SBP asks banks to check misuse of forex

E-Paper | April 28, 2026

KARACHI: The State Bank of Pakistan (SBP) has reiterated its doubt over the possible use of the banking sector for money laundering, terrorist financing and illegal transfer of funds.

“It is reiterated that authorised dealers must ensure strict observance of all applicable instructions, including regulations or guidelines issued by the SBP while opening and maintaining foreign currency accounts,” the State Bank said in a circular issued on Tuesday.

In pursuance of the Anti-Money Laundering Act, 2010, reporting entities including authorised dealers are under obligation to conduct Customer Due Diligence (CDD) and maintain record of transactions, account files and documents in accordance with the regulations issued by the SBP.

The ongoing CDD is an essential part of an effective anti-money laundering (AML) and combating the financing of terrorism (CFT) regime and applies to all customers to whom the authorised dealers are offering any type of service.

This includes monitoring and scrutiny of transactions undertaken throughout the course of business relationship between the bank and the customer to ensure that the transactions being conducted are consistent with the institution’s knowledge of the customer, purpose of account, business and risk profile, and the source of funds.

Authorised dealers were advised to ensure that consolidated data or record of transactions routed through foreign currency accounts of individuals or entities is maintained by them at their head offices on a monthly basis.

In addition to the data or record already being maintained, data of those personal foreign currency accounts maintained by individuals where aggregate amount exceeding $10,000 in other foreign currencies is deposited in, withdrawn from or remitted out from the account during the month should be maintained as per the prescribed format.

Also, the data of foreign currency accounts maintained by entities where exceeding $25,000 in other foreign currencies is deposited in, withdrawn from or remitted out from the account during the month is also required to maintain.

“The above data/record shall be maintained by the authorised dealers and produced for on-site inspection/off-site monitoring by the SBP as and when required,” the central bank said.

Published in Dawn, February 24th, 2016

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ak4pk

Feb 26, 2016 08:18am

The problem is not so much with authorised dealers i.e. Banks but with money changers. What effective records are they required to maintain and who is responsible for checking those records. I am sure that the bulk of the suitcases full of foreign currencies transported to Dubai on a regular basis comes from these money changers. I honestly do not see their purpose on the high street, the banks can very well step into their shoes. Any currency that is sold to banks can then be properly accounted for. Of course people travelling abroad can buy their foreign currency requirements from banks and pay for it through their local currency accounts or credit cards. And to avoid currency smuggling, the travellers purchases should be entered on a sheet on their passport. Let's put it this way, we are a country short of foreign exchange, we must not pretend to be otherwise.

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