Unlicensed money changers have vanished from markets as the Senate and National Assembly (NA) passed an anti-money laundering (AML) legislation, which was a key demand from the Financial Action Task Force (FATF) to remove the South Asian nuclear state from its grey list, earlier last week.
This has been followed by a 30 to 40 per cent increase in the counter selling of US dollars, according to currency dealers, who added that according to the amended bill, an investigating officer (IO), with the permission of the court, can conduct covert operations to detect terrorism funding, track communications and computer system by applying latest technologies in 60 days.
The new law suggests punishment for money laundering including smuggling and illegal trading of currencies for up to 10 years.
“During the last two days the dollars selling at the counters reached around $6 to $7 million per day which usually is on average about $4 million per day,” said Forex Association of Pakistan (FAP) President Malik Bostan, explaining that liquidity decreases in the market when thousands of unlicensed money changers help in the illegal transfer of foreign currencies from the country.
The fear among illegal businesses doers has helped counter this issue with an arrest in Peshawar that has also served as a warning.
Former general secretary of Exchange Companies Association of Pakistan Zafar Paracha said the legislation will “definitely bring change in the currency market.”
“There is a clear threat for the illegal trading and smuggling of the currencies in Pakistan and I believe the government would not tolerate this illegal business which has put Pakistan in the grey list,” Paracha said.
He said the passage of legislative amendments would not only aid in exiting the grey list but also establish a stable exchange rate market based on a true valuation of currencies, yielding higher remittances.