Eighty percent of Pakistan's remittances still move illegally

A 2002 start in Bolton, UK

Muzamil opened the conversation with a confession: he only understood the mechanics of remittance after moving to Dubai himself. Once you’re outside Pakistan, dealing in foreign currency stops being abstract. You discover the bank rate, the open market rate, and the fact that an entire science sits underneath a number you used to glance at once a year. With over 10 million overseas Pakistanis and roughly a million people leaving the country annually, he framed remittance as one of the economy’s real load-bearing pillars: close to $30 billion a year through legal channels alone, more than Pakistan earns from exports once raw material costs are stripped out.

Naqqash Hafiz, Executive Head at ACE Money Transfer, traced the company back to a single branch in Bolton, UK, in 2002, operating under the corporate name Aftab Currency Exchange Limited. Growth followed regulation: in 2009, ACE became an authorized payment institution under the UK’s Financial Conduct Authority. From there, the company built out sending corridors from 28 countries, including the UK, the EU, Australia, Canada, and Switzerland, into 106 receiving countries, among them Pakistan, Bangladesh, India, Sri Lanka, Gambia, and Ghana. Naqqash Hafiz sized the global remittance market at roughly $750 billion, with the top ten sending countries responsible for close to 40% of that flow. Pakistan, he noted, ranked sixth among receiving countries in 2020, with $31.2 billion in that year’s remittance receipts.

Eighty percent still moves through hawala

Muzamil pushed past the official number to ask about what doesn’t show up in it. He recounted stumbling across a documentary on drug trafficking in Africa that traced a hawala network back to Karachi, and used it to make a pointed argument: sending money through informal channels for a slightly better rate quietly makes the sender part of the same infrastructure that moves criminal proceeds. “You’re effectively becoming a part of drug trade and a lot of illicit activity just because of that, versus if you send it through regulated channels,” he said.

Naqqash Hafiz agreed but widened the frame. Illicit transfer isn’t only about crime money riding the same pipes, he argued; ordinary remittances sustain that pipeline too, because migrant workers whose actual earnings exceed their declared income abroad tend to send the declared portion legally and the rest through informal means. He cited World Bank migration data: 11.1 million Pakistani workers left the country between 1971 and 2021, a figure that counts workers only, not the families and dependents who followed. Globally, he said, remittance analysts estimate that roughly 80% of the world’s transfers still move through illicit means, and Pakistan isn’t an exception. Against $30 billion in regulated receipts, he estimated the true total, legal and illegal combined, at closer to $45 to $50 billion a year.

Seven seconds from the UK to a Pakistani bank account

Asked what ACE’s product actually looks like, Naqqash Hafiz described a fully digital service: customers in the UK, EU, Switzerland, Australia, or Canada sign up through a mobile app in about two minutes, uploading ID and address details, and can then send to a Pakistani bank account, a mobile wallet, or arrange cash pickup at almost any Pakistani bank branch. More than 90% of ACE’s customers use the app rather than the website. The headline claim: “It would take you 7 seconds to send money from Australia, Canada and Europe to Pakistan,” at any hour, including bank holidays and Eid.

The speed depends on two things working together. Card payments processed through Mastercard and Visa rails settle in seconds on the sending side, and ACE pre-funds its Pakistani accounts so it doesn’t have to wait for its own settlement before releasing money to a recipient. On top of that, ACE says it was among the first companies to let customers validate a Pakistani bank account before sending, catching the transposition errors, a digit typed wrong, an account number misremembered, that used to turn into slow, frustrating correction processes days later.

Competing with Wise and Remitly on speed, not price

Muzamil asked how ACE stacks up against newer digital-only competitors like Wise and Remitly. Naqqash Hafiz leaned on ACE’s traditional roots: more than a decade of serving customers in person at agent locations in the UK and Europe before the app existed, which he said gave the company a granular read on customer pain points that pure digital entrants lack. ACE says it was first to offer seven-second transfers and first to guarantee delivery on bank holidays, and Naqqash Hafiz argued no competitor, including Wise, matches that speed, which he pegged at hours rather than seconds for some rivals. The company counts around 1.3 million customers globally and moved roughly $1.2 billion in the prior year.

His explanation for the free-to-send model over $100 was blunt about the underlying incentive: “One happy customer, one loyal customer brings another 10 customers,” he said. “Rather than making 10 pounds from one customer, we can make 1 pound from 10 customers.”

