Hot pursuit of terror fundsPakistan
ON Aug 28, a letter was received at the State Bank from a sector commander of the Rangers in Karachi asking for specific account details and transaction history of four individuals. The letter was addressed to the director of the Banking Policy and Regulatory Department of the State Bank, asking him to “please circulate to all the financial institutions as well as foreign banks operating in Pakistan to provide the following information in respect of the following individuals”.
The information being asked for was incredibly detailed, including copies of account opening forms “even if closed”, all persons authorised to operate the accounts in question, signature specimen cards, and account statements “from date of opening to date”.
“In addition to the above”, the letter continued, “please obtain information of any other accounts, deposits or lockers maintained by the above individuals or to his/her business concerns with details of security offered including family members. In case any banking facility has been granted to a third person/firm against the deposit or guarantee of the above individuals, details of such facilities showed [sic] also be obtained and advised.”
The individuals listed were Dr Asim Hussain, Mr Shoaib Warsi (deputy managing director of SSGC), Mr Zohair Siddiqui (former managing director SSGC), and Mr Kamran Ihsan Nagi (general manager Project and Construction, SSGC).
Each of them was picked up in a series of raids that followed the arrest of Dr Asim Hussain. A number of others were also picked up in those raids, including Amin Rajput, the chief financial officer of SSGC, and Dr Yusuf Sattar, the deputy managing director of Ziauddin Hospital North Nazimabad.
The letter from the Rangers made no mention of Rajput and Sattar, suggesting their personal financial affairs were not being scrutinised at this stage. One of the four listed in the letter, Nagi, was later released from Rangers custody on the night of Sept 11, although it’s not clear whether the investigation against him continues or has been dropped.
Nevertheless, on Sept 3, five working days from receiving the letter, the Banking Policy and Regulatory Department issued a confidential circular to presidents and CEOs of all banks and DFIs. The circular simply said: “Please find enclosed a copy of letter dated Aug 27, 2015 received from Pakistan Rangers regarding supply of information/documents for your immediate attention to be dealt with under the relevant laws.”
Notice the circular does not ask banks to act on the letter from the Rangers. It only says the letter must “be dealt with under the relevant laws”. This ambiguity is in contrast to the language of other circulars issued by the same department. What is the right way to deal with the request contained in the letter? And what are those “relevant laws”? Nobody from the world of banking and law can pinpoint, although the consensus is that the regulator indeed has the power to entertain, and act upon, the request from the Rangers.
Conversations with senior bankers suggest that the banks are indeed complying with the request contained in the letter and will be furnishing the details, although the volume of material that will be generated as a result is likely to be considerable, and will require a great deal of capacity to sift through and extract anything meaningful from it.
This matter is of great interest for a number of reasons. For one, the request itself is highly unusual. Normally requests for client-specific information from law-enforcement require a court order, but it turns out in this case nobody is willing to challenge the authority of the State Bank to proceed in the absence of a court order. Has a precedent been set?
Second, requests for information on clients from law enforcement tend to be very specific. For example, they may request to see the deposit slips for certain credits made into an account, along with CCTV footage to identify the particular individual who made a specific deposit. But in this case, the information being requested is broad-based, implying the investigation is looking for trends, or sifting for signs of irregularities or improper dealings. Can future terror financing investigations proceed similarly?
Third, none of the individuals listed in the letter have, as of yet, been charged with any offence. They have all been taken into Rangers custody under Section 11EEEE of the Anti-Terrorism Act (1997) for suspected involvement in terror financing and embezzlement of funds.
It is excellent and heartening to see such swift and decisive action being taken to investigate a case of suspected terror financing. This might be the single most forceful effort mounted by the state in recent years to follow up on terror financing suspicions, an area in which Pakistan has struggled to show results, and even dragged its feet to pass the amendments to the relevant legislation that would bring its legislative framework against money laundering and terror financing into conformity with international norms and best practices.
What is less excellent and less heartening, however, is that the first high-profile case of such swift and decisive action to investigate suspected terror financing happens to be against people better known for their links to politics than to terrorist entities.
The results of the investigation will tell us how well this uniquely forceful step has worked in strengthening the hand of the state to genuinely identify and intercept terror funding, which everyone agrees is a crucial part of the overall war against the menace of terrorism. But in the meantime, one wonders how things might turn out if such swift and decisive action were to be directed against entities and individuals within Pakistan who are more widely suspected of maintaining links with terrorism.
The present case shows the tools with which to track terror funds are ready and available. All that is required is the will to use them.
The writer is a member of staff.
Published in Dawn, September 17th, 2015
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