Financing terrorism: Show me the money

Published: November 10, 2010
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Army, law enforcement agencies lack a counter-terrorism strategy that can throttle the financial bloodline of militants

Army, law enforcement agencies lack a counter-terrorism strategy that can throttle the financial bloodline of militants

KARACHI: Pakistan seems to lack a counter-terrorism strategy that cuts off the financial blood line of militants, analysts say.

“Our strategy seems to be focused only on bombing Waziristan,” says analyst Zahid Hussain. “No one is focusing on cutting off the supply lines of militants.”

Amir Rana, director of the Pakistan Institute for Peace Studies, agrees. “The Pakistan Army and law enforcement agencies need to tackle this problem head on if they’re serious about dismantling the firepower of terrorists.”

The money trail

There are two basic funding channels for the militants. First, there are the established infrastructures of money generation such as charity collected through Zakat, madrassas and mosques, businesses and revenue earned through shops built around these places of worship, the collection of animal hides and remittances sent from overseas Pakistanis.

Only a fraction of the funds comes from this channel, increasing dependence on the other source: income through criminal activities such as bank robberies, kidnapping for ransom, banditry, illegal taxation and drugs.

According to Omar Shahid, SSP of the anti-extremism cell of the Sindh police’s Crime Investigation Department, apart from one or two Saudi or other Gulf princes who may be funding terrorists in an individual capacity, there’s no evidence that foreign states are funding homegrown militants.

“The problem is more localised now,” Shahid says, adding that the main source comes through Pakistani people, most of whom unwittingly contribute to militant funds through charity.

However, Hussain says that money through charities from Gulf countries especially find its way into the wrong hands.  Just four or five years ago, this charity was close to Rs90 billion. “Now where does all that money end up?” he asked.

A major chunk is collected through Zakat money from Karachi and Faisalabad, says Rana. Hussain substantiates that view. “One can take the example of Lal Masjid in Islamabad, which was funded by various prominent businessmen,” he said.

Cost of a suicide jacket

Shahid’s unit recently caught a teenaged suicide bomber, armed with a suicide jacket, and two of his handlers in Karachi who were allegedly affiliated with the Tehreek-i-Taliban Pakistan. “The handlers covered their operational costs through collection of hides in the name of a madrassa,” Shahid said.

Commenting on the cost of making a suicide jacket, he said it doesn’t require a lot of money to make the device. “It costs anywhere between Rs50,000 and Rs100,000.”

Illegal taxes

Also, during Eid, Mehsud tribesmen living in Karachi are forced to pay ‘bhatta’ in the name of donations for fighters in Waziristan. “Last Eid, we received reports that ‘parchiyaan’ (tickets) were collected from each trader in Sohrab Goth (in Karachi) for this purpose,” Shahid said.

“There are many layers to collection of funds in tribal areas. For example, if one group of militants collects money through criminal activities in Darra Adam Khel then another collects illegal taxes in Bajaur, etc,” Rana said.

According to Hussain, using drug money to finance terrorism is more of a phenomenon in Afghanistan. However, Rana says that in Pakistan, the smuggling route used to transfer drugs and other illicit items is taxed by militants operating in those areas.

Lack of training

The Pakistan Army and local law enforcement agencies, including police and rangers, are neither trained nor look deep into the financial trail of a terror-related crime. Even though intelligence agencies keep a tap on militant networks, the bulk of their operations is limited to wire-tapping and intercepting militant conversations.

Director-General of the Federal Investigation Agency (FIA) Waseem Ahmad insists that his organisation has a counter-terrorism wing that includes a section on financing. “We monitor all home remittances coming into the country through money exchange and wire services like the Western Union,” he said.

Ahmad said that the FIA has also stayed in touch with international policing bodies like Interpol to liaison requests to monitor certain suspicious transactions. The FIA does all this in close coordination with the financial monitoring unit (FMU) that comes under the finance ministry and whose offices are located in the State Bank of Pakistan building in Karachi. Ahmad said that all the people housed in the unit are professionals with expertise in economics and forensics.

Hawala system

According to Ahmad, despite “strict” checks and pressures to monitor the illegal hawala system of sending remittances home, he was informed in an exclusive presentation recently that around 10,000 people or locations are still available in the country from where such illegal transactions take place.

More than four million Pakistani migrants are estimated to be living abroad, 47 per cent of whom are believed to be in the Middle East. According to a State Bank report, $7 billion flow into the country through hawala channels each year.

According to a private banker in Karachi, most people such as daily wagers in the Middle East find the hawala to be a hassle-free system that offers better rates than most exchange companies. Also, she pointed out, people forget about money transfers taking place within the country. “Keep in mind that one doesn’t need a large amount of money to carry out a suicide attack. Say, a group wants to carry out a single suicide mission in the city under the budget of Rs100,000, money could be sent from Islamabad or Peshawar through new schemes using fake NIC numbers,” she added.

