FIA books 13 dealers for money laundering

Action had been ordered by the interior minister on Sunday.

LAHORE: In a nationwide crackdown against foreign exchange dealers involved in money laundering, the Federal Investigation Agency (FIA) arrested 13 dealers and recovered a large amount of foreign and Pakistani currency from their possession.

Transactions worth more than Rs300 million were found to have been conducted by a single dealer in Lodhran, during a raid on Tuesday.

Interior Minister Rehman Malik had ordered the FIA on Sunday to launch a crackdown on foreign exchange dealers involved in hundi and hawala practices.

FIA’s teams across Punjab raided foreign exchange dealers allegedly involved in money laundering and recovered registers, documents, cheque books and bank records. The raids were conducted in Lodhran, Sahiwal, Kharian, Mandi Bahauddin, Gujrat, Gujranwala and Sialkot.

The FIA also registered cases against dealers involved in money laundering.

Previous crackdown

The interior minister, while chairing a meeting of representatives of Exchange Companies Association of Pakistan (ECAP), FIA and the State Bank of Pakistan on Sunday, had directed the FIA to crackdown against dealers violating Foreign Exchange Act.

In an earlier crackdown against forex dealers in 2008, the FIA had arrested major players involved in hawala business under the garb of leading currency exchange companies.

Of the companies raided, Khanani and Kalia International (KKI) was accused of transferring Rs103.8 billion in violation of a number of laws meant to control undocumented movement of capital across borders.

The FIA combed through over 1.4 million transactions in KKI’s database that the company facilitated between February 2004 and December 2007.

During that period, the FIA estimated, the company transferred nearly Rs69 billion out of the country legally, while Rs103.8 billion was transferred illegally.

KKI’s actions had allegedly precipitated a drop in the value of the rupee, which
depreciated by 27% during 2008.

Following the crackdown by FIA, the hawala and hundi business reportedly dropped by 80% by January 2010. The agency’s efforts were also acknowledged by the State Bank in its second quarterly report for 2009.

Published in The Express Tribune, January 18^th, 2012.