The freelancer gap ACE hasn’t closed

Muzamil raised a newer use case: Pakistani freelancers earning in dollars who struggle to get paid at all, let alone move the money efficiently, pointing to Payoneer’s high costs and to Wise’s move to cap certain transfers below 40,000 rupees during a period of accounting difficulty. Naqqash Hafiz confirmed he remembered that episode, tying it to currency volatility rather than a Wise-specific problem: when the rupee was swinging 5 to 10 rupees a day, several companies imposed sending limits to manage risk. ACE, he said, never set limits for its customers during that period, because its treasury team could anticipate the fluctuation, and the company still claims no cap: “If you want to send millions of dollars through Ace Money Transfer, you can send.”

On the freelancer product itself, ACE has a UK wallet called Ace Union, with an IBAN and debit card, that lets users receive and spend dollar income. But Naqqash Hafiz was clear that ACE’s core license structure serves senders in receiving countries like the UK or the EU, not recipients sitting in Pakistan, so a dedicated freelancer-to-Pakistan product is still in planning rather than live.

From letters and flight schedules to instant transfers

Muzamil asked for a historical view: how remittance moved before formal channels existed. Naqqash Hafiz described a system that, thirty to forty years ago, ran on personal networks and patience. A worker abroad would wait for someone from his village to travel home, hand over cash, and trust word of mouth and a scheduled phone call at a neighbor’s house, since most homes had no phone, to coordinate delivery. From the moment money changed hands abroad to the moment a family in a village received it could take thirty days: a flight home, a stop to see relatives first, then a week or two before the courier reached the household holding the cash.

Bank wire transfers cut that to 24 to 48 hours. ACE’s claim is that its app collapses it to seven seconds, with the recipient’s bank credited through a direct technology integration that messages the bank the moment a sender confirms a transaction in the app.

A thirteen-rupee gap that pushes billions underground

The conversation’s sharpest number came from Naqqash Hafiz’s breakdown of 2023’s remittance drop. Pakistan received close to $29 billion in 2022, he said, but was tracking toward only $24 to $25 billion in 2023, a roughly $5 billion shortfall. He pinned much of it on the widening spread between the interbank rate (around 286.5 at the time of the interview) and the open market rate (around 299.5), a 13-rupee gap that, on a $1,000 transfer, works out to roughly 13,000 extra rupees for someone willing to carry cash and exchange it informally instead of routing it through a bank. “It would make him more money,” he said, describing why senders drift toward informal channels even when they understand the legal option perfectly well. He also cited global economic slowdown and Pakistan’s domestic political and economic instability as contributing factors.

On why regulated channels are still worth using despite that gap, Naqqash Hafiz pointed to legal protection: by UK and EU law, ACE has to hold customer funds in a segregated, access-restricted account until the money reaches the recipient, meaning a sender has a documented claim if something goes wrong, something a hawala arrangement, built on spoken trust, can’t offer. As for how ACE earns money while advertising free transfers over $100, the answer is Pakistan’s Remittance Initiative, a joint program from the State Bank of Pakistan, the Ministry of Finance, and the Ministry of Overseas Pakistanis, which compensates banks and remittance operators for routing money through formal channels instead of charging customers directly. ACE has run this incentive further through a three-month campaign with Bank Al Habib, structured as a “hundi se inkaar, Pakistan se pyaar” (reject hawala, choose Pakistan) awareness push, with a daily lucky draw worth 100,000 rupees and two Eid grand prizes of one crore rupees each for customers who send via ACE and receive through Bank Al Habib.

Betting on the US, the Middle East, and digital currencies

Toward the end, Muzamil asked about geographic expansion. Naqqash Hafiz confirmed ACE has registered a US entity and is working through the licensing process there, a process he said typically takes a minimum of twelve months and can stretch to two years. Middle East expansion, particularly the UAE, is next in line: he noted that more than 10 million overseas Pakistanis exist globally, and roughly 55% of them are concentrated in the UAE, Saudi Arabia, Bahrain, Kuwait, and Oman.

The conversation closed on where money itself is headed. Muzamil raised cryptocurrency and blockchain as a counter-reaction to what senders experience as over-regulation, and Naqqash Hafiz responded with a live example: the day before the interview, ACE had met with the Central Bank of Nigeria, which indicated it would soon allow remittance operators to transfer money into Nigeria using eNaira, its central bank digital currency, alongside the US dollar corridor Nigeria has used since banning Naira-denominated remittances a few years earlier. He was careful to separate that from unregulated crypto: “We do not see any financial thing unregulated as a very positive thing for the economy of the world,” he said. “If there are no rules and no regulations, the world would be something different.”

Asked to project Pakistan to 2050, Naqqash Hafiz didn’t hedge on potential, only on execution: “Pakistan as a country has a huge potential. In every field, Pakistan has a huge potential. Only the thing that we need, being Pakistanis, is to channelize that potential to the right direction.” He tied that directly back to the episode’s throughline, remittances already near $25 billion a year, with foreign direct investment as the larger lever still mostly untouched.