KARACHI: As Pakistan moves to tighten controls on foreign currency transactions, the government has mandated that all dollar dealings be linked with Nadra and include facial recognition alongside fingerprint verification. However, exchange companies have warned that loopholes will persist unless a centralised 1Link-style system is introduced to track buyers across the market.
A notification from the Ministry of Interior and Narcotic Controls (MoI&NC) stated that dual-modality biometric verification will be required from January 1, 2026. Exchange companies are instructed to adopt the necessary administrative and technical measures to comply with the new requirements, which aim to enhance security and reduce leakages amounting to hundreds of millions of dollars.
Despite the stricter protocols, exchange industry representatives argue that the new system alone will be insufficient. Malik Bostan, chairman of the Exchange Companies Association of Pakistan, highlighted that buyers could still obtain excess dollars by making repeated undertakings at different exchange outlets, a loophole invisible to other companies.
“Nadra will get all information about dollar transactions after installation of the software, but a buyer can still purchase dollars from multiple exchange companies,” Bostan explained. “A buyer can simply sign an undertaking claiming they have not bought currency elsewhere, and the same process can be repeated at another exchange company.”
Bostan suggested that implementing a 1Link-style system, similar to the interbank network used for ATMs, would prevent multiple purchases across exchange outlets. “Under such a system, a buyer cannot buy more dollars elsewhere since all transaction data would be accessible through the central link,” he said. He plans to formally request the State Bank of Pakistan to consider this approach.
Currently, exchange companies record CNICs, travel documents, and biometric data, including video evidence, for each customer, but this information remains in-house. Transactions are reported to the State Bank, and evidence is shared with the FIA only when required for investigations.
Bostan estimated that $1.1 billion to $1.2 billion in dollars had been purchased this year, with $700 million to $800 million remaining untraceable. He warned that these funds could be diverted to illegal activities and reiterated that only a centralised tracking system could effectively plug such leakages.
As Pakistan continues to strengthen foreign currency controls, industry experts emphasize that integrating advanced technology with a unified monitoring platform is critical to improving transparency, safeguarding the FX market, and preventing illicit flows.
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