KARACHI, July 12: The mounting American pressure for filtration of wire transfer of the US dollar is causing blockade in transfer of money to Pakistan, as TTs (telegraphic transfers) take 10 to 15 days to reach the desired destinations or they are returned for detail information, market sources say.

Both banks and exchange companies find it difficult to transfer money for individuals as they think the TT should not take more than 72 hours. They fear that the extraordinary pressure on money transfers could divert the business from the official channel to the illegal mode of transfers -- Hundi system -- which was under strict vigil after the 9/11 incident.

They said around 70 per cent TTs were either blocked or returned with advice to provide further details.For obvious reasons bankers and exchange companies’ operators were not ready to own their comments on the situation but accepted that the Americans had tighten their grip on money transfers, especially from the Middle East on the suspicion of terrorist connections.

Bankers said the return cost the customers $40 to $50 per TT because of lengthy recovery process.

Last week the State Bank asked all exchange companies to close their Nostro accounts with exchange companies abroad by 25th of this month. The SBP said foreign currencies of home remittances or against export of foreign currencies (other than US$) should either be received in exchange companies’ Nostro accounts with the banks abroad or in foreign currency accounts maintained with the banks in Pakistan.

“Some exchange companies were misusing the TT facility and money was transferred with fake identity cards and it was revealed when investigated,” said an owner of an exchange company. He said it was a good step taken by the SBP. But others believe that the decision was taken on American pressure. Exchange companies said their business would decline by 50 per cent after the closure of Nostro accounts and tight monitoring on money transfer.

The American check after the 9/11 has produced positive results for Pakistan as huge remittances started coming through the banking channel. However, the bankers said the recent blockade could hurt the legal system of transferring money. “Banks have opened their own exchange companies and now they would face the same problem as other exchange companies are facing.”

Both inflows and outflows of money are under strict monitoring of the US authorities. A banker said banks and exchange companies would have to face their share of problems in handling remittances from the Middle East because most of the money came from this region and Pakistan was one of the major destinations of those outflows.

“Transfer of money through banks with all details is in favour of Pakistan, as the country will have all track records. Initially people may face problem but in the long run it will be beneficial,” said Salman Jaffrey, chief dealer at Jahangir Siddiqui.

According to a recent report emanating from Dubai, money transfer agencies like Western Union had delayed or blocked thousands of cash deliveries on the suspicion of terrorist connections simply because senders or recipients had names like Mohammed or Ahmed.

“If most common Muslim names — Mohammad and Ahmed — are suspicious then more than half of Pakistanis would avoid sending their money through legal channel and the Hundi system would flourish,” said an exchange company manager.

Pakistan is expected to receive about $4.2 billion as remittances this year and most of them will come from the Middle East. Pakistanis have strong presence in the Middle East and the business with Dubai also increased substantially during the last 10 years. The frequent transfer of small amount among family members living in both the countries is common. Now a quick transfer will not be possible.

“The details being asked for the transfer of money clearly indicate that the transfer should be made through a bank account that keeps complete information about the sender and the purpose of sending money,” said Aamir Aziz, a businessman.

He said opening a foreign currency account in a local bank was very difficult as it also required a guarantee and was time-taking. Even after the opening of foreign currency account, the currency would be kept for at least two weeks in the account then there will be a possibility of transfer.