FinCEN Files: UK is Global Center For Money Laundering and Pakistan Among its Top 3 Sources

The latest leaks of US FinCEN (Financial Crime Enforcement Network) files show that the United Kingdom (UK) is the biggest global center for money laundering. An earlier report issued by the British Crime Agency put Pakistan among the world's top sources of money laundering in the United Kingdom. The latest FinCEN leaks represent just the tip of an iceberg. The leaked 2,100 FinCEN files covering $2 trillion worth of transactions that ICIJ (International Consortium of Investigative Journalists) and Buzzfeed reporters got their hands on represent just a small sliver of the roughly 12 million SARs FinCEN has received since 2011. Pakistan's Prime Minister Imran Khan has repeatedly raised the issue of the West's inaction in stopping the illicit flows of hard currencies from developing nations to the developed world. Money laundering and other financial crimes affect the economic roots of a nation like Pakistan and slow down its human and socioeconomic development.

FinCEN Leaks Represent Tip of Iceberg

FinCEN Leaks:

Financial Crimes Enforcement Network (FinCEN) is an arm of the U.S. Treasury Department responsible for keeping tabs on and combating money laundering. All banks are required by US Law to file SARS (Suspicious Activity Reports) of transactions involving unclear sources and beneficiaries, or those connected to jurisdictions with a history of financial crime. 

Banks file about 2.2 million such transactions each year. Very few of these are actually reviewed or investigated by the US government. Recently, journalists at Buzzfeed and the International Consortium of Investigative Journalists (ICIJ) have announced they have obtained 2,100 FinCEN files covering $2 trillion worth of transactions that  represent just a small sliver of the roughly 12 million SARs FinCEN has received since 2011. Some of the biggest western banks, including HSBC, JP Morgan, Barclays and Standard Charter Bank are named among the institutions reporting SARS. 

Pakistani Banks:

There are six Pakistani banks named among those filing suspicious activity reports with FinCEN. The banks named are Allied Bank, United Bank (UBL), Habib Metropolitan Bank, Bank Alfalah, Standard Chartered Bank Pakistan, and Habib Bank (HBL). According to the data revealed by ICIJ, 29 such suspicious transactions from and to Pakistan were flagged. Of those, the ‘received’ transactions amounted to $1,942,560, while the ‘sent’ transaction was $452,000. 

FinCEN leaks show suspicious activity of a Dubai-registered company linked to Altaf Khanani of Pakistan through accounts at Danske Bank. “There can only be one reason why money has been moved out of Danske Bank and into his trading companies - and that is money laundering. Because that was the only thing that happened in those companies,” says Richard Grant, the former head of the Australian intelligence service told DR, a Danish news platform. 

Pakistan Among Top 3 Sources:

British National Crime Agency (NCA) has identified Pakistan, Nigeria and Russia as the top source countries for money laundering in the United Kingdom, according to British media reports. The NCA report says the UK is a prime destination for foreign corrupt and politically exposed people (politicians and their families) to launder money. 

In its annual assessment of serious and organized crime, the NCA says: “Investment in UK property, particularly in London, continues to be an attractive mechanism to launder funds....As the UK moves towards exiting the EU in March 2019, UK-based businesses may look to increase the amount of trade they have with non-EU countries....We judge this will increase the likelihood that UK businesses will come into contact with corrupt markets, particularly in the developing world, raising the risk they will be drawn into corrupt practices.”

Here are some of the key excerpts of the UK NCA report titled "National Strategic Assessment of Serious and Organized Crime 2018":

1. "The UK is a prime destination for foreign corrupt PEPs (politically exposed persons, a euphemism for politicians and their family member) to launder the proceeds of corruption. Investment in UK property, particularly in London, continues to be an attractive mechanism to launder funds. The true scale of PEPs investment in the UK is not known, however the source countries that are most commonly seen are Russia, Nigeria and Pakistan".

2. "The overseas jurisdictions that have the most enduring impact on the UK across the majority of the different money laundering threats are: Russia, China, Hong Kong, Pakistan, and the United Arab Emirates (UAE). Some of these jurisdictions have large financial sectors which also make them attractive as destinations or transit points for the proceeds of crime."

