Terrorism and money laundering

This paper was presented at the International Judicial Conference, held in Islamabad from April 13-15 by the Law and Justice Commission of Pakistan. "Money laundering and the financing of terrorism are financial crimes with economic effects. They can threaten the stability of a country's financial sector or its external stability more generally. Effective anti-money laundering and combating the financing of terrorism regimes are essential to protect the integrity of markets and of the global financial framework as they help mitigate the factors that facilitate financial abuse.
Action to prevent and combat money laundering and the financing of terrorism thus responds not only to a moral imperative, but also to an economic need." - Min Zhu, Deputy Manager Director of IMF
Summary Terrorism and money laundering, intrinsically linked, pose considerable threats to global peace and security as well as destabilise political and financial stability of many nation States. This twin menace assumed dangerous proportions in the wake of the ghastly incident of 9/11 in New York. Since then the whole world has been suffering from what great psychologist, psychoanalyst, sociologist and humanistic philosopher Erich Fromm termed as the '2Fear of Freedom' - terrorists have managed to create an atmosphere of uncertainty and fear while the international community is struggling without much success in eliminating their financial lifeline - ie dirty money. Enormous funds are generated by terrorist networks - through legal as well as illegal sources, concealed and laundered using the existing legal financial framework or unlawful networks. These terrorist networks cannot be destroyed, or even made ineffective, unless concerted efforts are made at the national and international levels to effectively block their financial sources.
This paper briefly highlights critical areas of fighting terrorism and money laundering, shortcomings in the existing anti-terrorism and anti-money laundering laws, contradictory policies, faulty strategy and lack of a comprehensive plan to counter a mindset that believes in using force to impose its ideas and ideology on others. It also suggests a new approach to tackle the growing threats posed by terrorists and countering their financial resources.
Failure of global and domestic initiatives Since the tragic event of September 11, 2001, the United States and its allies have been unsuccessfully engaged in what they call a 'war on terror' (sic). After a decade of military warfare spending trillions of dollars, they are now seeking "political settlement" with the 3Taliban. It is paradoxical that after making tall claims of uprooting the causes of terrorism, United States and its allies are finally bowing before the forces of obscurantism that want to impose their way of life on others by using force rather than through democratic means. All the States are obliged-under international and domestic laws-to counter terrorism and protect the people from militants who forcefully want to impose their ideology on them.
In the aftermath of 9/11, United States and its allies' military actions against innocent civilians are as condemnable as are the terrorists' unabated shameful attacks all over the world - both violating international laws and posing serious threat to world peace. Critics say that the war against al Qaeda and the Taliban - (enjoying networking with many criminal groups) with hubs in Afghanistan, Pakistan and elsewhere - by the United States and its allies has geo-political motives and no serious effort has been made till today to attack their financial lifeline4. These networks in the name of religion are minting enormous money, even if it comes from organised crime5. This aspect remains inadequately investigated by domestic and international intelligence agencies. Since terrorist groups have not been uprooted financially, they are wining more and more 'sympathisers' all over the world with money power. Strangely, their main targets are not only the United States and Western countries - for their obvious participation in the 'war against terror' - but also Pakistan, India and Iran. Their recent target was the financially and militarily strong China6.
The fundamental questions in the fight against terrorism and money laundering are:
-- Where do these terrorists get so much money from?
-- Why are the governments not serious in cracking down on unlawful transfer of funds?
-- If banking channels are used, then why cannot the remitters and recipients be traced?
-- If the 7hawala and hundi system is used for unlawful cross-border transfer of funds, why are persons engaged in these unlawful activities not arrested and punished?
-- Who are financing these terrorist networks?
-- Who provides these terrorists with sophisticated arms and military training?
It is a well-established fact that terrorist networks get millions of dollars every year from various sources - using cover up entities8. Professor James Petras in Enormous by Any Measure reveals that "Washington and the mass media have portrayed the US as being in the forefront of the struggle against narco-trafficking, drug laundering and political corruption: the image is of clean white hands fighting dirty money. The truth is exactly the opposite. US banks have developed a highly elaborate set of policies for transferring illicit funds to the US, investing those funds in legitimate businesses or US government bonds and legitimating them. The US Congress has held numerous hearings, provided detailed exposés of the illicit practices of the banks, passed several laws and called for stiffer enforcement by any number of public regulators and private bankers. Yet the biggest banks continue their practices, the sum of dirty money grows exponentially, because both the State and the banks have neither the will nor the interest to put an end to the practices that provide high profits and buttress an otherwise fragile empire"9.
