Introduction
This paper attempts to address the questions:
1. What is terrorism?
2. Why, by whom and how is terror financed?
3. What measures have been taken to check money transfers for terrorist purpose?
At the outset one must concede that due to perceptual differences it is extremely difficult to define “terrorism.”
According to Chambers Concise Dictionary, terrorism is “an organized system of intimidation, esp. for political ends.” The Oxford English Reference Dictionary refers to terrorism as “the systematic use of violence and intimidation to coerce a government or community, esp. into acceding to specific political demands.”
UN Convention for the Suppression of the Financing of Terrorism, 1999, includes in the definition of terror any act “intended to cause death or serious bodily injury to a civilian, or to any other person not taking an active part in the hostilities in a situation of armed conflict, when the purpose of such act, by its nature or context, is to intimidate a population, or to compel a Government or an international organization to do or to abstain from doing any act.”
The international community has failed to agree on a definition of terrorism to the full satisfaction of all states. However, there is an emerging consensus since 9/11 that systematic violence in which civilians are targeted ¬¬¬____ even if the ends are apparently legitimate ____ should definitely be considered as terrorism. This broader definition of terrorism encompasses Islamic militancy as well as many violent movements that are essentially for national liberation or for securing political or fundamental human rights. Despite some serious reservations, for the present paper we shall adopt this wider connotation of the term.
Every act is motivated by some idea. To identify the sources of terror finance, one has to understand different motives of terror.
In this regard, terrorism perpetrated for political ends needs to be differentiated from terrorist acts performed for criminal purposes. Most of the mafia and drug syndicates aspire to have a flourishing business with profit as the sole motive, and they mainly target government functionaries, including judicial officials, to remove obstacles from their way or to hinder investigation into their crimes or to soften government attitude towards their illegal activities. A very pertinent example is that of Columbia where these types of crime are common occurrences. Drug cartels are directly involved in politics and money from narco- trafficking has even financed presidential election campaigns. The terrorism attributed to organized crime is limited in its purport and scope and essentially self-financed. This is not to deny the fact that the criminal groups at times collaborate or cooperate with different terrorist outfits having political motives for mutual benefits.
The terrorist organizations with political objectives do not consider the acquisition of money as an end in itself. For them money is a means to achieve certain objectives. They require financial resources to:
1. Recruit members and supporters.
2. Arrange for facilities to impart military and other training to perform terrorist acts.
3. Provide for purchase of weapons, arms and ammunition, equipment and a variety of gadgets.
4. Spend on travel and movement for operational purposes.
5. Pay for obtaining information and intelligence to execute the mission.
6. Use media for publicity and propagation of views.
7. Cater to other miscellaneous expenses required for undertaking terrorist missions.
On its part, political terrorism is generally perpetrated for such negative objectives as:
1. Ethnic cleansing and liquidation.
2. Political or cultural subjugation of a particular community or national group.
3. Acquiring submission from a particular community to an unjustified policy.
4. Strengthening of a dictatorial regime.
5. Economic exploitation.
6. Destabilization of an enemy state or territory.
On the positive side, it is also a weapon in the hands of the weak that resort to it to:
1. Reinforce the struggle for national liberation from foreign domination.
2. Secure fundamental human rights or fulfill political aspirations, including that of secession.
3. Retaliate against and resist alien attempts at cultural and political hegemony or encroachment.
4. Highlight the wrongs being perpetrated against them.
5. Take revenge of any other perceived wrong committed by the ‘would-be-victims’ of terror.
All the present centers of terrorism would provide the testimony to the above mentioned thesis: Israel, Palestine, Lebanon, Afghanistan, Iraq, Kashmir, Chechnya, Dagestan, Sri Lanka, Sierra Leone, Angola, Democratic Republic of Congo, Xingjian, Tajikistan, Uzbekistan and the Philippines, and not in the distant past, Cambodia, Bosnia, Albania, Kosovo, East Timor, Somalia and Ethiopia. The United States becomes a target of the Islamic militants worldwide because of its direct involvement with Israel, occupation of the Arab lands and support to perpetrators of injustice at other places.
There are a variety of sources through which terror is financed. These include:
1. States, directly or through, front organizations.
2. Welfare associations / relief organizations, including charities.
3. Individual donors.
4. Legitimate business enterprises.
5. Drug trafficking and other illegal operations.
6. Extortions, thefts, robberies and dacoities.
7. Abduction of people for ransom.
8. Money / credit card counterfeiting etc.
The transfer of money from the source to the end user takes place through:
1. Commercial Banks and other legitimate financial institutions
2. ‘Havala’ and ‘Black Market Peso Exchange System’
3. Money changers
4. Individual carriers etc
In the process of money transfer, if required, organized crime also plays its role for making profit. It is to check criminal transfer of money that international community has taken a number of measures that include strict monitoring of banking system and a watch on suspicious accounts.
Sources of Terror Finance:
The state is the basic political entity and primarily responsible for the welfare of its citizens and, according to the United Nation Charter, for the maintenance of international peace and security. Paradoxically the manner in which “national interest” is perceived and articulated has converted the state into the foremost financier of terrorism. Throughout history, the state has either employed its apparatus directly or used proxy entities to perpetrate terrorist acts. The persecution and killings of the Jews in Hitler’s Germany, of the Communists in Suharto’s Indonesia, (not to mention of Bengalis in Yahya Khan’s Pakistan) and of Bosnian Muslims in Milosevic’s Yugoslavia represented the most horrible reigns of terror let loose with the state-resources.
These acts in fact amounted to pogroms and genocides of unarmed civilians who were the citizens of the same states. Similarly Indian, Israeli and Russian military operations and gross human right violations in occupied Kashmir, Palestine and Chechnya respectively are ghastly examples of state-terrorism. The resources allocated in the name of defense, internal security and maintenance of law and order, running into billions of dollars, is spent by these states to terrorize civilians into submission and to perpetuate their control over the territories mentioned, which they can not morally lay a claim on. Ironically the perpetrators of state-terrorism have no qualms in referring to their extreme measures, including bombardments of residential buildings, as counter-terrorism.
