The State Bank of Pakistan (SBP) on Wednesday said that around $7.9 billion capital had flown out of the country in the last five years from foreign currency accounts opened under the protection of Economic Reforms Act 1992.
The SBP officials informed the National Assembly’s Standing Committee on Finance that there was no bar on transferring money abroad through foreign currency accounts.
They informed that $1 billion were transferred abroad in the fiscal year 2010-11, $1.2 billion in the year 2011-12, $1.9 billion in 2012-13, $1.8 billion in 2013-14 and $2 billion were transferred in the year, 2014-15.
The bank officials further informed that only $600 million had been transferred for the investment purpose. However, when the officials showed complete ignorance about the purpose behind the transfer of the remaining money, the committee members expressed serious reservations over the law, which allowed transfer of the capital abroad.
“This is a strange law, which allows the capital to move out of the country through foreign currency accounts,” said a committee member, Asad Umar, of PTI.
He added that people were purchasing properties in foreign countries by moving capital out of Pakistan.
He demanded constitution of a sub-committee to probe the matter.
Committee chairman Qaiser Ahmad Sheikh noted that the Economic Reforms Act 1992 paved the way for moving capital out of the country.“SBP should apply Anti-money Laundering Act on these cases.
SBP director informed the committee about the investment made by the Pakistani companies and individuals abroad with permission of the SBP in the last three years. He said that investment abroad was allowed only for those countries that allowed return of profits, dividends and capital.
He added that applications under equity investment abroad up to $5.00 million had been approved by the SBP and applications for equity investment abroad above $5.00 million had been sent to ECC for approval.
It is very interesting that Pakistani Banks had sent this money out of the country without intimating to “Financial Monitoring Unit”. Political parties from opposition demanded an indetail complete probe of the matter which is very sensitive. As this chain may lead to money laundering and this money may be used for terrorism. The Banker Pakistan is highlighting this issue since years that some of the Pakistani banks are involved in money laundering and shifting a huge amount of capital abroad with following proper mechanism.
FIA, NAB should probe the matter deeply and should make references against culprits.