The stance of the US government is just the opposite. It claims to be committed to taking strict action against illicit money and terrorists. The President of USA signed an 10Executive Order 13224 on September 23, 2001 which gives the US government a tool to impede terrorist funding. The 11official website of United States says "it is a part of our national commitment to lead the international effort to bring a halt to the evil of terrorist activity". The website further claims: "In general terms, the Order provides a means by which to disrupt the financial support network for terrorists and terrorist organisations by authorising the US government to designate and block the assets of foreign individuals and entities that commit, or pose a significant risk of committing, acts of terrorism. In addition, because of the pervasiveness and expansiveness of the financial foundations of foreign terrorists, the Order authorises the US government to block the assets of individuals and entities that provide support, services, or assistance to, or otherwise associate with, terrorists and terrorist organisations designated under the Order, as well as their subsidiaries, front organisations, agents, and associates".
The United Nations Office on Drugs and Crime in its 12latest report has claimed that terrorists and criminals have laundered around $1.9 trillion or 3.2% of global GDP in 2010 alone. The UN report warns that "once illegal money has entered the global and financial markets, it becomes much harder to trace its origins, and the laundering of ill-gotten gains may perpetuate a cycle of crime.
The United Nations, from the very start in the fight against money laundering at the international level, has played an active role to promote the harmonisation of countermeasures and the strengthening of international cooperation13. It has taken multiple initiatives to counter money laundering and the financing of terrorism. These initiatives can be summarised below:
--- The United Nations Convention Against Illicit Traffic in Narcotic Drugs and Psychotropic Substances, adopted in December 1988 in Vienna, was the first international instrument to address the issue of proceeds of crime, and to require States to establish money laundering as a criminal offence.
-- The United Nations Convention against Transnational Organised Crime was opened for signature in December 2000. The scope of money laundering under the terms of the Convention includes proceeds derived from all serious crimes. The Convention urges State Parties to cooperate with one another in the detection, investigation and prosecution of money laundering. Parties are obliged to reinforce the requirements for customer identification, record-keeping and the reporting of suspicious transaction. Parties are also recommended to set up financial intelligence units to collect, analyse and disseminate information. Further to the events of September 11, 2001, UN member States underlined the links between terrorism, transnational organised crime, the international drug trade and money laundering, and called on the States that had not done so to become parties to the relevant international conventions, including the 1999 International Convention for the Suppression of the Financing of Terrorism.
-- The UN Security Council adopted resolution 1373 (2001) through which it established the Counter-Terrorism Committee (CTC); which is mandated to monitor the implementation of the resolution urging States to prevent and suppress the financing of terrorist acts. In order to comply with the terms of the resolution, many States have been using preventive and criminal anti-money laundering measures to combat the financing of terrorism.
It is an admitted fact that despite the above initiatives by the United State and United Nations and many other countries, terrorist networks and their financial support is increasing every day. This calls for a critical review to identify the factors behind the failure. Laws, both domestic and international, are in vogue but the issue is that of enforcement and co-ordination between governments and the law enforcement agencies. The political and economic interests of various States make it difficult for laws to be implemented in letter and spirit. The Western economies are thriving on the flight of capital from the developing countries - especially money transferred by corrupt rulers and businessmen. Off-shore centres are hubs of dirty money. In the face of these realities, the governments in the West and their media present one side of the story, shifting the entire blame of money laundering and financing terrorism to Afghanistan and Pakistan. Since the rulers in these two countries lack transparency in governance, they cannot stand up and tell the truth to the wagers of the 'war on terror' (sic).
Pakistani scenario Pakistan is one the worst hit countries by terrorism and money laundering. There is sufficient evidence that militant groups working against the security and stability of the State generate huge funds through organised criminal activities and also get huge "donations" from "sympathisers" in and outside Pakistan14. It is an irrefutable fact that certain laws protect illegal money, for example 15section 5 and 9 of the Protection of the Economic Reforms Act, 1992 and 16section 111(4) of the Income Tax Ordinance, 2001. These laws ensure unlimited flow of remittances and dealings in foreign currencies.
