Forex fraud: FIA to coordinate with State Bank to enforce forex laws

[Naveed Yaseen]

By Abdul Sattar Khan
LAHORE: After the arrest of directors of a leading exchange company from Karachi and Lahore on charge of illegally transferring dollars abroad, the Federal Investigation Agency (FIA), in collaboration with the State Bank of Pakistan, is planning to net some other big fish.

Munaf Kalia and Javed Kalia, directors of the Khanani and Kalia, have been arrested by the FIA and their head office situated at II Chundrigar in Karachi has been sealed off. According to the documents available with The News, the FIA plans to enhance prison term for those involved in violating the Foreign Exchange Regulation Act (FERA), 1947 from two years to seven years. As per the documents, maximum precaution measures have further been proposed to evolve an effective strategy, involving all the stakeholders, including the relevant business quarters. It is feared that FIAís action may trigger a fresh controversy at a time when the national economy is already facing a major crisis.

“A panic in the market at the moment would further erode whatever amount of confidence is left with the stakeholders,” the document, carrying the FIAís action plan, cautioned. ìTherefore, the State Bank of Pakistan may be asked to make arrangements for training the FIA and police investigators on the relevant laws and regulations,” said the document. In order to coordinate the efforts and to make the action plan more acceptable to all the stakeholders, the FIA bosses have also proposed setting up of a committee, involving all the stakeholders and holding regular sessions on weekly basis at the State Bank of Pakistan headquarter in Karachi.

The proposed FIA action plan is primarily aimed at countering four major methods that are used for the flight of foreign currency. These include Hawala, foreign currency accounts, smuggling of foreign currency and under and over invoicing by exporters and importers.

According to FIA circles, the core strategy of the proposed action plan is mainly based on prevention, prosecution and participation, with the State Bank of Pakistan playing a leading role in this grand operation.

On the account of prevention, the sources said certain methodologies were being devised which include maintaining a close liaison between the exchange companies’ owners and their associations to plug loopholes in the regulation of the exchange companies; effectively enforcing the regulatory mechanism for exchange companies; devising credible and quick legal alternatives to the Hawala system; intelligence collection to identify those involved in violation of relevant laws; appeal to overseas Pakistanis to use legal channels for money transfers and generous rewards to those who do well.

http://www.thenews.com.pk/top_story_detail.asp?Id=18241