating remittance flows, often operating alongside banks and exporters.
1. Remittances and Foreign Exchange
One of their most vital roles lies in handling remittances from Sudanese nationals abroad. In a context where remittances represent a major source of foreign currency inflows, exchange companies have provided faster, more accessible channels than some conventional banking procedures.
2. Financial Inclusion
Exchange companies have also contributed to financial inclusion, particularly in areas where the presence of commercial banks is limited. Through electronic payment applications and streamlined transfer services, they have widened access to financial transactions in underserved regions.
3. Revenue Model
Their income is primarily derived from transfer fees and exchange rate spreads. While expanding services, they remain subject to central bank monetary policy directives and compliance requirements.
Legal Boundaries: Complement, Not Substitute
Under Sudanese law, exchange companies are considered complementary to the banking system — not substitutes for it. They operate within a strictly defined regulatory framework.
Permitted Activities (Overlap with Banking Functions)
Exchange companies are authorised to perform specific functions that intersect with certain banking services:
Buying and selling foreign currency at rates approved and monitored by the Central Bank.
Executing outgoing and incoming money transfers for individuals and businesses.
Cashing cheques and remittance instruments originating from abroad.
These services are particularly significant in the current economic climate, where speed and accessibility are critical.
Prohibited Activities (Core Banking Functions)
However, exchange companies are explicitly barred from performing core banking functions, including:
Accepting deposits: They may not open current or savings accounts.
Granting loans or credit facilities: Any form of financing or credit extension is prohibited.
Investing client funds: They cannot deploy customer funds into commercial or real estate ventures.
These restrictions are fundamental to preserving the structural integrity of Sudan’s financial system.
The 2026 Banking Regulation Reform
A major shift occurred with the enactment of the new Banking Regulation Law in January 2026, approved by the joint session of the Sovereignty Council and Council of Ministers. The law aims to modernise the financial sector, strengthen transparency and reinforce institutional boundaries.
Key Provisions
Clear functional separation: The law explicitly delineates the roles of banks and exchange companies.
Licensing enforcement: The Central Bank has revoked licences of companies found engaging in unauthorised activities, including operating as parallel banks or trading currency outside official channels.
Digital integration: Policies introduced in 2026 seek to integrate exchange companies into national clearing and payment systems to enhance transparency and reduce reliance on cash transactions.
Why Exchange Companies Cannot Open Current Accounts
Opening current accounts is an exclusive function of licensed commercial banks. The Central Bank of Sudan strictly prohibits exchange companies from offering such services.
Legal and Regulatory Rationale
Protection of Depositors:
Commercial banks operate under deposit insurance schemes and legal safeguards that protect customers’ funds. Exchange companies are not covered by such guarantees.
Anti-Money Laundering Compliance:
In January 2026, the Central Bank issued circulars strengthening monitoring of transaction patterns and warning that companies acting as “shadow banks” — by managing informal accounts — would face severe penalties, including licence withdrawal.
Supervisory Measures in 2026
The Central Bank has intensified field inspections to ensure compliance. Any exchange company found accepting deposits or managing unofficial accounts faces immediate licence suspension.
In previous years, dozens of companies were subject to banking bans for regulatory violations. The 2026 policy framework further emphasises the prohibition of financing parallel activities outside the formal financial system.
Official Alternatives for Customers
Individuals wishing to open a current or savings account must approach licensed commercial banks. Major institutions currently providing digital account-opening services include:
Bank of Khartoum
Faisal Islamic Bank
Omdurman National Bank
Al Baraka Bank
Several banks now offer fully online account-opening services (as of 2026), reducing the need for informal financial arrangements.
Conclusion
Exchange companies in Sudan serve as fast, flexible financial service windows for currency exchange and remittances. However, they are legally prohibited from managing deposits or providing credit — functions reserved exclusively for licensed commercial banks.
Any exchange company offering “current account” services is operating outside the law and exposing depositors to significant risk. Such accounts are neither recognised nor guaranteed by the Central Bank of Sudan.
The 2026 regulatory reforms reaffirm a central principle: financial inclusion and innovation must proceed within clear legal boundaries to protect depositors, maintain systemic stability and prevent the emergence of shadow banking structures.
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