The Khanani affair

The sentencing of Altaf Khanani has brought the spotlight back on Pakistan and the practice of international money laundering. The country has failed to clamp down on money laundering, despite two decades of terrorism inside its borders. Khanani was one of the main partners in Khanani and Kalia International (KKI), an international money exchange company that the US has accused of laundering billions of dollars across the world. In 2015, the US Attorney General’s office named KKI’s clients to include Chinese, Mexican and Columbian organised crime as well as the Lashkar-e-Taiba, Dawood Ibrahim, Al-Qaeda and Jaish-e-Muhammad. Given that Altaf Khanani’s arrest – after a six-month long, three-country sting operation – was celebrated with such zeal, the three-year jail sentence comes as somewhat of an anti-climax. Khanani pled guilty to one charge in exchange for a plea agreement, which was made in exchange for wide-ranging information of which little is known yet. We will probably only know more when the US authorities make further arrests.

What reflects poorly on Pakistan is that Khanani’s entire organisation had been shut down and its key players had been arrested in 2008 by Pakistani authorities. However, despite three years spent in sifting through the company’s paperwork, Khanani was let go due to glaring omissions in the evidence presented before the courts. Rumours were that it was at the behest of some of the power players in Pakistan but no one was ever able to verify that. These questions are likely to be answered in time, depending on how the Americans act on the information obtained. The entire affair is a reminder of the 1991 BCCI scandal, which led to the closure of the bank amid allegations of serving as a go-between for international money laundering, the drug trade and organised crime. It seems we haven’t learnt much since that time; and it is unlikely that any new lessons will have been learned after the Khanani arrest either. Pakistan’s inability to build a convincing case against KKI will come under further scrutiny as the full details of his revelations unfold. The need to take money laundering seriously cannot be stressed any further to Pakistani authorities. Both the current interior minister, Chaudhry Nisar, and former interior minister Rehman Malik have made big claims about going after the KKI network. The fact is that little to no real progress was made. What remains to be seen is whether the FIA will get in touch with US authorities to obtain actionable evidence to take action inside the country. Pakistan’s commitment to clamping down on illegal finance entering and leaving the country cannot just be mere talk.