Financing terror

There has been much talk of countering terrorism finance but there has never been a formal estimation of how much terror finance enters Pakistan and through what channels. The Ministry of Finance has finally compiled a 45-page report on the risk of money laundering and terrorism finance in Pakistan. The report, while limited in its in scope, confirms alarming details. Around 223 national and international terrorist organisations are operating with billions of rupees in annual operating budgets. These revelations confirm what has already been known. If terrorism is to be nipped in the bud, it is important to cut off its sources of finance. But what becomes clear as the report goes on is that Pakistan simply does not have the capacity to clamp down on terrorist finance. The sources of this finance range from drug trafficking, kidnapping for ransom, extortion, vehicle snatching, hawala/hundi, foreign exchange, contraband items and the sale of Nato/Isaf loot.

The report also shows that Pakistan is not yet in a position to be able to become part of the anti-money laundering group. This may not come as a shock but it should. Pakistan has apparently been fighting a war against terrorism for a decade and a half. How the country still does not have the ability to clamp down on major sources of terrorist finance is a serious failure on the part of the civilian and security apparatus. Curbing terrorist finance was also a key part of the National Action Plan (NAP) and it has been noted repeatedly that these provisions remain unimplemented. The government’s strategy of shutting down suspect bank accounts only pushes terrorism finance back into channels that the state just does not have a capacity to monitor. Instead of only focusing on closing down suspect bank accounts, the government needs to gather evidence and arrest individuals who form the nodes between terrorists and their financiers. Major sites of money laundering are the UAE, UK, US and surprisingly South East Asian countries. The report suggests that Pakistan needs international support to curb foreign funding. While that may well be true, it seems the problem is much more on the Pakistan side. It is Pakistan that does not have the capacity to become a part of the inter-governmental Financial Action Task Force (FATF) for at least another year. If we are clear about one thing, it is this: Pakistan needs to act against curbing terrorist finance on an urgent basis.