A study by the State Bank of Pakistan titled '17The Size of the Informal Economy in Pakistan' estimates that the total size of the informal economy is around 30 percent of the total economy. It means that annually some 600 billion rupees are generated in Pakistan by the parallel (untaxed) economy (informal though not illegal). Black money, generated through organised criminal activities eg kidnapping for ransom, rent-seeking, smuggling in goods and narcotics trade etc is about Rs 800 billion that does not appear in the study of the SBP but is documented in 18Pakistan: Enigma of Taxation. Another study-19Pakistan: Drug-trap to Debt-trap - estimates the total figure of the informal economy at US $95 billion.
In the presence of so-called "protective" (sic) economic laws cited above, the provisions of the Anti-Money Laundering Act of 2010 have rarely been invoked. In fact, this has become a dormant law. The banks are not reporting any suspicious transactions under 20section 7 of the Anti-Money Laundering Act, 2010 or 21section 67 of the Control of Narcotics Substance Act of 1997. This shows the slackness of the institutions and agencies responsible for implementing these laws.
It baffles the people that when the presence of monstrous black money is so apparent, why its criminal accumulation and generation is not countered and the offenders remain punished? They ask whether it is on account of lack of political will, rampant corruption, ineffectiveness of law enforcement agencies, or defective laws. The terrorists and money launderers not only use hawala and hundi but exploit the legal sanction available under section 111(4) of the Income Tax Ordinance which says that if anybody brings money through normal banking channels, the tax authorities cannot pose any question about the "source". The banks also take cover under section 5 and section 9 of the Protection of Economic Reform Act, 1992 to withhold information from the tax authorities.
Besides legal weaknesses pointed out above, during the last 30 years, the National Accountability Bureau (NAB), the Federal Investigation Agency (FIA), the Anti Narcotics Force (ANF) and the Federal Board of Revenue (FBR) have not been able to establish a joint task force to book and prosecute the men and networks involved in money laundering. The NAB, in fact, has been accepting 'plea bargains' offered by the corrupt, and minted a lot of money as 'share' in recovery. This is how we run State agencies on the taxpayers' money - the institutions established for punishing tax cheats, criminals, rent-seekers, drug traffickers and terrorists who get freedom by paying a few bucks as plea bargain. In the presence of numerous departments and law enforcement agencies, terrorist networks get on a daily basis, millions through hundis and hawalas in addition to extortion money and proceeds of drug-arms deals. Many of them are even getting funds through normal banking channels in benami accounts. The inadequate reporting of such transactions by banks to the Financial Monitoring Unit (FMU) established under section 6 of the Anti Money Laundering Act, 2010 is a serious cause for concern. The State Bank of Pakistan as a regulator has failed to enforce this law - there should be a monetary limit for banks to report all cash transactions as the expression "suspicious transactions" is vague and subjective.
Although Pakistan, under tremendous pressure from the outside world, passed Anti-Money Laundering Act, 2010, section 5 and 9 of the Protection of Economic Rearms Act, 1992 and section 111(4) of Income Tax Ordinance, 2001 gives a free hand to money launderers. It assures them that no question would be asked if they remitted their ill-gotten funds from outside into Pakistan through normal banking channels and surrendered foreign currency to the State Bank in exchange for rupees. The money can then be fearlessly invested in any legal business. For money laundering, one has just to pay a small premium to a money exchanger to fax a remittance. One wonders how such schemes are sponsored when the country is faced with a perpetual challenge of terrorism and money laundering. Besides giving a free hand to terrorist networks, the provisions of Protection of Economic Reforms Act, 1992 and Income Tax Ordinance, discussed above, are playing havoc with the economy. People keep undeclared and untaxed funds in foreign currency accounts (or in bank lockers) or even at home, but the FBR officials have no jurisdiction to hold an enquiry in respect of the foreign currency accounts22. This is the real dilemma faced by Pakistan due to contradictory laws and policies in its fight against terrorism and money laundering.
Funds generated through organised crime and money laundering is the real power of terrorists who easily buy corrupt State actors and ultimately undermine the very legitimacy of the government. Pakistan is a classic study of this phenomenon as was once Columbia.
