Terrorism, arms, drug trades, and money laundering, intrinsically linked, pose considerable threats to global peace and security along with destabilising political and financial stability of many nation states. Pakistan is one of the worst-affected victims of these menaces. The war against any terrorist network e.g. ISIS, Al Qaeda and the Taliban (enjoying networking with many outlawed groups having hubs in Afghanistan, Pakistan and elsewhere) cannot be won unless their financial lifeline is destroyed. These networks are minting enormous money from voluntary donations to organised crime. There are a few questions that irk everybody’s mind. 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 be remitters and recipients traced? If hawala and hundi are used for unlawful transfer of funds, why persons engaged in these unlawful activities are not arrested and punished? Who all are financing these terrorist networks? Who all are providing them sophisticated arms and military training? It is a well-established fact that criminals remit billions of dollars every year from bank accounts maintained in various countries. The crackdown on this enormous dirty money is the real issue though it finds less significance in discussions and strategies to defeat terrorism that is largely fed by arms and drugs deals. James Petras, Professor of Sociology, Binghamton University, New York, in his paper, “Dirty Money” Foundation of US Growth and Empire makes startling revelations: “There is a consensus among US Congressional Investigators, former bankers and international banking experts that US and European banks launder between $500 billion and $1 trillion of dirty money each year, half of which is laundered by U.S. banks alone”. These yearly inflows surpass all the net transfers by the major US oil producers, military industries and aircraft manufacturers. The most recent estimates (2016) are that 90 offshore jurisdictions around the world licensed about 11,000 offshore banks that control approximately $155 trillion in assets. The 2017 International Narcotics Control Strategy Report (INCSR), annually prepared by the US Department of State, itself admits that “in April 2016, the ‘Panama Papers’ exposed significant vulnerabilities related to lack of financial transparency and the use of shell companies to launder money, commit tax fraud, and evade US sanctions”. Money laundered in Panama primarily comes from drug trafficking proceeds due to its location along major trafficking routes. Once the money has been laundered, it can be recycled into bona fide investments not only in real estate, hotels, etc, but also in other areas such as the services economy and manufacturing. Like the US government, our authorities also know that huge funds are laundered through banks yet they do not take any action. Professor Petras in Enormous By Any Measure says: “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”. It equally applies to our rulers sitting in Islamabad. Case of Pakistan is no different from Panama or Columbia. There is sufficient evidence that militant groups working against the security and stability of Pakistan generate huge funds through organised criminal activities and also get generous “donations” from “sympathisers” in and outside Pakistan. In the face of this fact, we have yet not developed a reporting system to monitor the generation and movement of such money/funds/assets. On the contrary we have laws that protect transfer of funds, for example, section 5 and 9 of Protection of Economic Reforms Act, 1992 and section 111(4) of the Income Tax Ordinance, 2001. These provisions ensure unlimited flow of remittances and dealings in foreign currencies. So financiers of terrorists are free to use even the banking facilities. Tomorrow, June 26, will mark the 30th year anniversary of the UN International Day against Drug Abuse and Illicit Trafficking. According to the UNODC, nearly 210 million people are using illicit drugs such as cocaine, cannabis, hallucinogens, opiates and sedative hypnotics worldwide Drug barons, terrorists and money launderers not only use hawala and hundi but exploit legal sanction available under section 111(4) of the Income Tax Ordinance, 2001 which says that if anybody brings money through normal banking channels, 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 tax authorities. Besides legal weaknesses pointed out above, during the last 30 years, NAB, FIA, ANF and FBR have not been able to establish a joint task force to book and prosecute the men and networks involved in organised crimes. Pakistan presents a classic case study of ‘state within state’ — terrorists and mafias crippling institutions and over-empowering the masses. Pakistan has suffered a lot and paid a heavy price in men and material while fighting against terrorism. Determined and practical efforts are needed to destroy the financial supply lines of organised criminal networks. What happened to National Action Plan (NAP) and 29 civil-military wings established in August 2016? These and many other questions need to be answered if we are really serious in uprooting terrorism, drug trafficking and other crimes. The writer specialises in studying global narco-arms economy and its linkages with terrorism. He is author of numerous articles on these issues, besides author of books, Pakistan: From Hash to Heroin and its sequel, Pakistan: Drug-trap to Debt-trap Published in Daily Times, June 25th, 2017.