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Financial side of terrorism


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February 26, 2017

War against terrorists cannot be won unless their financial lifeline is destroye

In Afghanistan, Pakistan and elsewhere, many militant groups in the garb of “fighting for ideology” are engaged in criminal activities: from smuggling to kidnappings, narco trade to arm deals. These terrorists, money-greedy above anything else, are modern-day mercenaries. Religion is their tool for militancy, but their actual strength lies in generating money and gaining control. They recruit men for self-acclaimed ‘holy war’.

Terrorism, like fascism, is a destructive ideology. To fight terrorism, it is necessary to understand it. Wishful thinking about use of force alone will not help to win the war against something that relates to human behaviour, lust for money and quest for control.

Mere use of force against a few groups and men without eliminating the root causes leading to extremism, fascism, fanaticism, fundamentalism, bigotry, militancy and terrorism may bring a short-term victory, but in the long-term, would just be a futile exercise. With use of force we can only kill terrorists, but with just socio-economic order and good governance we can eliminate roots of terrorism.

Economic imbalances within society as well as globally, revival of fundamentalists and imposition of will of the mighty on the weak, all growing since 9/11 in 2001, have created world-wide turmoil and unleashed a reign of terror. Behind this trail of terrorism is dirty business — drug and arms trade, human trafficking, smuggling, kidnapping for ransom, and all other activities relating to organised crime.

This financial side of terrorism has been documented by Gretchen Peters in her book, Seeds of Terror and by us in Pakistan: Drug-trap to Debt-trap and Pakistan: From Hash to Heroin.

Terrorism and money laundering, intrinsically linked, pose considerable threats to global peace and security along with destabilising political and financial stability of many nation States and Pakistan is one of the worst-affected victims of these twin menaces. The war against any terrorist network e.g. ISIS, al Qaeda and the Taliban (enjoying networking with many outlawed groups having hubs in Afghanistan, Pakistan and elsewhere) cannot be won unless their financial lifeline is destroyed. These networks are minting enormous money from voluntary donations to organised crime. The questions that irk everybody’s mind are:

Funds generated through organised crime and money laundering is the real power of terrorists.

Where do these terrorists get so much money from?

Why are the governments not serious in cracking down on unlawful transfer of funds?

If banking channels are used, then why remitters and recipients cannot be traced?

If hawala and hundi are used for unlawful cross border transfer of funds, why persons engaged in these unlawful activities are not arrested and punished?

Who are financing these terrorist networks?

Who provides these terrorists with sophisticated arms and military training?

It is a well-established fact that terrorist networks remit millions of dollars every year from bank accounts maintained in various countries under fictitious names. The seizure of this enormous money is the real issue that hardly finds any significant place in discussions and strategies to defeat terrorism at global level. James Petras, Professor of Sociology, Binghamton University, New York, in his paper, “Dirty Money” Foundation of US Growth and Empire  makes startling revelations: “There is a consensus among US Congressional Investigators, former bankers and international banking experts that US and European banks launder between $500 billion and $1 trillion of dirty money each year, half of which is laundered by US banks alone.”

These yearly inflows surpass all the net transfers by major US oil producers, military industries and aircraft manufacturers. The most recent estimates (2016) are that 90 offshore jurisdictions around the world licensed about 11,000 offshore banks that control approximately $155 trillion in assets. This is the real ground situation whereas we daily hear from official quarters in US and elsewhere making big claims about ‘war on terror’ (sic).

Like the US government, our authorities also know that huge funds are laundered through banks yet they do not take any action. Professor Petras in Enormous By Any Measure says: “Washington and the mass media have portrayed the US as being in the forefront of the struggle against narco trafficking, drug laundering and political corruption: the image is of clean white hands fighting dirty money. The truth is exactly the opposite.” It equally applies to our rulers sitting in Islamabad.

The personnel appointed to counter the menace of terrorism in Pakistan are neither properly trained nor well-equipped to unearth and destroy the deadly roots of dirty money that supports and nourishes terrorist outfits. Since the organised crime syndicates have deeply embedded tentacles and influences in the financial systems, terrorists find no difficulty in exploiting the available infrastructure.