Terrorism is also used as an instrument of policy by the states to promote their national interest vis-à-vis other states. Reportedly Pakistan financed and trained the Sikh militants who were active in Indian Punjab for freedom during the 1980s despite the fact that Indian Punjab was never a disputed territory between the two countries. These Sikhs were responsible for targeting Hindu civilians in the province. Perhaps Pakistan wanted India to remain engaged in East Punjab so that it could concentrate on its Afghan frontier where jihad against the Soviet forces was in progress. From 1989 up to quite recently, Pakistan had been recruiting, organizing, training, equipping, guiding and otherwise financing Kashmiri mujahideen outfits, particularly Hizb-ul Mujahideen, Harkat-ul Ansar and Lashkar-i-Taiba, engaged in a legitimate liberation struggle. Pakistan also intended to bleed India and to bog down its armed forces in a protracted and costly conflict. Apart from military installations and Indian troops, these mujahideen targeted and terrorized the local Hindu pandits who were forced in large numbers to leave their ancestral homes in the Kashmir Valley. The mujahideen were accused of massacring hundreds of Hindus on their way to pilgrimage of shrines in the mountainous region of Indian occupied Kashmir. Pakistan is said to have “misused” American aid for its ambitions in Kashmir and had worked with Osama bin Laden to impart military training to Kashmiris and to induct Arab-Afghans in the Kashmir jihad. For its role in Kashmir and support for the Taliban regime, Pakistan was on the verge of being declared a “rogue state” on the eve of 9/11.
On its part, India has never missed an opportunity to harm Pakistan. During the crisis in East Pakistan in 1971, it trained and armed the Mukti Bahini (liberation army) that perpetrated worst terror on non-Bengali Pakistanis, particularly Biharis and Punjabis, residing there; and after the creation of Bangladesh, massacred several thousand of these hapless civilians. Throughout, India has also remained involved with regional, ethnic and linguistic parties and groups in Pakistan in Sindh, N.W.F.P. and Balochistan.
Behind many terrorist acts, including bomb explosions at busy spots in Pakistani cities, one can detect the hands of India’s Research and Analysis Wing (RAW). During 1980s and 1990s, India was unmistakably involved in ethnic violence in the cities and towns of Sindh, particularly Karachi. India had set up camps in its provinces of Gujarat and Rajhestan to impart military training to disgruntled Pakistani youth who were then sent back to Pakistan on terrorist missions.
The Arab states have financed PLO and Hamas to mount pressure on Israel. Although the PLO entered into an agreement with Israel in expectation of acquiring a Palestinian state, Hamas continued to resort to terrorist attacks on buses, restaurants, commercial centers and other public places with civilian casualties. Israel on its part has been perpetrating worst form of state terrorism on Palestinian civilians with impunity due to US protection. Iran’s support for Hizbullah in Lebanon is too well known. Perhaps Iraqi resistance against the US, British and allied occupational forces is receiving men and money from other Muslim countries, albeit to a limited extent. In fighting between the armed bands and American led coalition forces in Iraq, civilian casualties have become routine occurrences. The United States has admitted to resorting to abuses (read terrorize) of civilian inmates in prison houses in Iraq on mere suspicions.
Saudi Arabia has been the principal financier of Islamic welfare organizations. In the aftermath of the Islamic Revolution in Iran, the Saudi government was particularly concerned with its spillover effects in the region and throughout the Muslim world. The Saudi sponsored International Islamic Relief Organization (IIRO) extended financial assistance to several Wahhabi groups in the Middle East and Central Asia. Although terror financing was not on IIRO’s agenda, some Western analysts believe that a considerable part of its donation meant for education, health, housing and other welfare activities ultimately went into the hands of the terrorists.
The Saudi governmental organization namely the Muslim World League (MWL) is considered as the biggest relief organization in the Muslim world with over 100 branches in more than 30 countries. Egypt and some other Arab governments have accused MWL of assisting Islamic terrorist groups.
According to a working draft, dated May 30, 2004, and prepared by the Center for Strategic and International Studies, Washington D.C., entitled Saudi Internal Security: A Risk Assessment:
“The government did not oppose foreign and domestic efforts to raise money and obtain support for ‘pro-Islamic’ movements in Bosnia, Kosovo, Afghanistan, and Central Asia when these represented extreme and sometimes violent causes. Little or no effort was made to monitor the extent to which foreign ‘charities’ raised money for political movements in Europe, the Middle East and Asia, that were far more extreme (and sometimes violent) than would have been tolerated in Saudi Arabia.”
The madrassahs and charities are traditional Islamic institutions. In countries like Pakistan they serve as the largest non-governmental network for social welfare. The madrassahs impart religious education to the students hailing from the lower strata of the society who otherwise might remain illiterate. They also provide boarding and lodging to the poor students. The charities are involved in a variety of relief works. Dependent on donations, the charities provide food, clothing, shelter and medical services to the needy. During the 1980s the madrassah network was used to organize jihad against the Soviet occupational forces in Afghanistan. According to one estimate, the United States and Saudi Arabia contributed some $ 6 billion in military aid to the mujahidin during the decade of the Soviet occupation of Afghanistan. It was in the wake of Afghan jihad that Osama bin Laden and Dr Abdullah Azzam founded Makhtab al Khidmat (MAK) or Afghan Service Bureau in Peshawar, Pakistan, in 1984, to provide relief and welfare services to the mujahidin and later conceived the idea of Al-Qaeda. After the Soviet withdrawal in 1989, Pakistan continued to benefit from the madrassah system in its grand design to have “strategic depth” by indirectly controlling Afghanistan through the Taliban. Pakistan also recruited mujahidin for its Kashmir venture from the madrassahs and arranged for their training in the camps situated in the Pakistani tribal areas, Afghanistan and Azad Kashmir. Since the jihad was also funded through charities, after 9/11, the madrassahs and charities emerged as prime suspects in American “war on terror”.
The US authorities contended that some private charities also financed the madrassahs, wherein radical Wahhabi theology was taught with its tremendous emphasis on jihad as an article of Islamic faith. The students of these madrassahs considered waging of jihad against the infidels as obligatory for Muslims and as such from here a large number of Muslim terrorists were recruited.
It was, owing to this line of reasoning, that immediately after 9/11 the United States targeted a number of charities including Al-Rasheed Trust (Pakistan), Al-Akhtar Trust (Pakistan), Makhtab al Khidmat (Pakistan) and Al–Harmain Foundation that was based in Saudi Arabia, but had worldwide presence. The Office of Foreign Assets Control, United States, acted swiftly to identify associations and individuals whose assets were to be frozen on suspicion of having links with Al-Qaeda and within a month US and foreign financial institutions froze assets valued about $ 100 million on this count. (Rohan Gunaratna, Inside Al-Qaeda, Karachi: Vanguard, 2002. p.66).
Since 9/11 terrorism and Al-Qaeda have become synonyms for the Western world, in particular the United States. The violence related to Islamic militancy is almost invariably attributed to Al-Qaeda and its global network without proper investigation. Reference is made to Declaration of War by Osama bin Laden, together with the leaders of the World Islamic Front for the Jihad Against the Jews and the Crusaders that said:
“We – with God’s help – call on every Muslim who believes in God and wishes to be rewarded to comply with God’s order to kill the Americans and plunder their money wherever and whenever they find it. We also call on the Muslim Ulema, leaders, youths and soldiers to launch the raids on Satan’s US troops and the devil’s supporters allying with them and to displace those who are behind them so that they may learn a lesson.” (Quoted in Rohan Gunaratna, p.01)
The Western governments and media have been making wild speculations about the financial resources of Al-Qaeda. Different Western analysts cite the figures ranging between $30 million and $300 million as Osama’s personal fortune. His family is very influential and owns a prestigious group of construction companies in Saudi Arabia. It was due to his opposition to stationing of US troops in the Holy Land in the wake of the Gulf War of 1991 that Osama had to leave Saudi Arabia in 1994.
