SBP seeking LEAs to curb illegal money transfers

KARACHI: The central bank has sought help of law enforcement agencies to stop money laundering as well as the menace of cash smuggling across borders in a bid to boost remittance inflows to the country, bankers said.

The State Bank of Pakistan on Thursday called a meeting of bankers related to remittances business to discuss the falling trend in foreign inflows from overseas workers. “A top official of the State Bank of Pakistan informed us about their ongoing crackdown on illegal operators, including some exchange companies,” a head of remittance business at a leading commercial bank told The News after attending the SBP meeting.

Weaker remittances along with sluggish exports continue to put pressure on balance of payments, increasing concerns for the central bank. The banker, wishing to remain anonymous also said the SBP asked banks to activate all ways and means to increase remittance flows through banking channels.

“They emphasised on need of a joint effort with the banks to not only curb illegal money transfers but also to create awareness amongst Pakistani remitters,” he added. “It also pointed towards and encouraged the banks to explore home remittance opportunities in conventional corridors with high potential, including some countries in Europe, also Malaysia, Australia, and Canada.”

The central bank also hinted that they would help banks to improve the rate for remittance exchange which would curb hundi and hawala operators.

The SBP said it would have follow-up meeting with the bankers every fortnight.       The country has been suffering slide in money sent home by migrant workers for the last year as oil-driven economies cut jobs.

Remittances witnessed an annual drop for the first time in 13 years during the last fiscal year. They fell to $19.303 billion in FY17 from $19.916 billion a year earlier. The fiscal consolidation in Gulf Cooperation Council (GCC) countries as a result of subdued oil prices led to layoffs. These countries accounted for over 60 percent of remittances in FY17.

Earlier, the SBP reported that overseas Pakistani workers sent home $1.541 billion in remittances in July, 16.07 percent higher than a year earlier. Remittances stood at $1.328 billion in July last year.

The rise in July remittances came broadly in line with the expectations of analysts. “Migrant cash flows to Muslim populated countries, including Pakistan usually see expansion ahead of Eid festivities every year,” said an analyst.

“Many Pakistanis abroad have started sending money to their families and relatives which shows that it is meant for Eid-ul-Azha related expenses. A bulk of the remitted amount is expected to be utilised to buy sacrificial animals that is an important obligation of Eid-ul-Azha.”

The festival will be observed early next month. The SBP’s data depicted that remittances from Saudi Arabia increased 7.96 percent to $408.84 million in July FY18. Besides, the other major corridors, including United Arab Emirates, United States and UK registered a jump in remittances in the month of July.