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Report: Pakistan Terror Groups Get Rich From Crime, Money Laundering

Waves of crime in Pakistan — including extortion, smuggling and kidnapping for ransom — are major sources of terrorist financing for extremist groups in the country, according to a new government report obtained by Pakistani media.

The report by the Financial Monitoring Unit (FMU) in Pakistan, titled “National Risk Assessment on Money Laundering and Terrorism Financing 2017,” reportedly details how terror groups generate funds through criminal activities, a Pakistani newspaper reported Thursday.

“Main sources of income of terrorists in Pakistan include foreign funding, drug trafficking, kidnapping for ransom, extortion from business, vehicle snatching,” according to the 45-page confidential report by FMU, which is an intelligence service department within the Ministry of Finance.

The report, which has not been released publicly, says over 200 local and international terrorist organizations generate billions of Pakistani rupees to fund their activities.

“Annual operational budget of terrorist organizations is from 5 million rupees [about $48,000] to 25 million rupees [about $240,000],” the report said, according to The News website, which published excerpts.

Hawala system

According to the report, terrorist groups also receive money through the hawala system, an alternative or parallel system that operates outside traditional banking and financial channels. The system largely has been used in money laundering.

The income sources include “hawala/hundi,’ cash couriers, [and] dealings in foreign exchange,” the report said. “A part of foreign exchange collected abroad may include funds for terrorist financing, and the rupee counterpart disbursed in Pakistan may help terrorist financing.”

Some terrorist groups get rich off selling military equipment looted from NATO supplies that pass through Pakistani land before arriving in neighboring Afghanistan, according to the report.

The so-called southern route, which runs through Pakistan, is the most direct and cost-effective way to send supplies to U.S. and NATO forces in Afghanistan, but it is vulnerable to attacks by militants.

Islamabad has frequently been blamed for achieving little progress in combating the financing of terrorist groups in the country.

A U.S. Treasury Department report on terrorist financing last year said many militant groups in Pakistan, including those that “continue to pose a direct threat to the U.S. interests and allies in the region,” fund their activities through proceeds from illegal businesses and charitable organizations.

The Treasury report said the Pakistani-based Lashkar-e-Tayyiba group, which was blamed by law enforcement for attacks in 2008 in Mumbai that killed more than 150 people, including six Americans, receives millions of dollars through funding from several humanitarian organizations within Pakistan and private donations.

Government focus

Analysts say the Pakistani government has shown little interest in curbing militants’ financing in the country.

“The issue has been neglected within the framework of the war on terror in Pakistan,” said Fida Hussain, a finance expert in Islamabad. “Combating terror financing and money laundering should have been a priority for the authorities but they don’t seem serious in combating it.”

Pakistani authorities say the government is trying hard to deal with the issue.

“The first thing our government did in the parliament was to come up with a law and measures to prevent money laundering,” Tallal Chaudhry, a member of the standing committee on finance and revenue in Pakistan’s national assembly, told VOA’s Urdu service. “We’ve also worked to stop the flow of illegal funds coming from foreign countries and the money that was being illegally generated in the name of charity in Pakistan.”

Pakistan’s Central Bank last year ordered the country’s commercial banks to freeze the accounts of about 4,000 individuals and businesses linked to terrorism.

Analysts say the government is well aware of the income sources for terrorist groups, though it does not go far enough to curb them.

“The government has the ability to combat the terrorist financing, but it lacks a strong a will to do so,” veteran Pashtun politician Afrasiab Khattak told VOA. “It enacts laws, including anti-terrorism laws, but fails to implement them.”

He added that the people are not aware that some of their donations end up strengthening militant groups.

Said Amir Rana, a security analyst: “The Federal Investigative Agency and other agencies have the responsibility to look into the matter and see why they’ve not been able to come up with a plan to curb the illegal economic activities of the terrorists in the country.”

VOA’s Rabia Pir contributed to this report from Islamabad.

This story was originally posted on VOA News (Extremism Watch Desk).

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