It is understandable that Bin Laden contributed to Al-Qaeda’s funds in a big way that was commensurate to his income and status. But apart from Bin Laden, wealthy Sheikhs from Saudi Arabia, UAE, Kuwait and Qatar also poured their money into the cause of Al-Qaeda so that Bin Laden was able establish a welfare services network in all over the Muslim world that included orphanages, schools, study centers, mosques, hospitals dispensaries and refugee camps parallel to his military training camps in the Sudan and Afghanistan. Perhaps a number of these sheikhs did not know that a part of their contribution would be used to mount attacks on American interests in retaliation of its “anti-Islam” policies.
In fact in many cases these wealthy sheikhs and businessmen left the task of donating funds to the junior staff that did not care much about who were the recipients. As stated above, in the aftermath of 9/11 the US government made efforts to identify the money trail largely through charities, introduced strict monitoring of their banking transactions and froze assets of a large number of individuals and associations suspected of terrorist links.
Public fund raising has been one of the most important sources of financing of Islamic militancy. Who can deny that despite all out efforts by the West there is a considerable sympathy for Bin Laden and his mission in the Muslim world. American double standards in the Middle East and support for Israel have cultivated a firm belief in the Muslim masses that there is a global conspiracy against Islam and its culture and value system. The stationing of the US forces in Saudi Arabia and occupation of Iraq and Afghanistan have created unmistakable feeling that Islam is under siege. The Muslim settlers, in particular the youth, in the United States and Europe also share the same perception. As early as August 1996, soon after Bin Laden returned to Afghanistan, Al-Qaeda had issued an edict that said:
“It should not be hidden from you that the people of Islam have suffered from aggression, iniquity and injustices imposed upon them by the Zionist-Crusader alliance and their collaborators to the extent that the Muslims’ blood has become the cheapest in the eyes of the ‘world’, and their wealth have become a loot, in the hands of their enemies.
Their blood was spilt in Palestine and Iraq. The horrifying pictures of the massacre of Qana, Lebanon, are still fresh in our memories. Massacres in Tajikistan, Burma, Kashmir, Assam, the Philippines, Fatani, Ogaden, Somalia, Eritrea, Chechnya, and Bosnia-Herzegovina have taken place, massacres that sent shivers through the body, and shake the conscience.”
“All of this ___ and the world watched and heard, and not only did they not respond to the atrocities, but also, under a clear conspiracy ___ between the USA and its allies, under the cover of the iniquitous ‘United Nations’ ___ the dispossessed people were even prevented from obtaining arms to defend themselves. The people of Islam awakened, and realized that they were the main targets for the aggression of the Zionist-Crusader alliance. And all the false claims and propaganda about ‘Human Rights’ were hammered down and exposed for what they were, by the massacres that had taken place against the Muslims in every part of the world.” (Quoted in Rohan Gunaratna, pp. 89-90).”
It is a situation in which the common Muslims believe that everything ___ including acts of terror ____ is justified. Terror in self-defense and for the sake of sheer survival when Islam is under attack has become legitimate in their eyes, hence greater the assurance that donations would reach the jihadis (for the West the terrorists), greater the ability of the front organizations to raise the funds.
The terror organizations also rely on legitimate business operations to generate funds. Some terrorist groups have construction firms, restaurants and even stores as sources of their income. For example, Al-Qaeda has a finance and business committee as a part of its organizational structure that manages a very sophisticated global financial network. This committee comprises of professional bankers, accountants and financiers, and looks after investment of funds and generation of revenue. According to one estimate, Al-Qaeda has a core membership of 3,000 that costs $ 36 million a year whereas it spends a substantial amount on weapons, technology, infrastructure, camps, offices, houses, vehicles. It also has to bribe police, military bureaucracy, customs and immigration officials and even politicians to secure concessions. The exact amount needed on recurrent basis is not known.
It emerged during a trial in the United States that, apart from construction firms, Al-Qaeda had investments in manufacturing and trading companies that dealt in such diverse sectors as agricultural products (including processing and export of fruits and vegetables), sea food, dairy products, sweetmeats, leather, furniture and fixtures, bicycles, cars, trucks, machinery, machine tools, hospital equipment, fertilizer, sugar, iron and steel, insecticide, wood, cattle and even diamonds and precious stones. These business ventures were set up at different places including many European countries.
Al-Qaeda has divided its funds into i) investment for financial return and ii) funds for operational purposes. It has clandestine operational cells to disburse operational funds. While disbursing from feeder to operational accounts the fund passes through several other accounts to disguise the real motive of transfer.
The actual role of narcotic trade in terror finance is difficult to assess. Although the involvement of “organized crime” in drug trafficking is not disputed, as already seen in the case of Columbia, one opinion, though not confirmed and may not be true, is that Al-Qaeda has never used drug money to finance its operations.
The argument runs thus: drugs are prohibited in Islam and Al-Qaeda did not want to earn a bad name for itself in the Muslim world. Nevertheless, it may not be ruled out that some Islamic Groups believed that in a “do or die” conflict it was permitted to sell drugs to the infidels and to use the proceeds from narcotic trade against the “crusaders.” This seems particularly true of the Taliban, paradoxically an ally of Al-Qaeda.
Testifying before the State Department in December 2000, Michael Sheehan- the US Coordinator for Counter –Terrorism, said “the Taliban admitted to imposing the same rate of Ushr (religious tax) i.e., 10% on poppy as they imposed on other agricultural crops”. Given the nature of the Taliban ideology, nothing was beyond them.
According to one estimate, under the Taliban the narcotic trade had flourished to reach the figure of $ 8 billion per year and, due to Bin Laden’s influence on the Taliban, Al-Qaeda received a substantial share out of it. (Website: David N. Bessie & Christopher M. Gray, “Al-Qaeda’s Revenge: Its Methods and Nation-State Allies,” Citizens United States, Volume II, Issue 2) It is further alleged that, in order to produce high quality heroin, laboratories were set up with latest equipment in under ground shelters particularly in Khost and Jalalabad. Local and foreign chemical experts oversaw the working of these laboratories that earned a substantial amount of money for Al-Qaeda.
Addressing a Symposium in Vienna on June 4, 2002, A. V. Zmeyevsky, one of the Directors of the Russian Ministry of Foreign Affairs, contended that the Taliban, who had hold, over about 90% of areas where opium poppy was cultivated in Afghanistan, used the proceed from the sale of poppy to purchase arms and ammunition and for training the combatants and providing assistance to different terrorist groups in the region.