Politicians Dominate Panama Papers

Panama Papers Leak:

The NCA report says there are "professional enablers from the banking, accounting and legal world" who  facilitate the legitimization of criminal finances and are perpetuate the problem by refinancing further criminality.

In fact, there is an entire industry made up of lawyers and accountants that offers its services to help hide illicit wealth. Mossack Fonseca, the law firm that made headlines with "Panama Leaks", is just one example of companies in this industry.

Mossack Fonseca's 11.5 million leaked internal files contained information on more than 214,000 offshore entities tied to 12 current or former heads of state, 140 politicians, including Pakistan's now ex Prime Minister Nawaz Sharif's family.  Icelandic Prime Minister resigned voluntarily and Pakistani Prime Minister was forced out by the country's Supreme Court.

The Panama list included showbiz and sports celebrities, lawyers, entrepreneurs,  businessmen, journalists and other occupations but it was heavily dominated by politicians.

Pakistani Names in Panama Leaks:

Pakistani politicians and their supporters use allegations of corruption in Pakistani military to distract attention from their own well-documented corruption. Just a quick look at the names in leaked Panama Papers shows that politicians, not generals, dominate these lists. Pakistani names included in Panama Papers are those of several politicians and business people, but no generals, according to media reports.

 Prime Minister Nawaz Sharif is linked to 9 companies connected to his family name. Those involved are:  Hassan Nawaz, Hussain Nawaz, Maryam Nawaz, Relatives of Punjab Chief Minister and brother of Prime Minister Shahbaz Sharif are linked to 7 companies. They are: Samina Durrani and Ilyas Meraj.

Former Prime Minister Benazir Bhutto was linked to one company. Her relatives and associates are linked to others: Nephew Hassan Ali Jaffery Javed Pasha, Close friend of Asif Ali Zardari (4 companies), PPP Senator Rehman Malik (1 company), PPP Senator Osman Saifullah’s family (34 companies), Anwar Saifullah, Salim Saifullah, Humayun Saifullah, Iqbal Saifullah, Javed Saifullah, Jehangir Saifullah. The Chaudharies of Gujrat have not been linked personally but other relatives have including: Waseem Gulzar Zain Sukhera (co-accused with former Prime Minister Yusuf Raza Gilani’s son in the Hajj scandal).

Pakistani Businessmen in Panama Leaks: Real Estate tycoon Malik Riaz Hussain’s son (Bahria Town) Ahmad Ali Riaz (1 company), Chairman ABM Group of Companies Azam Sultan (5 companies), Pizza Hut owner Aqeel Hussain and family (1 company), Brother Tanwir Hassan Chairman Soorty Enterprise Abdul Rashid Soorty and family, Sultan Ali Allana, Chairman of Habib Bank Limited (1 company), Khawaja Iqbal Hassan, former NIB bank President (1 company), Bashir Ahmed and Javed Shakoor of Buxly Paints (1 company), Mehmood Ahmed of Berger Paints (1 company), Hotel tycoon Sadruddin Hashwani and family (3 companies), Murtaza Haswani Owner of Hilton Pharma, Shehbaz Yasin Malik and family (1 company), The Hussain Dawood family (2 companies), Shahzada Dawood Abdul Samad Dawood Partner Saad Raja, The Abdullah family of Sapphire Textiles (5 companies), Yousuf Abdullah and his wife, Muhammad Abdullah and his wife, Shahid Abdullah and his family, Nadeem Abdullah and family, Amer Abdullah and family, Gul Muhammad Tabba of Lucky Textiles, Shahid Nazir, CEO of Masood Textile Mills (1 company), Partner Naziya Nazir Zulfiqar Ali Lakhani, from Lakson Group and owner of Colgate-Palmolive, Tetley Clover and Clover Pakistan (1 company) and Zulfiqar Paracha and family of Universal Corporation (1 company).

Pakistani Judges in Panama Leaks: Serving Lahore High Court Judge Justice Farrukh Irfan, Retired Judge Malik Qayyum, Pakistani Media personnel in Panama Leaks: Mir Shakil-ur-Rehman of GEO-Jang Media Group (1 company).

FinCEN vs Panama Leaks: 

FinCEN leaks differ from previous bank leaks such as the Panama Papers in a crucial way: They are a snapshot into financial crime that banks are openly reporting to the authorities. 

