Hard work for dirty money

Terrorist financing and NACTA gear up for assessment

Hard work for dirty money
One of the 20 points listed in the National Action Plan (NAP) relates to terrorist financing or “choking financing for terrorist and terrorist organizations”. And after long and focused inter-provincial deliberations, the National Counter Terrorism Authority (NACTA) has finally laid down a roadmap to tackle this menace. The task had become urgent because of increased international monitoring of illicit funds meant for terrorist activities and an impending evaluation of Pakistan’s efforts against it.

The challenge is to satisfy the 35-nation intergovernmental Financial Action Task Force when it visits Pakistan in October next year. Formed in 1989 to combat money laundering, the task force also began monitoring the financing of terrorism after 9/11. If unsatisfied with a particular country’s banking measures against terrorist financing, the task force can blacklist it, which would hurt a country’s ability to borrow. Back in 2015, it had exempted Pakistan after its annual session which appreciated the country’s progress in tackling both money laundering and terrorist financing.

With this looming deadline, NACTA, the lynchpin in the entire effort,  moved with speed to put together policies, recently approved by the the Minister for Interior. It also included a proposal for a National Task Force on Counter Terrorism Financing. It will have representation from all police establishments, the Inter-Services Intelligence, Intelligence Bureau, FMU, Federal Board of Revenue, Anti-Narcotics Force, National Accountability Bureau, the Home departments, FIA, State Bank of Pakistan and FATA secretariat. The task force held its first formal session on July 19.
The challenge is to satisfy the 35-nation intergovernmental Financial Action Task Force (FATF) when it visits Pakistan in October next year

Simultaneously, Counter-Terrorist Financing Units (CTFUs) have been set up in all provincial Counter-Terrorism Departments (CTDs).  These units will be trained by the Federal Investigation Agency, SBP and the FBR. NACTA can also be approached, if necessary, by the law-enforcement agencies where further specialized training is required and this will be coordinated with the Financial Monitoring Unit and the agencies. CTFUs would be responsible for investigating the financial dealings of all those suspected and accused of terrorism and would be responsible for establishing reverse leads.

Given that several public sector organizations are plagued by inertia and incompetence, particularly in the ministry of interior and the police in general, NACTA seems to have pulled off the job of at least of putting in place a framework to address terrorist financing.

Although beset with capacity issues, the CTFUs have begun functioning in all CTDs to trace reverse leads into terrorist financing. NACTA is spearheading Branchless Banking Regulations, and has also introduced obligatory money declaration and a regulatory mechanism for bulk cash transactions. A Money Declaration Form has been introduced for both in-bound and out-bound international passengers in consultation with the SBP and FBR. Customs has been assigned the task of implementing it to enforce SBP rules on currency limits of USD10,000 per visit. Work has started on charity regulation, such as those of NGOs and non-profits. There is a task force for this and core groups have been formed at both the federal and provincial levels so that the policy is tabled soon.

But of course, given capacity and intellectual issues, effective implementation will take time and expertise in the coming years. Many NACTA measures last year, such as the listing of suspects on the Fourth Schedule or blocking national ID cards of suspected terrorists, for instance, created a big inconvenience for tens of thousands of people across Pakistan. Of the 8,307 persons on the Fourth Schedule, for example, the data of 6,577 individuals was shared with the SBP as they had Computerized National Identity Cards. As many as 5,023 accounts were frozen involving over Rs300 million. But many innocent people also suffered because of the knee-jerk reaction by the bureaucracy which complied with instructions thoughtlessly.

NACTA’s national coordinator Ihsan Ghani admits shortcomings. But he also reminds his visitors of the conditions surrounding his organization’s work. It will take time, he says, but we are hopefully on the right track after undergoing the painstaking process of bringing some 20 security agencies on board for support on the ground. Ghani has also proposed multi-tier training on terrorist financing for the police, from the sepoy to the officer, at police colleges and training academies. Investigators should be able to relate transactions from point A to point B, Ghani told TFT. Ghani says NACTA’s objective is to get a clean a clean chit from the Financial Action Task Force when it visits Pakistan next year to avoid being branded a haven for terrorist financing and money-laundering.

Clearly, the road is arduous especially viewed against the general dismal dysfunction that we see within civilian governance structures. Yet one would hope that all key stakeholders foresee the implications for Pakistan if it fails international scrutiny on its anti-terror and money-laundering regulations.

Imtiaz Gul heads the independent Centre for Research and Security Studies in Islamabad