‘Over $15b being remitted through illegal channel’

[Kabira]

ISLAMABAD:

In order to increase foreign exchange reserves, the government plans to strengthen banking channels to convince Pakistani expatriates to send remittances through legal means, and ultimately discourage other means of transmission.

Currently, more than $15 billion are being remitted through the Hundi system, which is the main impediment to the growth of gross domestic product (GDP). Pakistani expatriates remitted around $7.419 billion to Pakistan during the first quarter of this fiscal year.

The government’s vision can only come true if there is an increase in remittances through easy and expatriate-friendly banking channels. “Every year overseas Pakistanis send over $20 billion through the proper channel, while over $15 billion are being sent through hundi system in the country,” Special Assistant to Prime Minister on Overseas Pakistanis Syed Zulfikar Abbas Bukhari told APP.

The department was taking various measures to increase the use of banking channels by removing red tape in sending remittances to boost the foreign reserves, he said, adding that they were holding consultations with relevant stakeholders to ease complicated transaction process.

Bukhari said they had introduced biometric verification system to ensure better communication between the ministry and the Pakistani diaspora working abroad. He said they would link facilities, being provided to their families including housing and schooling, with use of legal channels, for remitting their money. They had directed their community welfare attaches for sensitising the Pakistani diaspora about using the legal banking channels for transferring their money to uplift the national economy, he added.

Moreover, future economic indicators predict a better situation in next year as workers’ remittances have increased by 15.14% in the first quarter of fiscal year 2019 against the same period of last fiscal, showed the State Bank of Pakistan’s (SBP) data. Remittances reached around $7.419 billion in this period, which was earlier recorded at $6,444.46 million.

Published in The Express Tribune, December 11th, 2018.

 

[Kabira]

This illegal money doesn't benefit Pakistan and is big reason for terrorism funding and money laundering.

 

[Riz]

FIA knows about every single person who is involved in illegal hundi hawala business , but there are many haramkhors in FIA itself who are on thrle payroll of that mafia.. Govt should take actions against those haramkhors first in a month you will see the result

 

[Indus Pakistan]

FIA knows about every single person who is involved in illegal hundi hawala business , but there are many haramkhors in FIA itself who are on thrle payroll of that mafia.. Govt should take actions against those haramkhors first in a month you will see the result

Agreed. But I think source countries of remittances need approaching as well. I know in UK there is these 'travel agents' on every street corner and they all are just cover for hawala business. Problem needs attacking from both sides. Foreign countries need to be reminded that often this is source of terrorist funding. Remittances could double to $4o billion a year and sort out the current account deficit if this problem was plugged.

 

[monitor]

Every year overseas Pakistanis send over $20 billion through the proper channel, while over $15 billion are being sent through hundi system in the country,

That's mean overseas Pakistanis sends 35 billion dollar annually. It's a huge amount if send properly could benefits Pakistan. How many Pakistanis live abroad?

 

[Kabira]

I wonder if $$ or €€ brought by Pakistanis in cash help Pakistan foreign exchange? Was wondering this few weeks ago when I went to money exchange office. There is possibility these people keep $$ with themselves, especially now that rupee isn't stable at all.

That's mean overseas Pakistanis sends 35 billion dollar annually. It's a huge amount if send properly could benefits Pakistan. How many Pakistanis live abroad?

Technically not because hundi is big source of money laundering. All local black money is given in hundi while these people then get $$ in foreign countries.

 

[Riz]

I know.. Our 80% import is from china.. It means 80% of our dollars are flowing to china.. But u guys will be surprised to know that 60% of our dollars are going to china through hundi hawala, 80% of imported items arriving through karachi ports..it can be easily trace out who sent the money illeagly for example if a company transmited 200k dollars through leagal channels to china what is the value of its impprted items...? But there you have another type of hurdle and that is fake invoices from the Chinese companies .. Suppose i imported items value of 200k dollars i will make request to my Chinese partner company to please send me invoice value of 50k US$... Now it requires alot of time and human resources at our ports to check of the value of import items is the same as per value of the transferd amount which transferd by legal channel.. So no way we can stop this hundi business it will keep harming us

 

[Kabira]

I know.. Our 80% import is from china.. It means 80% of our dollars are flowing to china.. But u guys will be surprised to know that 60% of our dollars are going to china through hundi hawala, 80% of imported items arriving through karachi ports..it can be easily trace out who sent the money illeagly for example if a company transmited 200k dollars through leagal channels to china what is the value of its impprted items...? But there you have another type of hurdle and that is fake invoices from the Chinese companies .. Suppose i imported items value of 200k dollars i will make request to my Chinese partner company to please send me invoice value of 50k US$... Now it requires alot of time and human resources at our ports to check of the value of import items is the same as per value of the transferd amount which transferd by legal channel.. So no way we can stop this hundi business it will keep harming us

Pakistan reached agreement with China to get real figure of imports irrespective what local importers show. Problem isn't from China side but local corrupts.

