August 7, 2003	Thursday	Jumadi-us-Sani 8, 1424

KARACHI, Aug 6: Two UN officials met representatives of money changers here to get first hand knowledge of how open currency market is operating in Pakistan. The information they sought will help them form any opinion about whether the kerb market is still being used by money-launderers — and whether terrorist have been using local money changers to move funds into or out of Pakistan.

President of Forex Association of Pakistan Malik Bostan said he and two other money changers met here on Wednesday Islamabad- based UN Regional Law Enforcement Advisor Mr. Richard Will and UK-based Special Advisor for Financial Crime Mr. Khawar Qureshi. The other two money changers were (i) Major (retd) Khizar Hayat and (ii) Shabbir Kazmi. Malik Bostan told Dawn that the two officials discussed with them the issue of money-laundering.

He quoted the officials as saying that whereas banks in the UK had submitted to Bank of England reports about 20,000 suspicious transactions no bank in Pakistan has so far given such report to the State Bank. “We informed them that the SBP monitoring policy is so tight that banks in Pakistan do not engage themselves in money-laundering,” he said. “We also told them that in Pakistan people get nervous while making legal transfer of money what to talk about making suspicious transactions.”

But apparently the UN officials did not buy this argument and asked money changers for suggestions about putting a stop on money-laundering. Bostan said he and other money changers posed a counter-question to the UN officials: what action the UN had taken so far against the US-based and European banks that are known for keeping illegally transferred money from across the world. On this the UN officials told them that the UN had so far traced $1.5 billion worth of cases relating to Swiss banks and action is being taken against those involved in money-laundering. They also told the money changers that the UN had also frozen $600 million (illegally transferred) funds of former Nigerian president.

The two officials made inquiries about how the open currency market operates in Pakistan and were briefed thoroughly by the money changers. Bostan said the officials were also apprised of the SBP regulations governing the money changers. “We told them that the State Bank has cancelled licences of 41 money changers found involved in irregularities.”

The UN officials said they had been in contact with National Accountability Bureau also and were helping them trace cases of money-laundering. Bostan told Dawn that he and other money changers had told the UN officials that they should recommend to the world body to ask central banks to stop harassing those transferring smaller amounts of money. “We told them that money-laundering is done by big guns and not by those who transfer $10,000 to $20,000,” he told Dawn.

“We also asked them to play their role in getting the present restrictions on money movement eased off for the sake of those who make genuine transfers,” he said. Bostan said he also asked the UN officials that the restrictions imposed by the US on cash transactions between the banks of the Muslim world were also not fair. “We suggested to them that the best way to cope with the problem of money-laundering is to issue as many licences of legal money transfer (to exchange companies and money changers) as possible.”

It is not for the first time that the UN officials met money changers as part of their investigation into charges by the US that money-laundering has been taking place in Pakistan and that the country has been used by terrorist for moving funds. Since the terrorist attack on the US on September 11, 2001, financial and legal experts of the UN and even the officials of the US state department have held several meetings with bankers as well money changers in Pakistan. They have also met officials of the central bank but have failed to come out with any convincing evidence to support the charges made by the US.

But the recent visit of the UN officials assumes some special significance as the US has once again alleged that terrorists have used Pakistan for illegal transfer of money. Pakistan has denied this charge saying Pakistan cannot be singled out for having been used particularly by terrorists to move funds. It has said that the terrorist might have used the country for funds movement in the same fashion as in the rest of the world — i.e. under cover. The State Bank has taken several measures to ensure that neither official inter-bank market nor the open currency market is used for money-laundering. It has introduced in the local banking system the culture of know your customers (KYC) — and they seemingly adhere to it.

The UN officials are likely to meet SBP officials and bankers sometime later this month.