These files mean, on a basic level, the reporting system is functioning. But the same leaks also show that banks frequently filed a SAR months after the transaction had taken place, and sometimes multiple times on the same client without anyone seemingly taking any action. 

West's Inaction Hurts Poor Nations:

Speaking to the 75th plenary session pf the United Nations General Assembly (UNGS), Pakistan's Prime Minister Imran Khan raised the issue of the West's inaction is stopping the illicit flows of hard currencies from developing nations to the developed world. He said:"Every year billions of dollars leave poor countries & go to rich countries. Billions of dollars siphoned by corrupt politicians to tax havens ,expensive properties bought in western capitals. It is devastating to the developing world".  

Pakistanis see the United Kingdom as the "Money Laundering Capital of the World" where corrupt leaders from developing nations use wealth looted from their people to buy expensive real estate and other assets. Private individuals and businesses from poor nations also park money in the west and other off-shore tax havens to hide their incomes and assets from the tax authorities in their countries of residence.

The multi-trillion dollar massive net outflow of money from the poor to the rich countries has been documented by the US-based Global Financial Integrity (GFI). This flow of capital has been described as "aid in reverse". It has made big headlines in Pakistan and elsewhere since the release of the Panama Papers and the Paradise Leaks which revealed true owners of offshore assets held by anonymous shell companies. Bloomberg has reported that Pakistanis alone own as much as $150 billion worth of undeclared assets offshore.

Summary:

The latest FinCEM leaks and previous Panama Papers as well as British crime agency reports confirm that the UK has attracted vast sums of illicit wealth from Pakistan and other emerging economies. Speaking to the 75th plenary session of the United Nations General Assembly (UNGS), Pakistan's Prime Minister Imran Khan raised the issue of the West's inaction is stopping the illicit flows of hard currencies from developing nations to the developed world. He said:"Every year billions of dollars leave poor countries & go to rich countries. Billions of dollars siphoned by corrupt politicians to tax havens ,expensive properties bought in western capitals. It is devastating to the developing world".  Money laundering and other financial crimes affect the economic roots of a nation like Pakistan and slow down its human and socioeconomic development.

Related Links:

Haq's Musings

South Asia Investor Review

The West Enables Corruption in Developing Nations

Did Musharraf Steal Pakistani People's Money?

Pakistan Economy Hobbled By Underinvestment

Raymond Baker on Corruption in Pakistan

Nawaz Sharif Disqualified

Culture of Corruption in Pakistan

US Investigating Microsoft Bribery in Pakistan

Zardari's Corruption Probe in Switzerland

Politics of Patronage in Pakistan

Why is PIA Losing Money Amid Pakistan Aviation Boom?

Riaz Haq's Youtube Channel

PakAlumni Social Network

Are Pakistan's Pandering Politicians Part of the Problem?

Latest polls show that Nawaz League's nexus with Punjab-based anti-Shi'a terrorist outfit Lashkar-e-Jhangvi has not hurt its popularity in Punjab during the last several months.

PML (N) Popularity:

In fact, it appears that PML(N) has successfully exploited Sunni majority's bigotry against the Shi'a in Pakistan, particularly in its home base in Punjab. Sharif brothers' PML (N) is now the most popular party in  Punjab with 59% approval and nationally with 41% approval rating  in Pakistan, according to the latest Gallup Pakistan poll. Pakistan People's Party (PPP) is second nationally with 17% and Pakistan Tehreek-e-Insaf (PTI) third with 14% approval.

Exploiting Hate:

To put PML(N)'s popularity in perspective, let's look at the history of how politicians have exploited such feelings of hatred against minorities. Adolf Hitler rose to power in Germany by riding a wave of resentment against European Jews. In India, Narendra Modi solidified his popularity in Gujarat by approving of Muslim massacre in 2002. Ten years later, Modi continues to be the most popular chief minister in India.  While India's ruling Congress party governs only 8 states,  BJP's anti-Muslim rhetoric continues to help it retain power in ten of India's 28 states. Most Israelis continue to vote for politicians who maintain brutal military occupation of Palestine.