Grey areas?

Rana stressed that more investigation is required to monitor the huge amounts of money that get pumped through stock exchange markets such as the Karachi Stock Exchange (KSE).

It has been alleged that various powerful stockbrokers in the country, working on behalf of criminal syndicates and underworld dons, use the stock markets to convert black money into white. Reportedly, much of this money also lands into coffers of militants and their sympathisers.

When asked whether he was looking into scams involving the KSE, the FIA chief said “we are still looking into this.”

Published in The Express Tribune, November 10th, 2010.

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Reader Comments (9)

  • Ammar hussain qureshi
    Nov 10, 2010 - 9:21AM

    the written message elucidate the aspect but there are many other corners on which our law enforcement agencies have to have great conserns, for countering terrorism.
    at the first priority the govt should probe and curb differet mafias like smugglers of different illegetimite commodities which include smuggling of oil, drugs, human, arms and amunations. because in particular they are the main contributors and a linch pin between different sources.Recommend

  • Bilal
    Nov 10, 2010 - 9:50AM

    It is very informative report, I agree and I believe the representative agencies are already working on these lines, I wish them success and I hope for terrorism free Pakistan. May Allah bless us all.Recommend

  • Muhammad Hussain
    Nov 10, 2010 - 9:59AM

    If financial supply line of the militants is effectively severed, along with aggressive counter militancy indoctrination / propaganda in the affected areas, militancy would die it’s own death. Billions being spent on drones and bombs should be used to effectively engage the people as human beings, otherwise the world would smell of more and more of gun powder but humanity and human beings would remain fractious.Recommend

  • Sharafuddin
    Nov 10, 2010 - 1:27PM

    Views expressed in the article are very correct. Guns, Drones and Bombs are not the answer. They only escalate what we want to eliminate. Psychological warfare is the effective way of eliminating extremism and it’s child terrorism. Nothing has been spent on psychological warfare whereas billions are spent on guns and bombs. It looks like ‘they’ do not sincerely want the war to be over.Recommend

  • Asmat Jamal
    Nov 10, 2010 - 2:25PM

    It is a very well researched article which covers intricate details. Tracing financial trails is neither the job of Police, nor Army rangers, FC etc. It is primarily the job of FIA which specializes in this field.
    As stated in the article Omar Shahid, SSP of the anti-extremism cell of the Sindh police’s Crime Investigation Department, says “ apart from one or two Saudi or other Gulf princes who may be funding terrorists in an individual capacity, there’s no evidence that foreign states are funding homegrown militants”.
    I have serious disagreement with the assessment over here. This insurgency could not have lasted if foreign sponsors were not there. Only few months back, Sri Lanka was able to turn the tables on Tamil insurgents when India stopped financing and aiding the insurgents.
    Pakistan is in the eye of the storm. There are international intelligence agencies involved in supporting the terrorists in Pakistan. I would not be surprised if names of some very close Arab friends are discovered in this game. Arab States whose citizens are active members of Al Qaida would not like to see the theatre of War shifting to their countries. So they would love to see the War in Pakistan rather than their own countries. India has Pakistan by the throat. It will not let loose the noose. Iran and Turkey has their own interests. While Iran is helping Hazara Tribe, Turkey is helping Tajiks , Turkoman and Uzbeks. NATO and USA has international interests. So the trail of money should go right up to Capitals of these countries.
    Local money cannot sustain such a big insurgency movement. It has international sponsors which include some so called very close and pious friends of Pakistan Recommend

  • srinivasan
    Nov 10, 2010 - 5:34PM

    This article should put to rest the oft repeated lies (about source of finance of the terrorists occurring periodically in many pakistani blogs) that the terrorists are funded by CIA/RAW/Mossad/Afgan drug trade etc. Pakistanis should know that the charity they give or rather collected from them go mostly to suicide bombs and terirists guns Even the bank robbery recently in Karachi was attributed to TTP..How is Pak govt going to stop thisRecommend

  • Anis Qureshi
    Nov 11, 2010 - 7:45AM

    Funding to these extremist is one thing. We should also stop these arab countries from exporting exremist ideology to our people.Recommend

  • SeekTheLight
    Nov 11, 2010 - 3:10PM

    Arabs, particularly KSA considers Pakistan a laboratory to test all its bizarre experiments and keep the extremist militants busy here, lest they bother them back home. We, being beggars and devoid of self respect, readily dance to their tune. With friends like them who needs enemies !! Recommend

  • IZ
    Nov 12, 2010 - 8:00AM

    Funny how the one actual “foreign hand” for which there is evidence of supporting these militant groups is neither India, nor USA, nor Israel, but Saudi Arabia and gulf states. But you would never find any Pakistani leader with the gumption to criticise them publicly. Even if one says that it is not the governments but individuals, but surely joint action with the Arab governments needs to be taken behind the scenes to have these people identified and jailed. Or are they too influential to be stopped?Recommend

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