Conclusions and recommendations Militant groups in Afghanistan, Pakistan and elsewhere in the garb of "ideology" are engaged in criminal activities; from smuggling to kidnappings, narco trade to arms deals. They are also fascist in their outlook aspiring to control the entire world by power - religion is just a ploy to achieve nefarious designs. Terrorism is their main tool to achieve monetary gains. Terrorism, like fascism is a self-destructive ideology. To fight terrorism, it is necessary to understand it. Wishful thinking about military might and invincible air-strike-power will not help to win the war against terrorists - they use religion to conceal their lust for money and social control, otherwise what is the justification for destroying educational institutions. Use of ill-directed force against a few groups without eliminating the main causes leading to "terrorism", is proving to be merely a self-defeating exercise. Determined and practical efforts are needed to destroy their financial lifeline. The strategy to fight terrorism has ignored this most vital aspect and, therefore, the powerful States, with all their military might and economic resources, have failed to win the war started by them 10 years back - they now certainly yielding before the forces of obscurantism - the enemies of humanity who take away innocent lives in the name of religion and faith (sic). The so-called powerful nations are also guilty of not providing justice and conforming to the international laws - the use of power by them without any restraint and respect for peace gives an excuse to the terrorist to launch attacks and engage in ant-State activities.
A. Domestic challenges on the legal front Pakistan, like many other countries faces the dilemma of dealing effectively with terrorists and financial funding to them. The justice system cannot deliver unless laws are effective and prosecution by the State is prompt and professionally handled. In recent months, the apex Court took up many 23cases involving non-production of people booked on charges of terrorism before any court of law. The Apex Court took serious note of violation of Constitutional provisions and directed the concerned agencies to file detailed report about these persons. Similarly, families of 24victims of terrorist attacks also voice their dissatisfaction that those responsible for killing their dear ones were not brought to justice. Parliament of Pakistan needs to 25review the existing anti-terrorism laws and frame new special enactments as was done by the US Congress in the form of Anti-Terrorism Act of 2001 passed on October 17, 2001. We must also enact laws relating to espionage, surveillance, wire-tapping, eavesdropping and acquisition of information through modern techniques under judicial and non-judicial oversight and prior sanction for countering money laundering and terrorism.
Enforcement is also a critical problem in Pakistan. In 2011, terrorism charges in 96 out of a total of 609 FIRs registered in 2011 under the Anti Terrorism Act (ATA), 1997, were dropped during investigation for wrongful implication and crimes not fit for prosecution under the ATA26.
Pakistan needs to harmonise all the commercial laws, especially reconsidering statutes relating to "protection of economic reforms" and bank secrecy. There is an urgent need to establish inter-ministerial task force for fighting terrorism and money laundering and repeal or amend all provisions that are in conflict with achieving this objective.
B. International co-operation Laws at the international level and initiatives of the USA and UN in blocking accounts of some outlawed organisations have failed to produce the desired results27. More efforts are required to forge effective international co-operation arguing and convincing all states that fighting terrorism and money laundering should be a matter of international morality. Fighting this twin menace, which is a global phenomenon, requires firm rules reflecting a message of unwavering determination, not a matter of accommodation to threats, foreign policy concerns, ideological sympathies, or domestic politics28.
At the international level, besides law enforcement and better co-operation amongst member states of UN, humanisation of world societies is essential. This can be an effective tool to eliminate terrorism. Use of force and denial of peoples' legitimate rights on the contrary is bound to provoke more terrorist acts around the world. The violent incidents in Egypt, Libya, Syria, Bahrain, Iran, India, Afghanistan, Spain, England, Ireland, Iraq, Palestine, Chechnya and elsewhere are self-evident. The use of force or right of pre-emptive strikes is only a short-term solution. In the long run, the governments of the world will have to sit down and chalk out a comprehensive strategy to ensure that miscreants and militants challenging world peace, security and tranquility are dealt with a strong hand - the best way to defeat them is to sever their money and arms supplies.
(The writers, Advocates and Visiting Professors at Lahore University of Management Sciences)
1 In Pakistani legal system, the term "terrorism" is defined in section 6 of the Anti-Terrorism Act, 1997 (see latest judgements of Supreme Court reported as Wali Muhammad v The State 2012 SCMR 201 and Ahmad Jan v Nasrullah and others 2012 SCMR 59 for scope and import). In political context, this term has different connotations covering all acts by militants groups against an established legal order (national or international). The western literature in the wake of resurgent movements in Muslim countries in the 1970s and Islamic revolution in Iran in 1979 used it to describe what they call "radical Islam". In post 9/11 era, the term was restricted to al Qaeda, the Taliban and their supporters.
