Daily Times

Sir: Britain has rejected petition for extradition of former finance minister Ishaq Dar, accused of money laundering and being front-man of ex-prime minister Nawaz Sharif. Aside from gung-ho calls to bring back money stashed abroad, there is no extradition treaty between Britain and Pakistan.

Money laundering is as old as man himself. Even four thousand years before Christ, Chinese merchants used to hide their wealth from their rulers so as to avoid confiscation. The merchants also invested their money in remote provinces and even outside China. Literature is replete with stories of Jewish shylocks that employed innovative methods to hide their money. Meyer Lanski (Capone’s accountant) was very successful in concealing his ill-gotten money. The Hindujas were criticised in British press for ‘obtaining British passports by contributing a substantial sum of the Millennium Dome.’ Till recently, India was not able to catch hold of absconder former Kingfisher Airlines boss Vijay Mallya. He is involved in fraud and money laundering amounting to around Rs 9,000 crores, similarly, diamond merchant Mehul Choksi and his cousin Nirav Modi are at large. They are involved in Punjab National Bank of fraud of Rs.13, 000 crore.

The United Nations International Drug Control Programme defines money laundering as the ‘… process by which one conceals the existence, illegal source or illegal application of income and then disguises or converts that income to make it appear illegitimate’. Specific techniques to circumvent anti-money laundering legislation include: (a) Smurfing that is breaking down a large volume of cash in amounts less than the threshold of the particular country’s reporting requirements, thereby avoiding the requirement to justify the transaction.

Generally, the cash is exchanged for bearer cheques or international money-orders which are then deposited into the trafficker’s account by a go-between of the same organisation. (b) Making use of so-called front and shall companies in cash intensive concerns (retail outlets, retail outlets, etc.). (c) Accounting techniques like over-invoicing of imports and under-invoicing of exports. (d) Private investment techniques like repatriation of funds parked in offshore shell companies through the loan-back method. (d) Use of non-bank financial institutions like unregistered currency-exchange houses, monetization of gold, gems, diamonds and other precious metals. (e) Acquisition of sick companies. (f) Hawala transactions based on trust and confidentiality rather than paper work leaving no trial and bypassing regulatory mechanism of banking systems. A recent report by a Swiss institute ranks Pakistan 46th on a list of 146 countries that face significant money laundering/terrorism financing.

Our investigators employ third-degree tactics (slapping suspects, keeping them awake, and prolonged detention and torture). But, if India’s experience is any lesson, such tactics are no good. Knowledge of criminal and civil law, including international law (extradition) is required to deal with innovative money launderers.

MALIK ABDUL HAMEED

Islamabad

Published in Daily Times, September 19^th 2018.