The beneficiaries of Afghan narcotic trade, according to him, were the Islamic Movement of Uzbekistan, the United Tajik Opposition, the Front for the Liberation of East Turkistan (in the Xingjian Uigar Autonomous Region of China) and some Chechen warlords. Narcotics, he alleged, were also produced in the Chechen Republic for export to Russia and some other European countries by the Chechen terrorists.
Yet another source of terror finance is interestingly mining and sale of diamonds. The Revolutionary United Front, a rebel force in Sierra Leone that subjected thousands of people to torture, mutilation and indiscriminate killings, took advantage of its military control of diamond fields in the country to engage in illegal diamond trade. This terrorist rebel force earned millions of dollars by selling diamonds to different parties, including Bin Laden and his Al-Qaeda. The terrorist groups in Angola and the Democratic republic of Congo also indulged in mining and sale of diamonds. The amount so earned was spent on procuring weapons and making payments to the troops of the terrorist organizations.
In order to devise methods to check the illegal trade in diamonds, the South African government convened a conference in Kimberley in 2001. Attended by government officials, representatives of diamond industry and human right activists from 38 countries, the conference initiated a process to develop a comprehensive trade system that was meant to exclude what were referred to as “blood diamonds” from diamond industry.
After several meetings that finalized the details, the participants formally launched what came to be known as the Kimberley Process in January 2003. The Kimberley arrangement provided for a sort of a voluntary and self-regulating system that envisaged checks by the concerned governments and the diamond industry at every stage from the points of origin of diamonds to retailers’ shelves. This required international monitoring, audited chains of custody, tamper-proof packaging and standardized and public record-keeping system.
Still due to conflict of interests within the industry the arrangement is not likely to prevent terror financing from “blood diamonds.” A lot depends on how watchful are the NGOs because they were largely responsible for highlighting the issue and pressurizing the governments and the industry to reach the understanding.
Other sources of terror finance include robberies, dacoities, extortion, abduction, and kidnapping for ransom etc.
Generally Islamic groups are reluctant to engage in such activities; nevertheless, isolated incidents of robbing of the Jews in Palestine and of the Christian Copts in Egypt have been reported. Similarly the Abu Sayyaf Group in the Southern Philippines is involved in many incidents of kidnapping of Western tourists, Christian missionaries and wealthy locals for ransom purposes.
The Abu Sayyaf Group was once a part of the Moro National Liberation Front, an Islamist organization. Some Islamist Groups in North Yemen and Chechnya have also engaged themselves in kidnapping for ransom business. There is no Islamic ruling to encourage this sort of activities, but probably the local culture or declaration issued in February 1998 by Bin Laden and others has provided justification for such crimes.
The Al-Qaeda manual, Declaration of Jihad against the Country’s Tyrants, contains instructions concerning the production and use of counterfeit money, counterfeit credit cards and forged documents. Algerian members of Al-Qaeda settled in Europe are well versed in credit card frauds. According to an estimate of security and intelligence agencies Al-Qaeda raises $ 1 million every month in this manner. (Rohan Gunaratna, p. 65) Several cells have been found working for this purpose in Britain, France, Spain, Belgium and the Netherlands. Interestingly they used to send money, so raised, to different countries of the Middle East and Pakistan. Reportedly there was a special camp in Afghanistan where Al-Qaeda experts trained its European members in credit card frauds. Al-Qaeda acquired equipment to encode and decode credit cards and machines to produce fake credit cards on the basis of information gathered from commercial establishments and through Internet. (Rohan Gunaratna, p.65)
Once the fund is raised the next important step is that of money transfer and, if required, of money laundering. It is here that we sometimes find close collaboration between organized crime and terrorist groups. The former can assist the latter through their established channels.
Money Transfer and Money Laundering
Before 9/11, the terrorist organizations mainly relied on normal banking channels for transfer of money to and from different countries in the Middle East, Europe and North America. For this purpose, a number of accounts were opened in the names of individuals and associations and after passing through several accounts money used to reach its final destination. This system was also followed by Al-Qaeda for its operations. Accounts were opened in the names of Al-Qaeda-controlled companies and trust-worthy individuals whose identities were not publicly known.
One bank that became very notorious for money transfer and laundering and was particularly involved in criminal practices was BCCI. After its collapse in 1991, a thorough investigation was made by different agencies that brought forth some startling revelations:
From the very beginning, the whole structure of, BCCI was designed by its founder Agha Hasan Abedi and his number two Swaleh Naqvi with the purpose of serving criminal interests and engaging in clandestine activities.
Made up of several layers of entities that were related to each other through holding companies, subsidiaries, affiliates and nominees, BCCI was able to conduct a massive exercise in money laundering in Europe, Africa, Asia and Americas. In order to prevent detection of illegal practices, BCCI fractured its corporate structure, record keeping and audit system. It appointed two auditors, none of whom had the authority to audit the BCCI operations in totality. It successfully manipulated bank confidentiality and secrecy laws to promote business.
By indulging in money transfer and laundering activities, BCCI facilitated terrorism, narco-trade, smuggling, sale of nuclear technology, illegal immigration, financial corruption, kickbacks and other such crimes. It bribed high government officials and prominent political figures to obtain concessions and favors in securing business like getting deposits from the given country’s Central Bank. BCCI operated in 73 countries of the world and infiltrated even the US banking system by purchasing certain banks despite regulatory barriers.
Even Americans were on its pay list. It was in 1988-1989 that Bank of England came to know of BCCI’s involvement in terror finance. Some of BCCI’s major operations included clandestine support to Pakistan’s nuclear program, laundering of money of Pakistani drug barons, facilitating General Noriega’s drug trafficking, links with Iraqi arms dealer Sarkis Sarkenalian and Syrian arms dealer, terrorist and drug trafficker Monzer Al-Kassar. The investigations that began in 1989 ultimately led to the closure of BCCI on 5 July 1991.
Apart from normal banking channels, on which the terrorist organizations rely less after 9/11, there exists a traditional system of international capital transfer generally known as ‘Havala.’ Although illegal, it is a trust-based and relatively cheap system that is very popular in South Asia and the Middle East. The service is very quick and without any documentation.
The networks of havala agents and brokers exist in different countries. The sender deposits the money with the broker and the designated person in another country receives the same. For identification of the recipient a password is used or necessary detail provided by the sender. The brokers use code words and communicate via telephone, Internet or e-mail to arrange for payments. The charges are less than commercial banks and service efficient and hassle free.
In South Asia, the havala system had its beginning in 1940s when a considerable number of people from certain villages migrated to Hong Kong, Britain, Canada and the United States. These people devised the method of transferring money through private networks.
