Alternative Remittance Systems and Its Impact on Money Laundering

There is a huge parallel economy going on in the country, and that economy is financed and managed by alternative system of money exchange and remittance. This sector is largely undocumented and very little has been written on it. By some standard, this sector caters to more than 50% of overall foreign exchange business in the country, the proceeds of which largely goes out of the economy undocumented. Government of Pakistan recently taken measures to regularize this sector and state bank devised some bylaws and policy to document this sector. Establishment of exchange companies and abolition of money changers are the few steps that state bank have taken in this regards. Exchange companies are required to follow proper standards and auditing requirements and by virtue of this state bank is now be able to have more insight of how much money is coming and flown from this country and on accounts of which beneficiary. At the same time there is a need that people making our policies should better be aware of how this system works and who are involved, its by trades and what measure to adopt to canalized the proceeds into the documented economy and also identify various changes that could be made in our financial sector to better caters the needs of expatriates like this system does. This study is done to answer these and similar questions