SBP Alerts Public on Illegal Foreign Currency Transactions

SBP Alerts Public on Illegal Foreign Currency Transactions

Karachi, January 22, 2025 – The State Bank of Pakistan (SBP) has issued a stern warning to the general public against engaging in illegal transactions of foreign currency. Highlighting the risks and legal consequences, the SBP emphasized the importance of conducting all foreign exchange activities through authorized channels.

The SBP cautioned that the sale, purchase, and transfer of foreign currency through unauthorized operators, commonly known as Hawala/Hundi, is illegal. “Are you aware that you may unknowingly become part of money laundering and terrorism financing offences by dealing with illegal foreign exchange operators?” the SBP stated. Such offences are punishable under the Anti-Money Laundering (AML) Act, 2010, and the Anti-Terrorism Act (ATA), 1997.

To protect individuals from potential legal and financial repercussions, the SBP urged the public to conduct all foreign currency transactions, including sale, purchase, and remittance, exclusively through banks and exchange companies authorized by the State Bank. Customers are advised to always collect a system-generated official receipt for every transaction to ensure transparency and compliance.

The SBP further advised citizens to report any instances of illegal foreign currency sale, purchase, or Hawala/Hundi operations to the Federal Investigation Agency (FIA). “If you come across any unauthorized foreign exchange operators, it is your responsibility to report their details to the relevant authorities,” the SBP noted.

The central bank also issued a direct warning to foreign currency operators, reminding them that unauthorized sale, purchase, and transfer of foreign currency constitute illegal activities. The foreign exchange business in Pakistan is strictly regulated under the Foreign Exchange Regulations Act (FERA) 1947. Only banks and exchange companies authorized by the SBP are permitted to operate in this domain.

Unauthorized operators engaging in foreign exchange transactions are committing a punishable offence under FERA 1947 and AMLA 2010. The SBP advised all such individuals and entities to cease these illegal activities immediately to avoid severe consequences. “Extensive actions against illegal currency exchange and Hawala/Hundi operators are being carried out by relevant law enforcement agencies,” the SBP warned.

By reiterating its commitment to combating illegal foreign exchange practices, the SBP aims to protect Pakistan’s financial system and ensure compliance with international standards. The public is urged to cooperate by adhering to these guidelines and supporting the State Bank’s efforts to maintain economic stability.