FATF manoeuvres Pak inbound international passengers to declare all foreign currency

Islamabad [Pakistan], September 9 (ANI): The Financial Action Task Force (FATF) has manoeuvred Pakistan’s inbound international passengers to declare all foreign currency.
As per the State Bank of Pakistan (SBP), the move will contribute to the pressure already on the rupee, reported The Express Tribune.
Meanwhile, Pakistan’s Ministry of Finance and Revenue said they were unaware of mandatory currency declaration by international passengers.
As per them, they were not part of a decision taken by the Civil Aviation Authority (CAA).
The proceedings of the Senate Standing Committee on Finance revealed, on Wednesday, that the National Directorate General of the Financial Action Task Force (FATF) had manoeuvred the decision 12 days before the on-site visit of the FATF delegation.
However, neither the Ministry of Finance (MoF) nor the Federal Board of Revenue (FBR) was aware that the CAA had issued a notification on August 16, making it binding for all incoming international passengers to declare the foreign currency in their possession. The FATF delegation completed its visit to Pakistan on September 2, reported The Express Tribune.
The notification said that a declaration form would have to be filled and handed over to the airline staff, in which the passenger would show details of domestic and foreign currency.
The Deputy Governor of the State Bank of Pakistan, Inayat Hussain said, “Recently, exchange companies complained that the CAA’s decision to make the currency declaration mandatory is also one of the reasons behind the rupee coming under pressure.
“The passengers are now reluctant to bring in foreign currency,” said Hussain.
The revelation reveals the inconsistency in decision-making and lack of coordination between state institutions that often carries serious implications for the economy. The rupee on Wednesday shed its value further by Rs 2 and closed at Rs 223.42 to a dollar, reported The Express Tribune.
Senator Saleem Mandviwalla had first asked the Minister of State to get the CAA notification suspended and ascertain the facts. But on the intervention of the deputy governor, Mandviwalla withdrew his statement.
It was also disclosed in the meeting that after the central bank allowed the export of US currency, approximately USD 7 million have been exported by exchange companies since August 15, reported The Express Tribune.
On August 15, exchange companies approached the central bank with a request to allow the export of US dollars due to low demand for the greenback in the local market, said the deputy governor. This happened after the dollar value plunged from nearly Rs 240 to a dollar to Rs 214, he added.
The exchange companies demanded they either be allowed to export the surplus US dollars or that the central bank should purchase the greenback from them.
“The central bank then allowed the export of the US dollar and, so far, US currency worth only USD 7 million has been exported,” said Hussain, adding that the rupee value was coming under pressure again.
The committee wondered why the SBP had given permission, mainly when hardly USD 7 million were exported. Hussain explained that the supply of cash US dollars with the exchange companies increased due to the devaluation of the greenback, reported The Express Tribune.
Chairman of the Standing Committee, Senator Saleem Mandviwalla stated that “The SBP should not have allowed the export of the US currency at a time when the dollar was a sacred commodity in Pakistan.”
Agreeing with the chairman’s remarks, Federal Minister for State and Frontier Regions, Senator Talha Mehmood said, “The decision to export the US currency put additional pressure on the value of the rupee.”
Exchange companies purchase foreign currency from customers via outlets spread across Pakistan. This foreign currency, in cash, is subsequently exported out of Pakistan on a consignment basis through Cash in Transit (CIT)/ Security Companies.
During the last fiscal year, exchange companies exported USD 3.1 billion in equivalent foreign currencies and then the US dollars were sold to commercial banks through their Nostro Accounts, said Hussain.
The deputy governor added that the exchange companies had purchased USD 4.4 billion from local clients and USD 2.2 billion were sold in the inter-bank in the previous fiscal year, reported The Express Tribune.
The committee also debated prevailing external sector conditions that compelled authorities to place restrictions on the outbound flight of dollars. (ANI)