Terror outfits continue to generate billions

ISLAMABAD: As Pakistan faces significant risk of terrorism financing, around 223 (national and international) terrorist organisations continue to generate billions of rupees in terms of their annual operating budgets in the country.

“Annual operational budget of [these] terrorist organisations is from Rs5 million to Rs25 million. Average cost of operation per terror incident varies from Rs0.5 million to Rs2.5 million depending on magnitude of incident,” revealed an official report titled, “National Risk Assessment on Money Laundering and Terrorism Financing 2017.”

“Main sources of income of terrorists in Pakistan include foreign funding, drug trafficking, kidnapping for ransom, extortion from business, vehicle snatching, ‘hawala/hundi’, cash couriers, dealings in foreign exchange, contraband items in Fata and sale of items looted from Nato/ISAF containers,” revealed a 45-page confidential report compiled by the Financial Monitoring Unit (FMU), an intelligence service department, active within the Ministry of Finance. The FMU acted as a national coordinator by engaging around 60 representatives from various government departments, authorities and agencies.

First of its kind report was planned to share with the World Bank (WB), the Financial Action Task Force (FATF) and Asia Pacific Group (APG) of Money Laundering.  A team of assessors of all the stakeholders under the supervision of the FMU compiled the report which revealed that Pakistan was short of adequate resources, skills and manpower to sufficiently take into account money laundering and terrorism financing.

“Both terror financing and money laundering risks are high. A part of foreign exchange collected abroad may include funds for terrorist financing and the rupee counterpart disbursed in Pakistan may help terrorist financing,” read the report, also exclusively made available with The News. “International terrorist network and agencies of foreign governments appear to be involved in causing terror financing risks in Pakistan. The matter requires international support through diplomatic efforts to stop foreign funding for the terrorism,” revealed the report.

After going through this report, it seemed, Pakistan would not be able to become a member of the FATF, an independent inter-governmental body that promotes policies to protect the global financial system against money laundering, terrorist financing till 2018.

On terrorism financing risks, the FMU in its report further revealed that unrest in the Gulf led to mushrooming of extremist movements and militant organisation as terrorists from hostile neighboring countries are expanding proxy war in Pakistan. Most preferred foreign destinations for parking billions of rupees laundered money are UAE, UK and USA, followed by South-Eastern countries.

It is first of its kind comprehensive report where Pakistan on request of the WB decided to carry out this national risk assessment exercise on money laundering and terror financing in 2015-2016. For this purpose, Islamabad formed a national team which used the National Risk Assessment tool of the WB where the FMU also engaged Federal Investigation Agency, Security Exchange Commission of Pakistan, National Accountability Bureau, Anti-Narcotics Force, State Bank of Pakistan, Federal Board of Revenue and Ministry of Commerce. Unregulated trade routes with Iran and Afghanistan are key pilferage points for money laundering and currency smuggling worth billions of rupees.

The report rates the national ability to combat money vulnerability of key business and financial sectors as “medium and medium-low.”

Sense of money laundering threat alarmed the regulators when they seized estimated Rs6 billion in past three years where FIA, NAB, ANF, law enforcement agencies, Currency Declaration Units, SBP and FMU registered/investigated around 8,100 cases/complaints. In money laundering trends the regulators noted in the report that corruption was identified as major predicate offence while smuggling, drug trafficking, cheating and fraud, tax frauds, kidnapping for ransom an extortion remained additional factors.

Only one of 256 filed key cases of money laundering was decided by the courts in last three years, officials revealed, adding that teams seized estimated Rs4 billion during this period. Regulators arrested some 491 of total 664 accused who were involved in crimes of money laundering while special teams, under the National Action Plan, also arrested 848 accused involved in money laundering, ‘hawala and hundi’ and illegal money changing during this period. The teams under NAP also seized Rs851 million since January 2015. 

It is also pertinent to mention here that some of proscribed organisations are reportedly generating millions of dollars annually to conduct their operations within and outside the country. Among them Tehrik-i-Taliban Pakistan, Lashkar-e-Taiba, Lashkar-e-Jhangvi and Sipa-e-Mohammad are taking the lead. International media reports revealed that Taliban net between $70 and $400 million from drug activity (of which at least $15 to $25 million is collected as usher.