There is sufficient evidence that militant groups working against the security and stability of Pakistan generate huge funds through organised criminal activities and also get generous “donations” from “sympathisers” in and outside Pakistan. In the face of this fact, we have yet not developed a reporting system to monitor the generation and movement of such money/funds/assets.

On the contrary, we have laws that protect transfer of funds, for example, section 5 and 9 of Protection of Economic Reforms Act, 1992 and section 111(4) of the Income Tax Ordinance, 2001. These provisions ensure unlimited flow of remittances and dealings in foreign currencies. So financiers of terrorists are free to use even the banking facilities what to speak of hawala and/or hundi.

In the presence of so-called “protective” (sic) economic laws cited above, the provisions of Anti-Money Laundering Act of 2010 have rarely been invoked. In fact, this has become a dormant law. It baffles the people that when the presence of dirty money is so apparent, why its criminal accumulation and generation is not countered and the offenders remain unpunished? They ask whether it is on account of lack of political will, rampant corruption, ineffectiveness of law enforcement agencies, or defective laws.

Terrorists and money launderers not only use hawala and hundi but exploit legal sanction available under section 111(4) of the Income Tax Ordinance, 2001 which says that if anybody brings money through normal banking channels, tax authorities cannot pose any question about the “source”. The banks also take cover under section 5 and section 9 of the Protection of Economic Reform Act, 1992 to withhold information from tax authorities.

Besides legal weaknesses pointed out above, during the last 30 years, the National Accountability Bureau (NAB), Federal Investigation Agency (FIA), Anti Narcotics Force (ANF) and Federal Board of Revenue (FBR) have not been able to establish a joint task force to book and prosecute the men and networks involved in organised crimes. The NAB, in fact, has been accepting ‘plea bargains’ offered by the corrupt, thereby minting a lot of money as ‘share’ in recovery. This is how we run State agencies on taxpayers’ money — the institutions established for punishing tax cheats, criminals, rent-seekers, drug traffickers and terrorists allow them to get exonerated by paying a few bucks as plea bargain.

In the presence of numerous departments and law enforcement agencies, the terrorist networks get on daily basis, millions through hundi and hawala in addition to extortion money and proceeds of drug-arms deals. Many of them are even getting funds through normal banking channels in benami accounts. The inadequate reporting of such transactions by banks to Financial Monitoring Unit (FMU) established under section 6 of the Anti Money Laundering Act, 2010 is a serious cause for concern. State Bank of Pakistan as a regulator has failed to enforce this law — there should be monetary limit for banks to report all cash transactions as the expression “suspicious transactions” is vague and subjective.

Funds generated through organised crime and money laundering is the real power of terrorists who not only easily buy weapons, exploit and train the poor for their nefarious activities, but also corrupt State actors, ultimately undermining the very legitimacy of the government.

Pakistan presents a classic study of ‘state within state’ — terrorists and mafias crippling institutions and the society. Pakistan has suffered a lot and paid a heavy price in men and material while fighting against terrorism. Determined and practical efforts are needed to destroy the financial supply lines of terrorist networks.

The government must tell the people how many cases with respect to busting of financial networks that are financing terrorists are filed in terrorist courts till today. How many studies are available with National Counter Terrorism Authority (NACTA) on terrorist financing that can help prepare short-term and long-term plans to uproot the menace. Is NACTA really in place? What happened to 29 civil-military wings established in August 2016 to ensure full implementation of the NAP? These and many other questions need to be considered if we are really serious in uprooting terrorism.

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Vision 21 is Pakistan based non-profit, non- party Socio-Political organisation. We work through research and advocacy for developing and improving Human Capital, by focusing on Poverty and Misery Alleviation, Rights Awareness, Human Dignity, Women empowerment and Justice as a right and obligation. We act to promote and actively seek Human well-being and happiness by working side by side with the deprived and have-nots.

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