2 Erich Fromm in his world-acclaimed book Escape from Freedom shows how human beings get their power from a surprising and deep sense of anxiety that coincides with individual freedom and not just from the external control of others. The real value of this book is in its discussion of the paradoxical idea that people struggle for freedom, then they struggle with freedom. At a psychological level, Fromm finds that freedom brings uncertainty and anxiety, whereas a lack of freedom brings certainty and comfort. While freedom seems appealing when people are not free, it brings a sudden and unexpected responsibility. This leads to an anxiety that can simply be overwhelming from a psychological point of view. As a result, people make choices to relieve themselves of this anxiety.
3 The attacks by the Taliban on Afghan Parliament and other official premises on April 15, 2011 once again proved the failure of so-called military might of US and Western world. Afghan President Hamid Karzai Monday blamed intelligence failures, particularly on the part of Nato forces, for the biggest co-ordinated militant attacks on Kabul in 10 years of war.
4 Gretchen Peters, Seeds of Terror, Picador, New York, May 2010.
5 Ibid.
6 Chinese security forces blanketed central areas of Kashgar city in the western region of Xinjiang on August 3, 2011 after deadly attacks that China blamed on Islamic militants highlighted ethnic tensions in the Muslim Uighur area.
7 It is an informal value transfer system based on the performance and honour of a huge network of money brokers. In the most basic variant of the hawala system, money is transferred via a network of hawala brokers, or hawaladars. It is the transfer of money without actually moving it. In fact, a successful definition of the hawala system that is used is: 'money transfer without money movement'. A customer approaches a hawala broker in one city and gives a sum of money to be transferred to a recipient in another, usually foreign, city. The hawala broker calls another hawala broker in the recipient's city, gives disposition instructions of the funds (usually minus a small commission), and promises to settle the debt at a later date.
8 According to James Petras, Professor of Sociology, Binghamton University, New York, there is a consensus among the US congressional investigators, former bankers and international banking experts that the US and the European banks launder between $500 billion and $1 trillion of dirty money each year, half of which is laundered by the US banks alone. These yearly inflows surpass all the net transfers by the major US oil producers, military industries and aircraft manufacturers. The biggest US banks derive a high percentage of their banking profits from serving these criminal and dirty money accounts. The big US banks and key institutions sustain the US global power via their money laundering and managing of illegally obtained overseas funds.
9 http://rense.com/general28/money.htm
10 President Bush issued Executive Order 13224 pursuant to the authorities of the International Emergency Economic Powers Act (50 USC 1701 et seq.)(IEEPA), the National Emergencies Act (50 USC 1601 et seq.), section 5 of the United Nations Participation Act of 1945, as amended (22 USC 287c)(UNPA), and section 301 of title 3, United States Code. In issuing Executive Order 13224, President Bush declared a national emergency to deal with the unusual and extraordinary threat to the national security, foreign policy, and economy of the United States posed by grave acts of terrorism and threats of terrorism committed by foreign terrorists, including the terrorist attacks in New York and Pennsylvania, and on the Pentagon committed on September 11, 2001, and the continuing and immediate threat of further attacks on US nationals or the United States. The details about Executive Order 13224, orders passed so far under it and list of individuals and organisations listed are available on the following:
http://www.state.gov/s/ct/rls/other/des/122570.htm
http://www.state.gov/s/ct/rls/other/des/143210.htm
http://www.treasury.gov/resource-center/sanctions/Programs/Documents/terror.pdf
Like the Department of Treasury, the US State Department has also the authority to designate individuals and entities under Executive Order 13224.