 

[Riz]

Agreed. But I think source countries of remittances need approaching as well. I know in UK there is these 'travel agents' on every street corner and they all are just cover for hawala business. Problem needs attacking from both sides. Foreign countries need to be reminded that often this is source of terrorist funding. Remittances could double to $4o billion a year and sort out the current account deficit if this problem was plugged.

90% of UK base pakistanies are sending money through illegal channels.. Spacialy kashmiri Brothers, Gujrati as well

Pakistan reached agreement with China to get real figure of imports irrespective what local importers show. Problem isn't from China side but local corrupts.

No brother.. Even UK and European countries have similar kind of problems.. Because of these fake invoices issued by Chinese companies... Non of these countries have any system to check each and every containers according to the invoices because it requires much time

 

[Indus Pakistan]

Technically not because hundi is big source of money laundering. All local black money is given in hundi while these people then get $$ in foreign countries.

True. It provides a perfect way for the corrupt in Pakistan to 'transfer' their money abroad. Sadly remittances so provided fail to contribute to the economy instead they end up just adjusting for corrupt money.

It's a huge amount

You know they say Pakistan is dirt poor. Poverty, blah, blah. Trade figures merely confirm that. You guys export more garments then the total Pakistan exports. But, go to Pakistan. Six lane motorways, cars jams, huge housing estates, shopping malls etc. This enigma is explained by the massive remitances. I have read figures that go as high as $30 billion for Hawala transfers. If true and i have no reason to doubt them the real figure is as high as $50 billion inflows.

 

[VCheng]

the government plans to strengthen banking channels to convince Pakistani expatriates to send remittances through legal means, and ultimately discourage other means of transmission.

How are they planning to reduce or eliminate the difference in exchange rates between the two systems? As long as expats get more rupees for their hard cash via hundi compared to the regular banks, the incentive will remain.

 

[xyxmt]

Thats what I said, control hawala and it will be doubled, stricter banking regulation is the need of time. In Canada, my son cannot deposit or withdraw money in my back account but in Pakistan a money exchanger can deposit 5 laks in your account.

 

[Kabira]

90% of UK base pakistanies are sending money through illegal channels.. Spacialy kashmiri Brothers, Gujrati as well


No brother.. Even UK and European countries have similar kind of problems.. Because of these fake invoices issued by Chinese companies... Non of these countries have any system to check each and every containers according to the invoices because it requires much time

You are right but China will show Pakistan gov exact figure of exports in $$. Right now there is quite a difference between what China shows and what Pakistani importers show. This agreement was reached in recent trip by Imran Khan.

 

[AZ1]

Govt should announce those who sends $2000 remittance through bank channel will get $50 or more. This way we will encourage overseas pakistani to send more and more money using bank channel. By doing this if we could manage to save $5 billion more that will be huge success.

 

[Riz]

You are right but China will show Pakistan gov exact figure of exports in $$. Right now there is quite a difference between what China shows and what Pakistani importers show. This agreement was reached in recent trip by Imran Khan.

Govt should allow outward remittance for business purpose, right now outward remittance for business purpose is not allow for common pakistanies.. And people are using hundi hawala channels if someone want to import a single item from china for his personal project or any electric appliances for personal usage

Govt should announce those who sends $2000 remittance through bank channel will get $50 or more. This way we will encourage overseas pakistani to send more and more money using bank channel. By doing this if we could manage to save $5 billion more that will be huge success.

Brother problem is our many Pakistani labor dont know how to use banking channel, because many of our labor is uneducated.. Govt should need to educate them before leaving country how and where they need to approach if they want to send money back home.. Or they must have an account in Pakistan before leaving the country which they use for money transfer in Pakistan