Subsequently, during the partition of the Subcontinent in 1947, the largest migration in human history took place. According to one estimate, nearly ten million people left their homes in India and Pakistan as a result of communal riots that gripped the two countries. The Hindus and Sikhs from Pakistani provinces of (West) Punjab, (East) Bengal and Sindh, and the Muslims from all over India but particularly (East) Punjab, the United Provinces, Gujarat, (West) Bengal, Bihar, Madras and Delhi were uprooted.
These refugees and migrants who did not have sufficient time to properly and legally transfer their wealth/assets opted for havala system to salvage what they could. Initially the havala system worked through extended families whose members served as couriers or carriers for transfer of money between India and Pakistan.
Interestingly, following the independence, some British companies also relied on havala system to ensure flight of their capital from India.
The requirement of business classes that were engaged in commercial activities further strengthened and institutionalized the havala system into a full-time profession.
In this regard, the Memon, Bohra and Khoja Muslim communities and Banyas (Hindu Traders) played a pioneering role. Their commercial interests and need for over- and under- invoicing of commodities to evade taxes became a major incentive in the development of the havala practices.
By 1960s and 1970s, the multinational corporations and foreign companies that operated in the Sub-continent needed to bribe politicians and bureaucrats to influence government policies and to secure lucrative contracts. The havala system came to their help in making illegal payments in the form of bribes, commissions, kickbacks etc. to those who mattered, in promotion of their interests. Some foreign entities also used the system for under- and over- invoicing like local business houses.
After the Arab-Israel War of 1973, the Arab oil-producing countries made swift increases in the price of crude oil. In the bonanza that followed, a large number of skilled and unskilled workers from South Asia found jobs in construction and other sectors in the Arab world. These workers very much preferred to send their earnings home through havala, which gave great boost to the system.
During early 1980s, Pakistan government announced that remittances from foreign countries that came through banking channels would be immune from inquiry or scrutiny for taxation purpose.
Instead of discouraging havala, this facility promoted the system because an unscrupulous businessman or a Drug Baron would deposit a certain untaxed and/or proceeds of drugs consignment with the havala dealer, who would, in turn then arrange for remittance of equivalent amount from Dubai in the name of that businessman or Drug Baron or his nominee through normal banking channel on payment of about 4 to 5 percent charges for the service.
The remittance received by the businessman/Drug Baron would not be scrutinized even if invested in business or used for purchasing some property. In this manner a businessman/Drug Baron would whiten his black income for a nominal charge thereby evading higher tax rate and laundering the proceeds from smuggling of drugs.
Due to its relaxed laws concerning investment and transfer of money, Dubai has become an attraction for havala dealers. Since under the policy of deregulation Pakistan government has permitted carrying of an amount not exceeding $10,000 to a foreign country without any restriction, the transfer of money through carriers by airways has become a daily feature. The havala brokers send dollars and other currencies like pounds, UAE dirhams and Saudi, Omani and Qatari riyals in the sums equivalent to $ 10,000 or less through carriers via low-fare airlines like Aero-Asia and Shaheen.
Until quite recently the carriers were paid ½ percent of the amount they transferred to Dubai; now the rate has fallen to ¼ percent. If the carrier is able to invest his own money, he can earn considerably more.
As stated earlier, in South Asia, the havala system developed during the partition of the Subcontinent into India and Pakistan when illegal money transfers were required due to migration of population between the two countries. In the Middle East, although the practice was there under local conditions, the Afghans who indulged in narcotics trade, particularly during the Afghanistan war, popularized it. Presently havala transfers run into billions of dollars, because due to convenience, often even legally earned money is transferred through this source.
B.W. Kumar, an Indian analyst, has identified several purposes for which this system is used:
1. Tax evasion.
2. Capital flight due to uncertain political, economic or cultural conditions.
3. Smuggling and evasion of exchange control regulations.
4. Transfer of funds acquired by corrupt politicians and government officers usually in major international deals; for example purchase of aircrafts, ships, arms or project contracts.
5. Securities transactions.
6. Transfer of funds acquired by fraud/ thefts.
7. Drug trafficking, organized crime, gunrunning.
8. Undercover activities of intelligence agencies, clandestine operations including supporting terrorist outfits.
9. Financial resources received covertly by ethnic, resistance or terrorist groups.
10. Payments to politicians, political parties, media men, lobbyists etc.
11. Under invoicing and over-invoicing.
Kumar has rightly concluded:
“Parallel banking was born because there was a need to be filled. Havala (underground banking) will cease to exist when smuggling, drug trafficking, tax evasion and black money cease to exist. This will never happen so long as the demand for secret money exists.”
The acceptability of havala system can be gauged from the fact that according to an estimate nearly $ 2.5 to $ 3 billion used to come to Pakistan through havala as compared to $ 1 billion via formal banking system at the time when 9/11 took place.
It is said that in Pakistan alone there are more than 1,000 havala agents. Amongst the unregulated financial institutions, two namely Al Taqwa and Al Barakat have been suspected by the US State Department of having links with Al-Qaeda. (Rohan Gunaratna, p.63).
Another system of money transfer akin to havala in some respects is the ‘Black Market Peso Exchange System’, mostly used by drug dealers but also availed by terrorists to transfer funds earned through narcotics trade.
Under this system a terrorist organization receives the peso equivalent in its account in a country, through a broker after the sale of drugs owned by that terrorist organization by the broker’s partner, for dollars in another country. In simple language drugs are sold in one country and the payment by the terrorist organization is received in another.
The terrorist organizations also depend on moneychangers for transfer of funds. The moneychangers usually have ordinary bank accounts in many countries. Tempted by the chances of making good profit, they indulge in criminal practices and serve the interests of organized crime and terrorist organizations.
Another method of money transfer is through individual carriers or couriers. Although this method is slow, some terrorist organizations consider it relatively safe for their purpose. Much depends on the amount to be transferred and the country to which it is to be transferred. Al-Qaeda is said to employ individual carriers some times even transferring large amounts and that is why it is quite difficult to destroy Al-Qaeda finances.
Measures to Combat Money Transfer
As early as 17 December 1996, the UN General Assembly had adopted a resolution that called upon all states “to take steps to prevent and counteract, through appropriate domestic measures, the financing of terrorists and terrorist organizations, whether such financing is direct or indirect through organizations which also have or claim to have charitable, social or cultural goals or which are also engaged in unlawful activities such as illicit arms trafficking, drug dealing and racketeering, including the exploitation of persons for purposes of funding terrorist activities, and in particular to consider, where appropriate, adopting regulatory measures to prevent and counteract movement of funds suspected to be intended for terrorist purposes without impending in any way the freedom of legitimate capital movements and to intensify the exchange of information concerning international movement of such funds.”
In 1999 was finalized UN Convention for the Suppression of the Financing of Terrorism and in 2000 UN Convention against Transnational Organized Crime.