11 http://www.fas.org/irp/offdocs/eo/eo-13224.htm
12 http://www.unodc.org/unodc/en/frontpage/2011/October/illicit-money_-how-much-is-out-there.html
13 Global Programme against Money Laundering (GPML) was established in 1997 in response to the mandate given to UNODC by the 1988 UN Convention against Illicit Traffic in Narcotic Drugs and Psychotropic Substances. GPML mandate was strengthened in 1998 by the United Nations General Assembly Special Session (UNGASS) Political Declaration and Action Plan against Money Laundering which broadened its remit beyond drug offences to all serious crime. Three further Conventions were adopted to specify provisions for AML/CFT related crimes, namely:
-- International Convention for the Suppression of the Financing of Terrorism (1999),
-- UN Convention against Transnational Organised Crime (2000)
-- UN Convention against Corruption (2003)
UN Security Council Resolutions 1267(1999), 1373(2001), 1540(2004), 1566(2004), and 1624(2005) call on UN Member States to combat terrorism, including financing of terrorism. GPML has capacities and a special mandate to assist Member States in ratifying and implementing the international standards related to money-laundering and financing of terrorism. Resolution 1617(2005 of the UN Security Council:
"Strongly urges all Member States to implement the comprehensive, international standards embodied in the Financial Action Task Force's (FATF) Forty Recommendations on Money Laundering and the FATF Nine Special Recommendations on Terrorist Financing;"
Resolution 60/288 of the UN General Assembly (20 September 2006): "To encourage States to implement the comprehensive international standards embodied in the Forty Recommendations on Money-Laundering and Nine Special Recommendations on Terrorist Financing of the Financial Action Task Force, recognising that States may require assistance in implementing them;"
14 Gretchen Peters, Seeds of Terror, Picador, New York, May 2010, and Dr Ikramul Haq, Pakistan Drug-trap to Debt-trap, Lahore Law Publications, 2001, see also http://www.guardian.co.uk/world/2009/jul/28/taliban-foreign-funds-us-holbrooke.
15 The sections read as under:
5. Immunities to foreign currency accounts.- (1) All citizens of Pakistan resident in Pakistan or outside Pakistan who hold foreign currency accounts in Pakistan, and all other persons who hold such accounts, shall continue to enjoy immunity against any inquiry from the Income Tax Department or any other taxation authority as to the source of financing of the foreign currency accounts:
Provided that such immunity shall not be available to citizens of Pakistan residing in Pakistan and to firms, companies and other bodies registered or incorporated in Pakistan in respect of any new foreign currency account opened or deposits created on or after the 16th day of December, 1999 or to any incremental deposits thereafter in an existing foreign currency account.
(2) The balances in the foreign currency accounts and income therefrom shall continue to remain exempted from the levy of wealth tax and income tax and compulsory deduction of zakat at source:
Provided that such exemption shall not be available to citizens of Pakistan residing in Pakistan and to firms, companies and other bodies registered or incorporated in Pakistan in respect of any balance in a new foreign currency account opened or deposits created on or after the 16th day of December, 1999 or to incremental deposits created on or after the 16th day of December, 1999 in an existing foreign currency account and income therefrom.
(3) The banks shall maintain complete secrecy in respect of transactions in the foreign currency accounts.
(4) The State Bank of Pakistan or other banks shall not impose any restrictions on deposits in and withdrawals from foreign currency accounts and restrictions, if any, shall stand withdrawn forthwith.
9. Secrecy of banking transaction.- Secrecy of bona fide banking transactions shall be strictly observed by all banks and financial institutions, by whosoever owned, controlled or managed.
16 In the Income Tax Ordinance 2001, promulgated on 13 September 2001, a special provision [section 111(4)] was inserted giving a free hand to money launderers that they would not be questioned if they remit their ill-gotten money from outside through normal banking channels, surrendering the foreign currency to the State Bank and getting Pakistani rupees as encashment. This facility has been cleverly used by terrorist networks, criminals, tax evaders and drug syndicates to launder their money with State patronage. The black money generated inside Pakistan through criminal activities is laundered through "fake" remittances.
17 http://www.sbp.org.pk/publications/wpapers/2010/wp33.pdf
18 https://www.lap-publishing.com/catalog/details/store/gb/book/978-3-8473-3105-6/pakistan:-enigma-of-taxation
19 http://www.amazon.com/Pakistan-Drug-trap-Dr-Ikramul-Haq/dp/9698403191/ref=sr_1_1?s=books&ie=UTF8&qid=1329279654&sr=1-1
20 7. Procedure and manner of furnishing information by the financial institutions or reporting entities. - (1) Every financial institution shall file with the FMU, to the extent and in the manner prescribed by the FMU, Suspicious Transaction Report conducted or attempted by, at or through that financial institution if the financial institution and reporting entity knows, suspects, or has reason to suspect that the transaction of a pattern of transactions of which the transactions is a part -
(a) Involves funds derived from illegal activities or is intended or conducted in order to hide or disguise proceeds of crime;(b) is designed to evade any requirements of this section;
(c) has no apparent lawful purpose after examining the available facts, including the background and possible purpose of the transaction; or
(d) involves financing of terrorism:
Provided that Suspicious Transaction Report shall be filed by the financial institution or reporting entity with the FMU immediately but not later than seven working days after forming that suspicion.
