The Finance Ministry has stated that amendments to the Foreign Exchange Regulation (FERA) Act 1947 are being sought in order to enable the State Bank of Pakistan (SBP) to regulate the foreign exchange regime in the country more comprehensively.
The Finance Division further stated that Prime Minister Imran Khan has sought curb on the practice of Hawala/Hundi and other forms of illegal foreign exchange transactions which are detrimental to the economy, and the Finance Division was directed to take immediate steps to curb illegal practice through amendments to the existing laws.
In statement of objects and reasons, the ministry stated that foreign exchange policy and operation in Pakistan are governed by the SBP under the provision of the FERA 1947, which empowers the SBP to regulate flow of foreign exchange into and out of the country. However, the SBP does not have the explicit powers under the FERA to issue any regulations/instructions relating to the inland movement of foreign currencies. Additionally, it was also considered necessary to enhance punishment provided in Section 23 of the FERA Act to create firm deterrence against contravention of various provisions of this act. This was stated to the Senate Standing Committee on Finance, which cleared the proposed law except the condition of carrying not more than $10,000 by a person within the country.
The ministry added that after a series of meeting with stakeholders, some amendments were suggested in the FERA Act. The SBP proposed to amend section 23 of the FERA, by enhancing the punishment, making the offence punishable under the section as cognizable and non-bailable, adding new provisos give explicit powers to FIA to take prompt action against illegal foreign exchange operators without requirement of any formal complaint from SBP and empowering the tribunals to take action against illegal foreign exchange operators in expeditious and time-bound manner. The ministry further said that moreover, a new section 8A is inserted to restrict the free movement of foreign exchange within the country without any limit. The bill was introduced in the Senate on January 1, 2020 and was referred to the Senate Standing Committee on Finance.
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