Terror Financing in Pakistan

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Terror funding of militant groups operating in Pakistan or from Pakistan is a serious concern for Pakistani authorities and international community. For Pakistani authorities, terror financing of groups operating against Pakistani state are of prime concern while for International community terror funding of groups operating from Pakistan against United States or India are of major importance. To curb terror financing it is important to know how militant groups raise fund and how they transfer their funds. In this article we will discuss funding of militants in Pakistan’s context. For simple understanding we categories militants into two major categories.

  1. Anti-Pakistan
  2. Militant Groups operating from Pakistan but not targeting Pakistani interests

Donations:

Anti-Pakistan Groups: Militant groups receive donations from their sympathizers and supporters. Donation collection differ from group to group. Anti-Pakistan groups such as TTP, Jamat-ul-Ahrar, Lashkar-e-Isalm, BLA, BRA etc. used to collect funds from general public in areas under their influence. However, they are no more able to openly collect funds from general public. Nevertheless, the still receive donations from their likeminded people. The donations are secretly given by individuals in cash or in kind. These militant groups are unable to collect sacrificial hides during Eid-ul-Adha (the Muslim festival in which animals are slaughtered and meat is distributed among poors). Despite a nationwide anti-militant atmosphere, there are still pockets in the country where people subscribe to ideology of these militants and provide them donations. The Baloch militants receive donations from Baloch businesspersons within the province as well as outside especially from Karachi[1]. Karachi is not only financial capital of Pakistan but it is also largest providers of donations to religious and militant organizations.

Donation collection by groups not fighting against Pakistan:

Those militant groups who are not fighting against Pakistani state have their support networks operating in the country. These groups have their charity fronts or welfare organizations who collect funds. They have huge public support base and it is hard for the government to take action against them as they mostly enjoy strong public support. These groups collect donations from multiple sources. They also use donation boxes places in shops and other business centers. There was a time when funds were collected in the name of Jihad and these boxes were called ‘Jihad Fund Box’ but after 9/11, government was forced to crack down on direct Jihadi funding. These groups created charity organizations and now funds are collected in the name of charity. Funds are also collect in cash and in kind. There are big businessmen who also provide huge amounts to these groups. These groups also collect Zakat (a mandatory charity on Muslims who have wealth above a prescribed amount). They also collect share from crops (which is called Usher in Islam) and hides of sacrificial animals during Eid-ul-Adha. Since these groups have obtained legal permissions from courts by claiming they have no association with militants, government is unable to carry out a comprehensive crackdown against them.

Businesses

Some of these groups also run businesses from where they get money to run their certain projects. They collect donations and invest certain amount in businesses run by likeminded people. Some groups also rent out their properties for fund raising. These businesses are never run in the name of the organization to avoid any sanctions.

Kidnapping for Ransom:

Kidnapping for ransom is one of the major funding source of militant groups. There was a time when kidnapping for ransom was rampant across the country and militants were raising billions of rupees from this source. However, Operation Zarb-e-Azb dismantled terror sanctuaries from FATA while Intelligence Based Operations (IBOs) wiped out urban networks of terror financing. Last three years have seen dramatic decline in kidnapping for ransom. However, a recent surge have been observed by PICSS as the militants have started to regroup in the country. The business of kidnapping for ransom have put together militants and criminal syndicates. Multiple channels are used to kidnap, keep and dispose the kidnapped person either by releasing after receiving money or killing. Militants were able to kidnap son of Prime Minister Yusuf Raza Gilani and son of late governor Punjab Slaman Taseer who was himself killed by his own guard on the issue of Blasphemy.

Drug Money

Afghanistan now provides more than 90 percent of drug in the world due to American occupation. It is worth noting that before American invasion, Taliban regime had completely eradicated poppy crop from areas under their control, which was admitted by United Nations. Drug money from Afghanistan is producing billions of dollars of transactions. Militant groups such as Afghan Taliban receive their due share from the money. It is not just the militants but CIA is also using drug money to finance its proxy wars in the region.

Official Funding of Terror Groups

Groups fighting against Pakistan also receive funds through Indian and Afghan governments. However, these funds are channelized in a way that they are cannot be independently traced back to the main financiers.

There are multiple ways of financing anti-Pakistan terror groups like TTP, Jamat-ul-Ahrar, Lashkar-e-Islam, BLA, BRA etc.

Through Maliks (Tribal elders):

Indian RAW through NDS has created a complex system of terror financing to avoid tracking of money trails. Durand line between Pakistan and Afghanistan has divided many families. These families are traditionally allowed to move across the border without visas or other legal documents under ‘easement rights’. Pakistan has recently restricted ‘easement rights’ to 20 kilometer area from border. On Afghan side, Pakistani militants are accommodated under ‘easement rights’. Local tribal elders known as Malik are used to disburse funds to these militants. These funds are used mostly for non-violent activities such as residence, food, healthcare, looking after families of militants and other related issues.

Funds for actions:

Funds are also directly distributed among militant leadership by NDS, which receives these funds from RAW. For example if a militant group will carry out a spectacular attack, it will be given special reward. For each attack there is generally specific amount fixed too such as target killings, IED planting, grenade throwing and other attacks. Militants make videos of their attacks for propaganda purpose as well as they provide these clips as proof of their success to their financiers.

Funds through Hawal/Hundi:

For big operations inside Pakistan, money is transferred through Hawal/Hundi money laundering channels. These channels are spread across the region with major centers in some Middle Eastern countries like UAE.

Pakistan’s efforts to curb terror financing

Pakistan has frozen the accounts of 5,000 suspected terrorists, taking about $3 million out of their accounts during last one and half year. Last year, in a major move to clamp down on terrorism financing, the State Bank of Pakistan (SBP) had directed all banks in the country to freeze accounts worth millions of rupees linked to individuals listed on the Fourth Schedule of the Anti-Terrorism Act (ATA) 1997.

 

All banks, development finance institutions and microfinance banks had been advised to take immediate action as per requirement of the law against individuals, whose names are included in the lists of fourth schedulers provided by the National Counter-Terrorism Authority (Nacta). Pakistan is also part of Financial Action Task Force, a 35-nation intergovernmental organization formed in 1989 to combat money laundering. After 9/11, it also took on the role of fighting the financing of terrorism. The FATF scrutinizes measures taken by countries at least twice in a year. In 2015, Pakistan was exempted from its scrutiny after a similar session applauded the country’s progress in tackling both money laundering and terrorist financing. However, concerns have been raised regarding the resurrection of banned groups such as Lashkar-i-Taiba under new names. Also worrying is the operation of groups such as Jaish-i-Mohammed, which is openly running seminaries and fundraising. Pakistan put Hafiz Muhammad Saeed, head of Jamat-ud-Dawah under house arrest at the start of this year to comply with the demands of FATF and to avoid being black listed. It has also started a crackdown on charity wing of Jamat-ud-Dawah recently.

Conclusion:

Terror financing in Pakistan has a complex web. Some terror funding is of prime focus while those groups who target India or America are not under strict scrutiny in the country. Anti-Pakistan militant groups are also funded by Indian RAW through NDS. The NDS-RAW have adopted a complex funding channel to avoid money trail.

Pakistan has been working to comply with requirement of Financial Action Task Force, a 35 nation body which checks terror financing and money laundering on six-month basis progress report.

[1] “Karachi: Security Agencies Apprehend Four BLA Militants In Operation | Abb Takk News”. 2017. Abbtakk.Tv. Accessed September 6 2017. http://abbtakk.tv/en/102896-2karachi-security-agencies-apprehend-four-bla-militants-in-operation260116/.

 

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