A large number of suspicious accounts and transactions in commercial banks detected by the FIA expose a pattern of financing activities of extremist groups operating in the country and abroad
Among the 20 points of National Action Plan NAP, the sixth point focuses solely on terror financing -- "Choking financing for terrorists and terrorist organisations".
Hawala and hundi are the main lifeline of terror fuelling and foreign exchange companies are providing the services at the doorstep of these non-state actors.
Last year during October, Adnan Rasheed’s Ansar-ul-Aseer planned to break the Karachi Central Jail. An intelligence agency thwarted the plot by a sting operation along with Sindh Rangers. To make this plot successful, huge amount of money was kept at the disposal of the gang. A top level intelligence source revealed that "massive investment was made to finance the plot. During a catch related to the jailbreak, security officials recovered 90 million rupees from KPK".
The executioners of the plan were withdrawing the money from an automated teller machine (ATM) in Karachi while the account was being operated from Peshawar.
During the course of investigation of Trade Development Authority of Pakistan (TDAP) corruption case, several fake accounts were unearthed. It came on record that some commercial banks were directly or indirectly involved in money laundering by facilitating in opening benami (fake) entity accounts. These banks were also found engaged in arranging sale and purchase of US dollars, other foreign currencies and hawala and hundi.
The Karachi Crime Circle of Federal Investigation Agency (FIA) started a comprehensive inquiry, number 1/2014, against these fictitious accounts. During the investigation, it was found out that hawala and hundi are being used to finance terrorism in the country. The national identity card copies used for opening these bank accounts were either fake or the card holders were not aware of the misuse of their cards.
Most of the accounts were opened in Peshawar.
An FIA source disclosed that some currency exchange companies of Dubai are involved in the business. According to the source, initially the elements involved in terrorism establish contacts with the currency exchange companies in Dubai dealing in hawala and hundi to Pakistan. They hand over a certain amount of money in foreign currency to these companies. The Dubai-based companies remain in touch with their business partners in Pakistan via phone, telex, Skype, Viber, WhatsApp, Tango or email, who at an appropriate time deliver the requested amount in local currency to local handler/s of terrorism in Pakistan. Their clients or handlers maintain benami accounts in various banks across Pakistan. These local handlers may be a member or leader or kingpin of any terrorist outfit involved in sabotage activities in Pakistan.
Despite no physical movement of money from Dubai to Pakistan, it lands in the desired hands. The million dollar question is how this process works?
Here is how. The Pakistani business community and importers who evade taxes, duties by ‘mis-declaring’ goods move their money abroad with the help of local foreign exchange companies. The bureaucrats, politicians, criminals and corrupt elements always seek shifting their illegally earned capital in the shape of kickbacks, bribes or coercion to foreign islands. These crooked players are in constant touch with hawala and hundi mafia. Here the same cycle repeats.
For transferring illegal local currency of powerful quarters, these exchange companies communicate with their counterparts in Dubai by using the same mode of phone call, telex, Skype, Viber, WhatsApp, Tango or email. The exchange companies in Dubai maintain accounts all over the world and while sitting in their offices, can transfer funds online to any country in the world. Pakistani companies provide the details of the bank accounts of the country as desired by the local senders. Sometimes individuals as indicated by the sender collect the amount themselves and that is how this trust business offers smooth service to thousands of clients without any tangible movement of cash.
According to the FIA inquiry initiated after the TDAP case findings, 42 benami accounts were opened in three commercial banks. Transactions involving a hefty amount of Rs32 billion were detected in these 42 fictitious accounts. All the bank accounts were operated between January 23, 2011 and December 6, 2013. When FIA began its inquiry in December 2013, 14 accounts in two of these banks were active. Most of the accounts were functional for six to eight months. In 12 different accounts, heavy cash of Rs1 billion to Rs3.5 billion were transacted.
FIA Crime Circle Karachi’s investigation of one such account spills the beans.
According to the investigation report, Rs320 million were transferred online during two and half months from the bank’s main branch in Karachi to its Khyber Bazar Branch in Peshawar. The title of the account maintained in Peshawar was M/S Gulab Tyre Dealer.
Later, 10 different accounts were opened in Shoba Bazar Branch of another bank in Peshawar. In each account, Rs2.5 to Rs3 million were deposited from M/S Gulab Tyre Dealer account.
The investigation further revealed that the money was transferred in 10 different accounts in the conflict zones of Pakistan -- Fata, KP and Balochistan. The report revealed that Rs0.5 to Rs1 million were deposited online from Account No. 207466609 to six different accounts in the bank’s branches of Bannu, Bhakkar, Miranshah, Darra Adam Khel and Swat. Account No. 207222939 transferred almost similar sums of money to five different accounts in Miranshah, Kohat, Karak, Bannu and Swat.
Likewise, Account No. 208051338, credited Rs500,000 to Rs10,00,000 online in the bank’s branches operated in Zhob, Dir and Swat.
Further, Account No. 209186299 of the bank’s Shoba Bazar Branch in Peshawar deposited the same amounts of money to the accounts maintained in Bannu, Tank, Zhob and Dera Ismail Khan.
Due to its limited resources, FIA was unable to expand its investigation; otherwise 450 to 500 such accounts were detected in commercial banks which were operated during 2011 and 2013, and showed transactions of huge sums.
These figures can be just the tip of the iceberg. Although Financial Monitoring Unit (FMU) is entrusted to keep a vigilant eye on suspicious transactions, it is the State Bank of Pakistan’s responsibility to check and regulate transactions to and from the country. In fact, NAP will not see success until all institutions of the country are driven collectively and coherently towards ending the menace of terrorism.