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$10 Billion a Year Money Laundering Pipeline

DR. FARRUKH SALEEM: In March 2017, the US Department of State released its ‘International Narcotics Control Strategy Report’. According to the Report, “The international community loses hundreds of billions of dollars every year due to trade-based money laundering…The practice also costs Pakistan more than $10 billion a year”.

Imagine: $10 billion a year times 10 years would mean $100 billion. How much is $100 billion? As per the State Bank of Pakistan (SBP), “Foreign debt and liabilities soared around 14 percent to $95 billion in the fiscal year ended June 30”.

How much is $10 billion a year? In 2013, the “government of Nawaz Sharif agreed to terms of an IMF loan of $6.6 billion disbursed over 36 months”. And we celebrated that loan.

How much is $10 billion a year? In 2008, the PPP government accepted an IMF package worth $7.6 billion. And we celebrated that package.

In Pakistan, the FIA is responsible for investigating money-laundering cases. In 2016, the estimate was that “Rs236 billion [has been] illegally transferred to 37 countries”. For the record, the FIA has a conviction rate of under seven percent. For the record, “only 1 of 256 filed key cases of money laundering was decided by the courts in the last three years”.

On September 18, Farhan Junejo, a close aide of a late PPP leader, was arrested over alleged money laundering by the National Crime Agency (NCA) of Britain (apparently a joint operation by the NCA, the FIA and NAB). The modus operandi of Pakistani money-launderers is now more or less clear: political actors along with civil servants steal from the national treasury; Pakistani bankers then facilitate the routing of the stolen funds through fake bank accounts; the laundered funds are then sent to Dubai; and from Dubai the funds are disbursed to various countries, including Switzerland, Spain, the UK and the US.

Yes, Pakistan has a financial monitoring unit (FMU) within the Ministry of Finance (established under the Anti-Money Laundering Act). Yes, the FMU is to receive all suspicious transaction reports (STRs) from financial institutions. Yes, the FIA is suppose to investigate – and prosecute – money launderers. But the FMU “forwards a limited number of STRs to FIA”. Plus, the FIA “lacks the capacity and resources to pursue financial investigations”. And we, therefore, continue to beg the IMF.

Under the PTI government things may indeed be changing. Right now, the FIA is busy unearthing one of the biggest money-laundering scandal in Pakistan’s history. On August 31, a banking court granted an interim bail to former president Asif Ali Zardari. Initially, there were 29 fake bank accounts – the number then went up to 44 – and FIA has now found an additional 33 fake bank accounts. The number now stands at 77 fake bank accounts. Reportedly, hundreds of billions of dirty rupees have been laundered through these bank accounts.

According to Britain’s National Crime Agency, “Britain was the prime destination for corruption of politically exposed persons to invest their funds and the most common source countries of those funds were Russia, Nigeria and Pakistan”.

We don’t need to beg, borrow and steal. We need to shut off the money laundering pipeline.

The writer is a columnist based in Islamabad.






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