(2) Any other government agency, autonomous body or regulatory authority may share intelligence or report their suspicions within the meaning of suspicious transaction report or CTR to FMU in normal course of their business and the protection provided under section 12 shall be available to such agency, body or authority.
(3) All CTRs shall, to the extent and in the manner prescribed by the FMU, be filed by the financial institutions or reporting entities with the FMU immediately, but not later than seven working days, after the respective currency transaction.
(4) Every reporting entity shall keep and maintain all record related to Suspicious Transactions Reports and CTRs filed by it for a period of at least five years after reporting of transaction under sub-section (1), (2) and (3).
(5) The provisions of this section shall have effect notwithstanding any obligation as to secrecy or other restriction on the disclosure of information imposed by any other law or written document.
(6) Notwithstanding anything contained in any other law for the time being in force, any Suspicious Transaction Reports required to be submitted by any person or entity to any investigating or prosecuting agency shall, on the commencement of this Act, be solely and exclusively submitted to FMU to the exclusion of all others.
21 Section 67: Reporting of suspicious financial transaction:
(1). Notwithstanding anything contained in any law for the time being in force, all banks and financial institutions shall pay special attention to all unusual patterns or transaction, which have no apparent economic or lawful purpose and upon suspicion that such transactions could constitutes or be related to illicit narcotics activities, the manager or director of such financial institution shall report the suspicious transactions to the Director-General.
(2). Whoever fails to supply the information in accordance with sub-section (1) shall be punishable with rigorous imprisonment which may extend to three years, or with both.
22 See judgement of the Lahore High Court in Hudabiya Engineering (Pvt) Ltd v. Pakistan and 6 others 1998 PTD 34.
23 H.R.C.No 965/05, Const.P.05/07, Const.P.29/07, Const.P.No 37/07, Const.P.No 55/07, HRC NO.2724/2007 and HRC NO.7679-G/2007.
24 In the aftermath of 9/11 tragedy, more than 35,000 innocent civilians and 5,000 personnel of the security forces including several police men have been killed in various subversive acts conducted by the insurgents such as attacks on markets, shopping plazas, school children buses, places of worship etc. Even ISI sub-headquarters, located in Lahore, Multan and Peshawar were targeted by the militants besides their personnel at various places. In this context, BBC, while quoting ex-ISI DG, Ahmed Shuja Pasha, revealed, "Nobody expressed their condolences over the 78 officials of the ISI who have been killed."
25 Pakistan can also learn a lot from the British approach. In 2007, a debate was initiated in Brittan as to whether ordinary law can deal with terrorists or not. The then Home Secretary, Jacqui Smith, insisted that terrorists were "simply criminals" and the best way to deal with them was to use the ordinary criminal law in order to bring them to trial and convict them". The critics said that there was only one problem with that approach: the ordinary criminal law is not equipped to deal with terrorists promptly and effectively. It has evolved to deal with people who steal, harm or kill from the standard human motives of jealousy, greed and lust. It is not designed to deal with people who aim to kill as many people as possible in their attempt to replace democracy with theocracy-which is what Islamist terrorists aim to do. The Director General of MI5, Jonathan Evans, claimed that there are at least 2,000 people known to the Security Services who were involved in terrorism, and probably 2,000 more whom they did not know about. After extensive debate, Gordon Brown and Jacqui Smith recognised that the criminal law, in its unmodified form, was unable "to protect us from that threat - which is why they propose yet another Bill to tinker with it"25. They recognised that the state's main responsibility was to protect people against acts of terrorism and mass murder, "not to pick up the bits after the bombs have gone off and people have been killed. To do that, it needs to be able to detain terrorists before they actually commit acts of terror. And that, of course, is exactly what the ordinary criminal law does not, and should not, allow the state to do". The British government discussed another option that was to take terrorism cases out of the criminal law all together, creating instead a special system of courts having different rules of evidence and different standards of proof. Something on those lines already exists: judge-only tribunals determine whether foreign nationals should be placed under house arrest, just as "Diplock Courts" were used for more than 20 years in Northern Ireland. The advantage of such a system is that evidence can be heard in secret, which means the evidence the security services
26 http://tribune.com.pk/story/324255/96-firs-registered-under-anti-terrorism-act-in-2011-were-bogus/
27 Heymann Philip B in International Co-operation Dealing with Terrorism: A Review of Law and Recent Practices, A