Militancy in Pakistan:

 In Pakistan, Zulfikar Ali Bhutto caved in to pressure from right-wing religious parties and passed a law declaring Ahmedis non-Muslim. This self-serving act did not save Bhutto. Anti-Bhutto riots gave Gen Ziaul Haq the opportunity to remove Bhutto from power. After grabbing power, Zia collaborated with the religious right to take advantage of average Pakistani's religiosity to consolidate his own power. Zia exploited the strong anti-communist sentiments after the Soviet invasion of neighboring Afghanistan. He collaborated with the United States and Saudi Arabia to give birth to religious militancy in Pakistan, eventually leading to the creation  of Al Qaeda and the Taliban who, along with their allies and affiliates such as LeJ, continue to carry out terrorist attacks in Pakistan and elsewhere. Nawaz Sharif, too, is a creation of the Zia era.

Civil Society's Role:

Most politicians in democracies are followers, not leaders. They respond to sentiments of their constituents, even hate-filled and violent sentiments. Most of Pakistan's politicians and political parties have their militant wings or alliances with various militant groups who carry out attacks against those who disagree. Such venal politicians are part of the problem, not part of the solution to rising violence in Pakistan. 

Given the venality of the politicians, the only possible solution to this problem is to build public opinion against violence in all its forms. Once the people decide to reject bigotry and violence, the politicians will follow.

Who has the power to shape public opinion in democracies? It's the civil society consisting of the mass media, non-governmental organizations, religious scholars and other powerful public advocacy groups.

Why Should Civil Society Care?

 It's in civil society's best interest to create an enabling environment for peaceful coexistence for freedom, music, arts, literature, culture and economy to flourish. Such freedom is necessary to promote creativity and ensure prosperity of the society as a whole.

Why Should Mass Media Care?

The media are owned by corporations who should care because a safe and secure Pakistan is the best way to increase their profitability. These media magnates should have a clear editorial policy to discourage incitement to violence. They should tell their anchors to stop spinning conspiracy theories designed to distract the attention of people from Pakistan's real threats which are mostly internal. They should encourage the people to take personal responsibility for their actions.

Why Should Politicians Care?

The politicians should care because they have to govern after winning elections. Here, they can learn from Indian BJP leader Narendra Modi.  Modi is still a bigot but he knows that he can not afford to alienate the whole world, particularly businessmen and investors who need security and stability to invest in Gujarat. Modi has used his anti-Muslim rhetoric to get votes but he has not allowed mass killings of Muslims after 2002. The lack of violence and continuing stability have attracted massive investments which have made Gujarat's economy among the fastest growing in the world.

Summary:

It's in the best long-term self-interest of Pakistani politicians and civil society  to work to reduce militancy and promote peace and tolerance in the country. This will help bring stability and economic opportunity to Pakistan's current and future generations.

Here's a video discussion on sectarian violence and upcoming elections:

Abbas Town Massacre from WBT TV on Vimeo.

Related Links:

Haq's Musings

Gangster Politicians of Pakistan

Shia Massacres Undermine Pakistan

 Blowback From Drone Attacks in FATA

Rising Tide of Intolerance Threatens Pakistan

Fighting Agents of Intolerance in Pakistan

Muslim Scholars Must Fight Hate in Pakistan

South Asian Christians Celebrate Christmas in Fear

Quaid-e-Azam Mohammad Ali Jinnah's Vision

Pakistan Must Defeat Agents of Intolerance 

Celebrating Quaid-e-Azam M.A. Jinnah's Birthday

Imran Khan's Social Media Campaign

Prior to his recent successful rally in Lahore that drew at least 100,000 people, Imran Khan’s energized young supporters employed social media to spread his message, and the participants and observers offered play-by-play accounts of the rally on Twitter. This is a first in Pakistan's political history for a serious contender for high office.



With near 265,000 Facebook fans, Imran Khan is only surpassed by former President Pervez Musharraf's 433,000 fans. None of the other politicians come close.



Half the population of Pakistan is below 20 years and 60 per cent is below 30 years. With this youthful population and rapidly expanding Internet access, the use of social media is growing in the country. Over 5,000,000 people in Pakistan use Facebook. Although this only targets about 3% of the population, this translates into more than a quarter of the Internet users in Pakistan having a Facebook account. Half of them are between the ages of 18-24, and an additional quarter are between ages 25-34.



