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.
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| 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."
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| 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
