Financing terrorism: Show me the money

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

Salman Siddiqui November 10, 2010

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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IZ | 10 years ago | Reply 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?
SeekTheLight | 10 years ago | Reply 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 !!
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