It appears that Pakistan's political campaigns are entering a new and exciting phase. The youth no longer feel stifled by the heavily censored state electronic media which dominated the national landscape for most of Pakistan's existence, nor are they intimidated by the old and powerful politicians. In fact, the new talent does not rely even on the corporate-owned commercial media that have emerged and become powerful during the last decade of President Musharraf's rule. With the growth of Internet in Pakistan, the rapidly expanding online population is feeling more empowered than ever to engage in free expression as part of their growing political and social activism.



With expanding educational opportunities, rising middle class and growing access and use of the modern social media by the nation's youth, Pakistan is now in the midst of a dramatic social and political transformation that is likely to change the face of politics in the coming decades. The arrival of this new era has the potential to eventually end the old feudal style politics of patronage, and replace it with a truly participatory democracy and vastly improved governance.

Related Links:

Haq's Musings

Twitter Revolution in Pakistan

Pakistan's Demographic Dividend

Pakistan Protest Music

Comparing Ralph Nader and Imran Khan

Imran Khan to Obama: Leave Afghanistan

Pakistan Launches 100 MBPS FTTH Broadband

Obama Campaign's Success on Social Networks

Pakistani Social Network

Imran Khan's Facebook Page

Pervez Musharraf's Facebook Page

Pakistan Election Rigging 101

Rigging Allegations
The allegations of poll rigging are getting louder as Pakistan approaches the Feb 18, 2008 parliamentary elections. When you hear the opposition politicians, particularly from PPP and PML-N, describe the details of alleged rigging in Pakistani and world media, it seems that they have a great deal of personal knowledge and expertise in
this specialty, the kind of depth that can only come from having engaged in it for themselves. I am writing this blog post to try and explain the crux of the issue as I understand it.

ISI Political Cell
As I read through a lot of material in my quest for the answers, what caught my eye was a PPP report alleging that "Military Intelligence sits in the offices of returning officers, police officials and other elections officials." The question is: What does the military intelligence have to do with organizing elections? To find the answer, I had to go as far back as 1975 when Zulfikar Ali Bhutto ruled the country with an iron hand under emergency rules. Talking about ISI's role in Pakistani elections, former ISI chief Gen. Hamid Gul recently said in an interview to Tehelka.com, " The ISI has played an important role and it has in its charter — through a prime ministerial decree signed by Zulfiqar Bhutto — a political cell, so the politicians are at fault and the Army chief and his coterie of generals are at fault."

Bhutto Legacy
It was Zulfikar Ali Bhutto who issued the executive order creating a political cell within the Inter Services Intelligence (ISI) with the purpose of influencing political processes in Pakistan. This fateful decision eventually brought ZA Bhutto's own downfall when he used this cell to unnecessarily rig the 1977 elections and was overthrown and executed by General Zia-ul-Haq. It was also this cell that helped Nawaz Sharif , a protege of General Zia-ul-Haq, get elected as Prime Minister of Pakistan after the General's death in a mysterious air crash followed by a brief term in office by Benazir Bhutto. In 1990 the ISI received 140m rupees (US$2.2m at current values) to rig national elections, according to supreme court testimony by the then chief of army staff, General Mirza Aslam Beg.
Described aptly as "Bhutto Legacy" by Pakistani newspaper Dawn's columnist Mr. Aredeshir Cowasjee, this political cell in the ISI continues to exist and it is still being used by the pro-government politicians to influence the outcome of the elections. Recently, Chaudhry Shujaat Husain of PML-Q, argued that this cell should continue working. Obviously, the opposition politicians want it disbanded, as long as they can not use it to their advantage.