After 9/11 the international community realized the importance of taking immediate measures to combat terror finance as recommended by the United Nations. The high level representatives of the Group of 20 countries (G-20) decided in their talks held in Ottawa to take the following measures:
1. Freeze the assets of ‘terrorist organizations’ and deny them access to international financial system.
2. Inform the world about the terrorist whose assets were frozen and the worth of such assets.
3. Ratify the UN Convention for the Suppression of the Financing of Terrorism (1999) and the UN Convention Against Transnational Organized Crime (2000).
4. Share intelligence and information on terror finance.
5. Assist the countries that could not afford to enforce anti-terrorist investigative system.
The Group of 20 countries accounted for 88% of global economic output and 60% of the world’s poor population.
(Website:Mark Bourrie, “Targeting Terrorists War Chests,” Asia Times).
Another country that appears to be very active in combating terror finance is no doubt Saudi Arabia, for it has to compensate for the past neglect. It has reformed its internal security apparatus and conducted a detailed review of Saudi- based companies and charities operating in Pakistan and Central Asia.
The Saudi government has established a High Commission for the Oversight of Charities with a view to introduce financial control mechanism and to conduct audit. It has also set up what is called Higher Saudi Association for Relief and Charity to oversee the distribution of donations and to ensure that they are provided to the needy.
The Saudi government has frozen the funds and financial assets of the Taliban as required by the UN Security Council Resolution 1267. The Saudi Banks have taken measures to identify and freeze all assets belonging to terrorist suspects and entities as per the list issued by the United States.
Saudi Arabia has joined hands with the Finance Ministers and Central Bank Governors of the G-20 to formulate an aggressive plan to rout out and freeze terrorist assets worldwide. There is now greater coordination between the Saudi Arabian Monetary Authority (SAMA) and other banking supervisory authorities and law enforcement agencies, including foreign ones.
The Saudi government has provided a list of 750 people, including 214 Saudi nationals, to Interpol for arrest. A number of these people are suspected of involvement in money laundering, drug trafficking and terror-related activities. A very laudable achievement is helping in identification of more than 50 shell companies, located in the Middle East, Europe, Asia and the Caribbean, that Osama Bin Laden used to transfer money.
Fiscal Terrorism
A very recent case in Pakistan ought to be an eye opener for us, the KKI Money Laundering Case.
The Federal Investigation Agency had arrested Mohammad Javed Khanani and Abdul Munaf Kalia, directors of the Khanani and Kalia International, on the night of Nov 7 in Karachi and Lahore, and Hanif S. Kalia, the chairman of the Kalia group, was arrested in Clifton on Nov 28.
The suspects are facing charges of illegally transferring billions of dollars abroad.
According to the charge-sheet, a case was registered against the suspects on Nov 15 after initiating an inquiry on a complaint (118/08) lodged by, the State Bank of Pakistan about illegal transfer of money abroad.
It said that besides two official websites, the firm had fraudulently created a website (www.clickpk.net) and database “Exchange plus” and “Foxpro” with criminal intentions without declaring it to the State Bank Of Pakistan and used them for illegal transactions. The company had also installed huge computing machines and devices at its head office in Saima Trade Centre on I. I. Chundrigar Road, which enabled the company’s Franchise offices set up across the country automatic access to the main system in order to facilitate such transactions.
The charge-sheet further said that the suspects had used the services of Al-Zarooni Exchange in the UAE, having Atif Aziz Polani and Jawed Qasim as the focal persons to assist all such dealings. Besides, the services of Number of Exchange Firms and gents in foreign countries were acquired That caused a loss of billions of dollars to the national exchanger.
The Suspects had sent billions of dollars from the country, with the connivance of other directors and partners of exchange companies and money changers.
The SBP’s exchange policy department had issued a licence for six years (Dec 26, 2002 to Dec 25, 2008) to the firm, while 1,468,151 transactions Were made from July 18, 2005 to Nov 6, 2008 through which foreign currency, worth Rs103849300144 was transferred abroad during the same period and The amount was not declared to the State Bank, it added.
The FIA, acting on the lead given by the arrested suspects, seized data From 13 computers, 2,643 backup DVDs and files of lockers from the system Administrator of the company, Mustahab Alam, it said, adding that the firm had opened hundreds of thousands accounts in different banks across the Country Five of the accounts had so far been identified, including Account title M. Javed at the PICPIC Commercial Bank’s market branch, Account titles M. Iqbal, Asif, Fahim and Hanif at My Bank’s Cloth Market Branch. Mohammad Iqbal Kasbati, son of Jan Mohammad, Altaf S. Khanani.
The State Bank of Pakistan has frozen almost 90 to 100 accounts of the directors of Khanani and Kalia and closed relatives of owners. Another report shows that details of about 18,000 accounts were also found in the 20 Computers seized from the offices and franchises of the company. Presently, the top brass of Khanani and Kalia are under the remand of FIA on illegally remitting the money, outside Pakistan.
But the notable point is that the Real culprits, i.e., the persons who have given the money to the money Changers to transfer it abroad are yet to be identified. While the seized Computers have complete addresses and whereabouts of the clients who used Services of the company, so it would not be difficult to find out the actual responsible personalities.
Officials say Javed Kalia has named influential people Whose money has been sent abroad but the problem is that these people are very Influential, therefore, advisor to PM, Rehman Malik, had to state in the Senate That no lists was prepared that included names of certain politicians, Businessmen or bureaucrats involved in the scandal neither any name had been put on the exit control list. Instead of appreciating government’s efforts, several Opposition senators asked under which law, action was taken by FIA against the Accused and why were they manhandled. A joint meeting of Forex Association of Pakistan (FAP) and Exchange Companies Association of Pakistan (ECAP) criticized the FIA’s Lahore Circle for presenting some of the KKI directors handcuffed in Lahore Sessions Court.
Director FIA Crime Circle also had to assure that in Future FIA would take the exchange companies’ association into confidence before taking action against any exchange company and would be raided in the presence of SBP officials. Earlier the advisor stated that those indulged in this criminal activity are too powerful and influential, however, a green signal was given and action proceeded against them.
He said the investigation was being carried out against seven money changing firms, but yet no action has taken against any other company. The advisor also explained that the action was taken under Foreign Exchange Regulations Act 1947, as the accused had committed criminal acts and they could seek bail. It is to be noted that earlier certain Powers transferred to the NAB, had been again given to FIA a week back, which Was given a signal to its cyber crime wing to go after certain elements that were indulging the illegal activity.
According to the details, Lahore FIA officials Prepared a Special Report about the flight of dollars from the country in April 2008,fearing that, a Forex Crisis, would hit the country in the near future.
