Ayaz Ahmed
Due to regulatory lacunas in Pakistan’s financial structure, money laundering has become one of the major impediments to its economic growth. According to the US State Department’s International Narcotics Control Strategy Report, Pakistan loses more than $ 10 billion in massive money laundering activities in a year. Presumably, some crooked and unaccountable politicians have their all fingers in the pie. This does not bode for the terror- infested country and its long-drawn-out war against resurgent terrorists and militants.
If this transaction of ill-gotten money continues unchecked, the crisis-ridden government of the Pakistan Muslim League-Nawaz (PML-N) will be unable to stabilize its underperforming economy and eliminate terrorist and militant groups allegedly based in the country’s war-ravaged tribal areas.
Apart from criminals and terrorists, some elected representatives are also believed to be involved in whitening their illegal money. The Panama Papers have revealed how the country’s top politicians and their kith and kin misappropriate dwindling national resources and legalize their looted money in offshore companies. This illegitimate business cannot be stamped out until the country’s elected representatives avoid amassing illicit money and then legitimatizing it.
To reduce money laundering in the country, the law enforcement agencies (LEAs) have registered about 498 cases under the Foreign Exchange Registration Act (FERA). The number of cases registered as Suspicious Transaction Report (STRs) from the Financial Monitoring Unit (FMU) is around 116. These cases seem to be the tip of the gigantic iceberg of money laundering activities being secretly carried out by state and non-state actors in the country.
Sadly, LEAs have not made any laudable breakthrough in detaining and bringing to justice those who are involved in this unlawful and disruptive business. There are two underlying reasons behind this stunning failure of LEAs: the deep-rooted corruption plaguing the country’s LEAs and the outright indifference of the incumbent government to bring money launders to book.
Arguably, the government’s non-seriousness about burgeoning money laundering business shows that some political heavyweights are also working in complicit with money laundering rackets to further their vested interests. What the so-called elected representatives of the country should not forget is that this illicit business has ominously helped indigenous terrorists and militants to immensely finance their nefarious designs against the country.
Terrorists and militants shrewdly use a range of instrumentalities to collect finances within and out of the country. Their major fund-raising means include the manipulation of hawala/hundi system, misapplication of charities, ever-increasing narcotic trade and petrodollars from some Middle Eastern monarchies.
The government has so far dragged its feet in arresting and sentencing around 8,000 people put under the Fourth Schedule. According to a report, 20 percent of these suspects are now deceased while 5 percent have either left the country or are too old and frail to pose any threat. This clearly manifests the incompetence and non-seriousness of the country’s leadership in terms of eliminating terrorism and militancy.
What is alarming is to note that some of these fourth schedulers are suspected to be involved in terror financing. The government should keep in mind that it cannot carry the day against resurgent non-state actors without seriously choking their multiple sources of finance.
The State Bank has recently made some headways in this regard by launching a system for the automated detection of money laundering and terror financing that use the banking system. This system will enable the Financial Monetary Unit (FMU) at Karachi to automate collection and analysis of suspicious financial transaction being received from banks and exchange companies in the country.
Although commendable, this step of the SBP is inadequate enough to impede illegal transaction of money in the country. The state needs to prevent transactions through hundi (an illegal system of transferring money whereby the money is paid to an agent who then instructs an associate in the relevant country or area to pay the final recipient). The hundi mafia uses secret and informal channels to transfer monetary resources to foreign countries. Surprisingly, this mafia runs a huge network of money brokers located in Africa, Asia and the Middle East.
According to the Exchange Association of Pakistan, more than $ 15 billion is transacted in the country through hundi in a year. This illegal mode of business has not only undermined the formal channel of trade, it has also deprived the government of taxes worth millions of rupees.
The state should awaken from its deep slumber and formulate some stringent measures to curb and block all means of money laundering in the country. It should establish an anti-money laundering task force equipped with all requisite tools to trace and dismantle all those networks involved in this undocumented transaction.
The aforementioned steps will yield no result if the corruption-stricken government of the PML-N does not establish coordination with African, Asian and the Middle Eastern countries to clamp down on trans-regional money laundering networks. To complement these steps, the national investigative agencies should expose and bring to book those politicians who are feathering their nest in this thriving business.
Disclaimer: Views expressed in this article are those of the author and Balochistan Voices not necessarily agrees with them.
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