Specific Allegations
In terms of the specific allegations such as ghost polling stations, ballot stuffing, counting irregularities, etc, each of these are rebutted effectively by Staffan Darnolf, Pakistan country director of IFES with lots of experience in elections in developing nations. Responding to a blog post by Barnett Ruben, Staffan wrote: "In this article you mentioned that the elections are likely to be rigged with the assistance of ISI and district administration as “[t]hese ballots, already printed, filled out, and prepared, are then added to those transported from polling places for the final count.” Could you elaborate a bit more here, as I simply don’t understand your argument. The reason being that no central counting of ballot papers take place. The ballot boxes are opened at the polling stations and the ballot papers are counted at the individual polling stations.
On ghost polling stations, Staffan says: "What my argument boils down to is that this notion of ghost polling stations is a red herring. Why go through this huge exercise involving thousands of people to try to siphon off ballot papers, get your hands on ballot boxes, security seals, the right stamps, the original forms, prep the ballot papers and then have them sent to the Returning Officers' premises where no counting of the ballots are taking place? Also, how do you produce faked voters list for these ghost polling stations now when the voters lists are computerized and can be easily verified?"
Staffan goes on: "To me, this seems as far-fetched as the allegation by some political parties in late November and the first week of December stating that 108 Punjab NA constituencies had been selected for rigging, as the ruling party's representatives had already received 20-30K (the reported number varied) extra ballot papers for stuffing. The problem with this accusation is that candidate nomination only ended on Dec 15. And before that no one knows which parties and candidates will actually run for office. Hence, it is only on December 16th that the final design of the real ballots are known and they can be produced for any of the 849 directly elected constituencies."
While specific allegations are rebutted well, just the existence of the ISI cell creates doubt as to the fairness of the polls in Pakistan.

Disband ISI Cell
Given the acknowledged existence of this political cell within ISI, can we expect any confidence in the results of the upcoming elections? The answer is clearly NO. Would such a cell give the losers the justification to launch mass protests, even if the elections are largely free and fair? The answer is clearly YES. I think it would be in the best interest of the nation if all politicians and generals agree to disband this ISI cell to make sure the elections are, in fact, free and fair and seen to be completely free, fair and transparent.

CSI: Pakistan ?

Watching the news, the pictures, the videos, and the abundance of speculation and conspiracy theories, it makes me wonder whether all of this controversy could have been avoided had there been a thorough and professional investigation undertaken after Benazir Bhutto's tragic assassination? Then I realize it is too much to ask of the people involved. Here are some of my reasons why:

1. There is a total lack of professionalism in the way the law-enforcement agencies in Pakistan go about their business. Even a cursory review by a lay person who has watched CSI:Miami or other US police shows on TV can see that no established crime scene procedures are understood or followed in Pakistan. The police do not immediately seal off the crime scenes. The police do not take time to carefully collect and preserve crime scene evidence such as detailed pictures, sketches, weapons, bullet fragments, explosives residues, blood swatches, fibers, vehicles etc. The police do not immediately contact the people present in the vicinity, interrogate them professionally and record their statements. They do not order an immediate autopsy in murder cases. They let the media and even ordinary folks just walk into the crime scene, disturb it and take pictures etc. They order that the crime scene be hosed down as quickly as possible even before it is scrutinized adequately for clues.
2. Even if all of the appropriate and internationally acceptable procedures were followed, there is a widespread fascination among the people and the media for all kinds of conspiracy theories on all matters, big and small. The politicians, in particular, immediately start accusing their opponents to gain political advantage. With total disregard for search of the truth, such an environment is clearly not conducive to any serious investigations of political or any other crimes in Pakistan.

Looking at the history of political assassinations in Pakistan, there are three assassinations that stand out: Liaquat Ali Khan's assassination in 1951, Murtaza Bhutto's assassination in 1996, and Benazir Bhutto's assassination in 2007. What is common in these assassinations is that in each case there were conspiracy allegations and Scotland Yard was brought in. In the first two cases, Scotland Yard could not help for various reasons including the fact that the crime scene evidence in each case was bungled by the Pakistani police. My fear is that the latest effort by Scotland Yard to investigate Benazir Bhutto's murder will meet the same fate.

If Pakistanis really want to learn anything from this history, they must resolve to fix the law-enforcement training and procedures to start to do the basic things right. Otherwise, they will be doomed to repeat the same mistakes again and again. Given the formidable challenge of the various domestic and international terror groups, Pakistan would become a soft target for their violence against perceived pro-West people and politicians and suffer widespread death and destruction. If Pakistanis do fix these procedures, I think they have a chance of dealing with political, terrorist, and criminal violence more effectively and lessen its impact on society at large. In my view, this suggestion is applicable in Pakistan regardless of the form of government Pakistan has: civilian, military, democratic, autocratic etc. Of course, democracy is preferable to enlist the support of the people to address the underlying causes of violence.