CTF/Hawala: India-US crack down on Pakistan terror financing networks

India and the US held a side meeting at the Financial Action Task Force (FATF) plenary last week  to finalise plans for cooperation on identifying and closing down sources of funding to Pakistan terrorist groups. No details have yet emerged on which funding channels are being used to send money to terrorist groups which may be in Pakistan or are using Pakistan as a base for funding.

The FATF’s latest report on terrorist financing focused on the use of hawala, the traditional South Asian underground method of transferring money between cities and across international borders. Briefly, the FATF claims hawala is open to exploitation by FCA - Hawalaterrorist financiers for several reasons, principally:

  • a lack of supervisory will or resources
  • settlement across multiple jurisdictions through value or cash outside of the banking system in some cases
  • the use of businesses that are not regulated financial institutions
  • the use of net settlement and the commingling of licit and illicit proceeds.

A lack of supervisory resources and commitment to effective regulation seem to be the largest sources of concern vis a vis hawala.

This was underlined by news from the Australian Crime Commission’s Project Eligo operation last month, which identified terrorist financing channels built on the back of trafficking and selling narcotics between South America, Australia and the Middle East. The funds in the Middle East were then channelled back to South America to pay for more drugs. This could have been achieved via formal or informal remittance systems.

That said, it is worth remembering that the hawala network is vast, based on trust and used by millions of South Asians to remit money home. A friend of mine regularly received legitimate payments for group tours of India from elderly travellers via a hawala operator ensconced in a jewellery store. What is more, the term hawala is rarely used. Most people refer to the system simply as money transfer.

India-US join hands to crack down financial network of Pak group

New Delhi: India and the US have joined hands to crack down on the financial network and fund-raising activities of Pakistan-based terror outfits.

“India and USA have agreed to work together to crack the financial network and fund raising activities of Pakistan-based terror FCA - TerrorFinanceoutfits and individual terrorists associated with these organisations under the Framework of Indo-US Bilateral discussion,” Minister of State for Home RPN Singh informed Lok Sabha in reply to a written question.

The India-US bilateral meeting, held on the sidelines of the Financial Action Task Force (FATF) in October 2013, facilitated exchange of such information between concerned agencies of both the countries.

Singh said India and the US have also agreed to have cooperation between their agencies in fighting against counterfeit currency and illegal financial transactions under the aegis of the India-US Homeland Security Dialogue.

A sub group of “illicit finance, illegal smuggling of cash, financial fraud and counterfeiting” has been formed to work with the areas of information exchange, capacity building and technical/ research cooperation.

“US Homeland Security and Indian agencies are working together to investigate sources of material and technologies used in the production of FICN,” he said.
Source: ZeeNews 

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