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| March 3, 2006 | Friday | Safar 2, 1427 |
Criminals financing terrorists: US report
WASHINGTON, March 2: Financial crimes related to narcotics trafficking, terrorism, smuggling, tax evasion and corruption remain a significant problem in Pakistan, says a US State Department report released here on Wednesday.
The official US report on narcotics trafficking contains a separate chapter on money laundering and financial crimes in Pakistan, noting that Pakistani criminal networks play a central role in trans-shipment of narcotics and smuggled goods from Afghanistan to international markets.
“Pakistan is a major drug-transit country,” the report claims. “The proceeds of narcotics trafficking and funding for terrorist activities are often laundered by means of alternative remittance system called hawala.”
The report, however, notes that the hawala or hundi system is also widely used by Pakistani citizens for legitimate purposes.
The official US report claims that a network of private unregulated charities has also emerged as a significant source of illicit funds for international terrorists’ network.
The State Department’s Bureau for International Narcotics and Law Enforcement Affairs, which issued the report, says that Pakistan does not have a comprehensive anti money-laundering law and its current anti money-laundering regime is “weak, outdated and based on a loose patchwork of laws and regulations.”
Pakistani law enforcement agencies, the report says, have achieved some success in investigating and prosecuting corruption, drug trafficking and terrorism but their success has been limited due to absence of more stringent laws and because of corruption within these agencies.
“Smuggling, trade-based money laundering and physical cross-border cash transfers are prevalent methods used to launder money and finance terrorism in Pakistan,” the report adds.
“Goods such as foodstuffs, electronics, vegetable oils and other products primarily exported from Dubai to Karachi are falsely documented as being forwarded to Afghanistan.
“Through smuggling, corruption, avoidance of customs duties and taxes as well as barter deals of narcotics, many of the goods destined for Afghanistan find their way into the burgeoning Pakistani black market.”
The report notes that while a range of terrorist financing risks and vulnerabilities continue to exist, Pakistan has taken “significant steps” to combat organizations financing terrorists and a number of groups have been proscribed as terrorist organizations.
As of Dec 20, 2005, State Bank of Pakistan has frozen roughly $10.5 million belonging to 12 entities and individuals associated with Osama bin Laden, al Qaeda or the Taliban, the report adds.
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