SBP forms panel to curb money laundering, Hundi

The State Bank of Pakistan on Friday constituted a special eight-member committee comprising four directors to curb money laundering, Hundi and Hawala systems. Sources told Business Recorder on Friday that this committee was constituted at a joint meeting between representatives of Exchange Companies Association of Pakistan (ECAP) and the State Bank.
The meeting was held at SBP head office to discuss various issues including ban on expansion of exchange companies' network. To further streamline the exchange companies, an eight-member committee was constituted during the meeting to solve the issues relating to exchange companies and to take appropriate steps to check money laundering, Hundi and Hawala. This committee has four representatives from the SBP and four from exchange companies.
From SBP, four directors - Ali Sultan of Exchange Policy Department, Shaukat Zaman of DFIs, Mansoor Siddique of BPRD and Basit Ali of FMU have been nominated. While, Aziz-ur-Rehman of Habib Qatar, Ameer Sultan of Pakistan Currency Exchange, Naeem-ud-Din advisor of ECAP and Tahir Qayoom of Habib Exchange Company will represent exchange companies.
This committee will work on seven-point agenda - corporate governance, financial discipline, internal control, anti money laundering/know your customer, Hundi/Hawala and online reporting. Sources said the representatives of exchange companies expressed serious concern over the sudden ban on setting up of new branch, franchise and payment booths.
Replying to queries of exchange companies, the SBP representatives clarified that this was a temporary restriction due to heavy burden of already submitted application and will be restored soon. Despite insistence of exchange companies they refused to give any timeframe. "Currently, over 70 applications are pending with the SBP. The approval needs time and fulfilment of various procedures," the SBP said.
At the same time SBP Governor Dr Shahid Kardar committed to dispose of the application in one month after submission, therefore to streamline the expansion procedure, the SBP has imposed temporary restrictions on the new branch, franchise and payment booth, they clarified.
"With this temporary restriction, it will be easier for the SBP to dispose of the pending applications and develop a proper mechanism for new branch, franchise and payment booth license," the SBP representative informed the meeting. However, sources said exchange companies were not satisfied with the SBP views and requested for a timeframe for ban on new applications. This request was turned down by SBP, sources said. "The SBP's curbs will directly hurt the business plan of exchange companies, which have invested millions of rupees," said a representative of exchange companies in the meeting.