The Report, also recommended strong and instant action against persons involved in The Hundi and Havala business. Lahore, Gujranwala, Karachi and Peshawar are the main cities where a majority of money changers were running the Hundi and Havala Business and anyone could send any amounts any where in the world without any check.A special team of the FIA’s Crime Circle was constituted to take action.
The agency has been ordered to collect more intelligence and crackdown, against the Hundi and Havala business. This malpractice in foreign exchange dealing was going on for the last 5 to 6 years. The Government blamed that the Money changers have developed a parallel internet banking system.
Actually money Changers never transferred the dollars or other currencies expatriate Pakistanis, deposited with them. Officials of the SBP and the government were expressing Apprehension for quite some time about involvement of some money changers, in the smuggling of dollars.
It was estimated that money exchangers have transferred around $10 billion during the last five years from the country. On an average, They were transferring about $10 million every day through the Havala and Hundi system.
The accused also accepted that this smuggling had caused the slump in the shares business at cal bourses.
Since April 2008, the Karachi Stock Exchange has witnessed a 41 percent fall in its 100-Index. Moreover, the value of rupee Against dollar was continuously going down, due to dollarization and open smuggling of dollars.
The money was being smuggled in big quantity, for instance, a Rs10 million bag was being sold for Rs1.10 million in Afghanistan in October. A probe was launched, which led to interception of $32 million at Lahore Airport. Such detections were also carried out in Peshawar and Karachi too.The main currency market of Peshawar is at Chowk Yadgar where hundreds of Afghan refugees have also joined the activity with the locals. Any person, having cash amount of even Rs5, 000 to Rs 10,000 were also purchasing dollar to earn a little amount.
Currency dealers having agents in Jalalabad, Afghanistan, fixed price of the currency. Millions of dollars were being smuggled to Afghanistan daily, as there is no check on the movement of the currency from and into Pakistan. Rupee against dollar was sold at Rs90 in Peshawar on 28th October 2008.The Afghan refugees traveling across the border at Torkham are the main source of currency smuggling that was not checked by any official agency.
Neither the government took timely action for arresting depreciation of rupee.On May 9, 2008, the SBP issued a warning to cancel exchange companies’ licenses that fail to bring remittances into the country and also will disallow the export of currency notes. They totally ignored all these warnings and rupee further weakened from Rs66.88 to Rs67.50/67.70 to a dollar on the same day. For a long time SBP kept the PKR-dollar parity stable at $1 to PKR 60 to 62 and the cash transactions were normally within 30 to 40 paisas band.On the other hand, the market players said the government is responsible for the slide down.
They feel that SBP/government, after the April meeting with the IMF, in Washington, might agree to weaken the rupee in order to control the widening trade and current account deficit by at least equal to the inflation differential. Therefore, the SBP allowed the rupee to slide by 30 to 40 paisa on a daily basis. This has encouraged the trend of polarization. The investors have shifted their focus from equities to the currency trade. Even the small savers and housewives jumped on the bandwagon. The money changers made Rs4 billion annually through this illegal trade while the forex reserves are depleting rapidly. Authorities have identified a cartel whose illegal transaction of foreign currencies is aggravating the devaluation of the rupee against dollar. At one time, one US dollar reached Rs84 in the open market while bank rate was Rs81. Later, dollar was sold for Rs88 in the open market while bank rate was Rs84.
There were also rumors that the government and the State Bank have agreed with The foreign agencies to drop the value of rupee to the level of Rs100 per dollar. The unstable rupee has also causing problems for importers as their imported goods were lying at ports and banks were not releasing them dollars, therefore, they have to purchase it from the open market where dollar price rates was increasing every day.
In November 2004, when SBP was trying not to let The Forex reserves go down below $10 billion on orders of then Prime Minister, Shaukat Aziz, similar threats and various administrative measures such as Exporting currency only through NBP Exchange company to plug leakages taken by the SBP did not work. In spite of several warnings exchange companies bring in Less than one billion dollars in home remittances while the currency export was Over $4 to $5 billion a year.
The SBP told money changers that unlike the Exchange companies need a minimum paid-up capital of Rs100 million they can start operating as mini exchange companies with a minimum capital of Rs25 million only.
The Bank also said if less than 80 percent of them do not opt for establishing ‘B’ category exchange it would cancel the very scheme that gives them this option. Representatives of exchange companies were not happy at these instructions they said they will have to undergo a loss since the rupee has Weakened, more than the agreed rate with SBP.
There are 378 licensed money changers across Pakistan 109 of them operating in Karachi. The SBP had set June 30, 2004 deadline for them to stop operating as money changers, they were given the option to transform their business into new exchange companies or get franchise from the existing ones.
But money changers were a bit averse to this idea and wanted to keep their own identity. So the central bank finally allowed them to form mini exchange companies instead of becoming a part of the existing exchange companies or establishing new ones. It also told them that at least five money changers should join hands to form one mini exchange company. Central bank said that the purpose of this requirement was to ensure that the majority of licensed money changers transform their businesses into exchange companies.
The SBP has admitted that exchange companies have made transaction of over $ 5 billion from January to September 2008, including the sale of $ 1 billion to banks and some $1.423 billion inward remittances and $ 1.675 billion Remittances sent abroad and $ 1.754 billion brought back through the export of ‘Kutchra’.
The SBP said it was continuously monitoring exchange companies and it has also taken some specific actions against companies on account of violations of foreign exchange rules and regulations during the last two years. Prime Minister’s Advisor on Interior Rehman Malik said, “We got information that a huge sum of money was sent to Afghanistan four weeks ago. A probe was launched, which led to the interception of $ 32 million at the Lahore airport. Such detections were also made in Peshawar and Karachi. We want to take action but the State Bank governor stopped us as she contented that the forex dealers were having the license for transacting the business in any amount.
After a thorough Deliberation, the government had to scramble its cyber crimes wing to lay hand on this business that was ruining the economy and taking the precious foreign Exchange away from the country away. Clarifying its position, the SBP said that with the transformation of Authorized Money Changers (AMCs) into formal exchange Companies, a large number of undocumented transactions have come under the fold of formal framework, which require proper documentation, record keeping and adherence to internationally accepted Know Your Customer Norms.
It also enabled The SBP to narrow the gap between inter bank and kerb market rates, which plays an important role in improving the flow of home remittances. The SBP said that at present there are certain contradictory provisions in the legislations relating to foreign exchange transactions.
For instance, Foreign Exchange Regulation Act (FERA), 1947 is the main legislation which provides regulatory powers to the SBP for making rules and regulations to govern the foreign exchange and remittance business. At the same time, Protection of Economic Reforms Act (PERA), 1992 Provides complete freedom to individuals to bring, hold, sell, transfer and take out foreign exchange within or outside Pakistan. Though the freedom was Curtailed to a certain extent by making an amendment in 1999, still an ample Freedom is available in terms of Pera 1992, has a clause which categorically states that PERA 1992 has an overriding effect over FERA 1947.
