KARACHI – The government of Pakistan has announced that carrying an amount above $10,000 without source will be dealt under anti-money laundering (AML) laws.
Failure to explain the source of such foreign currency may result in legal action, including scrutiny under prevailing anti-money laundering laws.
According to a notification issued by the State Bank of Pakistan (SBP) on August 6, 2018, individuals carrying foreign currency notes exceeding $10,000 within Pakistan are required to ensure the following:
1. The foreign currency notes have been acquired through authorized sources.
2. The funds used for the acquisition of such foreign currency are legitimate.
If an individual carrying foreign currency exceeding the specified limit fails to provide evidence of compliance with the above conditions, they may be held liable for action under the provisions of the Foreign Exchange Regulation Act, 1947, the Anti-Money Laundering Act, 2010, or any other applicable law.
The SBP, in its Foreign Exchange Manual – 2018, has detailed regulations concerning the export of foreign exchange. Authorized Dealers, individuals maintaining accounts expressed in foreign currencies, and persons granted permission by the SBP are permitted to engage in certain foreign exchange transactions.
The general permissions granted by the SBP include:
1. Authorized Dealers sending out cheques, drafts, or bills of exchange acquired in the normal course of business.
2. Individuals maintaining foreign currency accounts sending out cheques or drafts drawn on such accounts.
3. Individuals, excluding those issued foreign exchange for travel purposes only, sending out foreign exchange issued by an Authorized Dealer.
4. Individuals taking out foreign exchange issued by an Authorized Dealer in Pakistan and endorsed on their passport.
5. Non-residents in Pakistan taking out the unspent amount of foreign currency brought into the country, provided their continuous stay does not exceed three months.
Additionally, the SBP, through Notification No. F.E.1/2015-SB dated June 1, 2015, has granted general permission for individuals to take US Dollars or equivalent foreign currencies out of Pakistan, subject to specified limits:
• A minor (up to five years) is allowed a maximum limit of $1,000 per visit or an annual ceiling of $6,000.
• A child (from 5-18 years) is allowed a maximum amount of $5,000 per visit or an annual ceiling of $30,000.
• An adult (above 18 years) is allowed a maximum amount of $10,000 per visit or an annual ceiling of $60,000.
As an exception, Non-Governmental Organizations (NGOs), UN/Other Donor Agencies have the ability to draw foreign currency from their accounts without any limit for taking it to Afghanistan to the extent of such remittances. Authorized Dealers issue Certificates to these entities, with records of transactions maintained for SBP inspection.
The government’s move aims to regulate the movement of foreign currency within Pakistan and ensure transparency in financial transactions, aligning with global standards for combating money laundering and maintaining the integrity of the financial system.
