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KARACHI: The State Bank of Pakistan (SBP) and the Federal Investigation Agency (FIA) have joined hands to crack down on illegal foreign exchanges, whose number is estimated to be around 30,000 across the country.

The two organisations signed a memorandum of understanding (MoU) in this regard on Friday to improve upon and further facilitate the existing coordination between them. The SBP is the regulator of currency exchange companies while the FIA takes action on complaints from the central bank.

The daily business transactions of these illegal exchange operators run into millions of dollars, resulting in revenue loss for the country. More importantly, this unchecked flow of money can also be used to fund terrorists. Former SBP governor Yaseen Anwar said on record that about $10 million was smuggled out of the country every day.

Exchange companies hope the joint effort of SBP and FIA would help stop illegal trading and curb terrorist funding.

Forex Association of Pakistan (FAP) President Malik Bostan said, “We estimate that about 30,000 illegal money exchangers are operating across the country. This illegal trading not only causes a loss of revenue, but also poses a hidden risk to the country.”

SBP Governor Ashraf Mahmood Wathra said there was a need of further action on the part of FIA against illegal money exchange operators.

Director General FIA Muhammad Amlish has assured his full cooperation to the State Bank to curb the menace of illegal exchange business.

Billions of dollars have been smuggled out to Dubai in recent years and Pakistanis emerged as one of the biggest investors in the property of that country. But there is no trace how this money was transferred.

Another case was of offshore companies established by Pakistanis to smuggle billions of dollars out of the country, while the State Bank, FIA and other agencies failed to trace the source of this smuggling.

One of the top licensed currency dealers is under investigation for several months but there is no big development so far.

Currency dealers say all of this smuggling is being carried out by those who are operating without licences Mr Bostan of the FAP said one option was to legalise these unlicensed money changers and then force them to do business legally.

However, some currency dealers believe the current incidents terrorism, such as the one happened recently in Quetta, would not allow the FIA to pursue a softer approach.

A coordination committee has been established to improve cooperation between the SBP and FIA within the framework of the MoU.

Published in Dawn, August 13th, 2016