Therefore, the same limits the effectiveness of the Central Bank to effectively monitor and supervise foreign exchange activities, the central bank explained. Similarly, since FERA 1947 is lacking in empowering SBP to directly impose monetary Penalties on violation of foreign exchange rules and regulations. The SBP has, However, been constantly flagging the issue and proposed related amendments in FERA, 1947 and PERA, 1992 to enable the SBP to effectively and promptly deal with the violations and illegal foreign exchange activities.
The SBP also stated that only 10 exchange companies were issued explanation letters on the findings of Special Inspection/Routine Inspection on the violations of Foreign Exchange Rules & Regulation, during last two years. The licenses of two exchange companies of ‘B’ category were suspended on violations, besides permission for Export of FCY to a company was suspended. In order to improve documentation of foreign currency flows and introduce necessary checks on export of foreign Currency notes other than dollars by the exchange companies, a joint booth of the SBP and Customs was established at Karachi and Lahore airports.
It further said since the SBP is not a law enforcement agency, in order to curb illegal operators it has to request the concerned agencies for initiation of action. Accordingly, the SBP has been initiating a special campaign and took necessary steps, which include identification of such operators through its field offices and enhanced coordination with LEAs.
A number of cases were referred to law Enforcement Agencies, for requisite actions. According to officials figures, there are 24 full-fledged exchange companies with 162 branches/booths and 570 arrangements with third parties. Similarly, there are 30 exchange companies of ‘B’ category with 237 branches forming a total network of 969 business locations in the country for over the counter exchange and remittance business.
The Money Changers’ Association said it has 365 members of them only five companies had Established offices. The members of the racket of the currency black market pay Rs 1,000 per month to the local office of the federal intelligence agency who inform, the dealers beforehand about the possible raid.
FIA arrested Javed Khanani and two employees on November 5, however, the FIR has many weak points, later on a case was also registered in Karachi.
Khanani and Kalia carried out about 40 percent of all money exchange transactions in the country. It has 24 branches and nine franchises across the country.
In search for evidence to prove the exchange company guilty, it was found in one computer data that an Illegal transaction of Rs. 39 billion took place. The FIA has found that some of the accused had transferred at least $ 500 million abroad from their personal accounts during the last 10 months. The franchise of Khanani and Kalia International, Duniya Enterprise, in Gujranwala has been involved in ‘physical’ transfer of foreign currency from Pakistan, besides running ‘hawala or hundi business’ illegally.
The confiscated Gujranwala office computers have a website through which data was deleted, but the cyber crime wing of the FIA managed to retrieve it. The FIA also conducted raids in different districts of the NWFP, arresting four people. It also raided the Haripur franchise of Bismillah Money Changers and arrested two persons. Bismillah Money Changers was operating despite cancellation of their license by the State Bank. FIA had been monitoring KK for two months where its franchise in Gujranwala had a special counter for Hawala transfers. KKI offices in the Karachi Stock Exchange, and New Challi were raided and arrested Munaf Kalia, a director of the firm, lodged FIR on the Directives of higher Authorities, also arrested many employees.
The government sealed offices of the company all over the country and posted the FIA staff out side them. Malik Bostan, representative of the Forex Association of Pakistan, said the association would turn in anyone found involved in illegal transfers.
The FAP collects $7 billion foreign exchange annually and gives it to the Government, of which the share of KK is about $ 4 billion. He warned, “If we are targeted and harassed, this money will not be received”. Malik Bostan said a similar crackdown was initiated in 1998 by the Nawaz government.
However, it was stopped on the request of the FAP and the dollar was brought down from Rs 67 to Rs 50. He said if any complaint will be received against any money changer, the Association will itself hand over such a person to the FIA.Rehman Malik revealed that the money changers involved in establishing a parallel banking system for Transacting money had links with the drug money since bad money and black Business do have commonalities among themselves. He said ‘Actually this is ‘fiscal terrorism.’
Munaf Kalia, in police custody, said that FIA did not have the right to seal the office or property of any money changer. According to rules FIA should report to the State Bank and, SBP could serve show cause notice on which money changer could be investigated.
The SBP is the authority to serve notice and on finding evidence it is the State Bank that has the right of sealing the money changer company. The FIA team has also arrested eight officials of Nadra who are accused of issuing fake CNICs on which the illegal transfer of dollars was made. Moreover, the FIA arrested four men at the Karachi Airport who were Carrying dollars, pounds and travellers cheques worth about $ 1 million.
Both the KK directors are being interrogated to extract important information and names of politicians, bureaucrats, as to how bureaucrats, politicians, Businessmen and other influential people transferred money to their children for education and as installments for expensive property abroad.
The Financial Monitoring Unit (FMU) of the State Bank of Pakistan established under Anti-Money Laundering Ordinance 2007 has unearthed its first-ever case of suspicious business transactions worth Rs 50 million and asked the National Accountability Bureau (NAB), to initiate investigation against two companies.
These companies are suspected of involvement in Rs 50 million fraud, as they obtained rebates on the cheques issued from the government treasury and deposited in their accounts. The NAB was given green signal to launch inquiry against three foreign exchange companies, into allegations regarding illegal business, transfer of dollar and money laundering and approved investigation against A. R. Enterprises, Ahsan Enterprises and Tianshi International Pakistan.
Rehman Malik advised the people not to transfer money through ‘hawala’ or ‘hundi’, for transaction use banking system. Such activity abroad is known as money-laundering. Turkey’s second major source of income is foreign exchange business; but not the way, it is being done in Pakistan. However, this system might not end because it is more convenient to the immigrants to send their money through money changer companies as they deliver money to their doorstep within 24 hours. As against this banks take seven to 15 days to transfer money.
The loot and plunder of Forex Reserves on such a colossal scale is, in reality the Economic Heist perpetrated on Pakistan, by India, via Kabul. The tragedy, that Minister Interior has called the “FISCAL Terrorism” has gone un-noticed, as this aspect of the KKI Forex Scandal has lost sight of. The Culprits, some have absconded and others have taken seriously ill, ostensibly suffering from all kinds of ‘Life threatening Diseases’, and recuperating in the Government Hospitals and enjoying the hospitality at State Expense as state Guests. The dirty business of Havala and Money Laundering goes on unabated and is fact of life.
The Ground reality is that Valiant sons of our Beloved Country are laying down their lives every day in countering the Taliban, now with, admittedly US Arms, IEDs, Mines, Booby Traps and other latest weaponry originating in Afghanistan, perhaps with the Looted and Plundered Forex Reserves of Pakistan.
The Unique phenomenon is many of the so-called “Taliban” are not even circumcised. Did Indians forget that Taliban are supposed to Muslims and Muslims are circumcised?
May be while converting, the Indians forgot to circumcise them.
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