current problems in the combat of transnational …€¦ · (f) money laundering. (g)transnational...

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108TH INTERNATIONAL SEMINARPARTICIPANTS’ PAPERS

CURRENT PROBLEMS IN THE COMBAT OFTRANSNATIONAL ORGANIZED CRIME (PAKISTAN

PERSPECTIVE)

Tahir Anwar Pasha*

I. INTRODUCTION

“ O r g a n i z e d C r i m e ” , i n i t i a l l ysynonymous to a certa in I ta l ianphenomena like ‘Mafia’, ‘Camorra’ etc., hasnow extended to cover the whole world andis the most dificult challenge to criminaljustice policies. Criminals no longer livewithin the parameters of nationalboundaries. It facilitates criminals tooperate transnationally, both in terms offinance and their own security. They don’tencounter the difficulties - which the lawenforcers face - when crossing nationalborders for ulterior motives.

The recent decades have seen aninformation explosion which has reducedthe world into a global village. Internetoperations and satellite communicationsare biased in favour of criminals ratherthan the proponents of the criminal justicesystem. Just a delay of hours - which is notunusual in official channels - can create agap of thousands of miles and man hoursin the efforts to bring criminals to justice.

Law enforcers always fall behind inmatching the wealth of crime syndicates.It is these riches which infact persuade thetalented unemployed to keep on joiningshady activities. They obviously get agreater benefit, with less effort than theycould through legitimate sources. Crimeorganizers do not have to pass through thecumbersome procedural requirements ofdemands, budgets, requisitions, sanctions,

spending rules and subsequent audits.Similarly, the proceeds of crime are noteasily accessible to law officers on variousc o u n t s . C r i m i n a l s u s e i n t r i c a t emethodologies to camouflage the proceedsof crime and there are problems ofjurisdiction across national borders. Underthese circumstances it becomes almost animpossible task to prosecute and punishthe offenders who operate transnationally.

The immunity so provided to crimeoperators is fast becoming the vehicle of amulti-fold increase in the transnationalorganized crime. This has been felt by mostof the developed (and developing) countriesand the issue of transnational organizedcrime began to echo in internationalforums. Think tanks remained busy formany million of hours to overcome thedifficulties in combatting transnationalcrime. Discussions, Seminars Workshops,Symposiums, Conventions, Treaties etc.were designed to construct dams on thegushing flow of illicit channels. Some ofthese efforts, though slow, created aninpact and the desired results, but most ofthem remaind ineffective due to technologyadvances (of which the criminals are betteravailers).

It is in this context that the presentpaper has been written, to take stock of theproblems which the world is still facing inthe combat of transnational offenders. Inthis paper, I shall deal with issues from myown country’s point of view on the followingtype of transnational crime:

(a) Illicit drug trafficking.(b) Illicit firearms trafficking.

* Deputy Inspector General of Police, Central PoliceOffice in Lahore, Pakistan.

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(c) Smuggling of illegal migrants.(d) Illicit trafficking in women and

children.(e) Illicit trafficking in stolen motor

vehicles.(f) Money laundering.(g) Transnational economic crimes (e.g.,

large-scale fraud targeted atcorporations or organizations, creditcard fraud, counterfeit currency offinancial cheques, fraud by way ofmanipulating computer systems orother high technology equipment).

As far as Pakistan is concerned, illicitdrug trafficking and resultant moneylaundering are the most relevent issues.The other types of crime mentioned aboveare either not prevalent nationally - likelarge scale frauds targeted at corporationsor organizations, credit card fraud,counterfeit currency or financial cheques,fraud by manipulating computer systemsetc. - or if they are prevailing, they are notof much concern.

There may be sporadic cases of illicitfirearms trafficking in Pakistan, but noorganized gangs dealing in such nefariousactivities have come to notice. However,there was the fallout of the Afghan war,when Afghan refugees sneaked intoPakistan’s tribal area along with theirarms, some of which were lethal and hightech, for barter trade. This issue has cometo a lower level after the war turned intoan internal civil war, and the Pakistanborder side of Afghanistan came under theoccupation of the Talibans.

There was a time when money valueshad changed in Pakistan - like many otherdeveloping nations - and most of the skilled/unskilled workers sought employmentabroad in move affluent countries. Amushrooming growth of gangs dealing inillegal immigrants was noticed. Thesegangs operated transnationally. With

stringent laws and measures taken bothnationally and internationally, thisproblem has almost come to a halt inPakistan. There were periods in theprevious years when zero i l legalimmigration was recorded.

Illicit trafficking in women and childrenis also not much of a problem in Pakistan.There was some illicit traffic from aneighbouring region and one far easterncountry of women for prostitution(disguised at house maids). Similarly therewas some trade of children from thesouthern part of Punjab (the biggestprovince of Pakistan) to some middleeastern countries for the purpose of camelraces. Although the immigration was legaland was with the consent of the parents orguardians, it was still considered illicit onhumanitarian grounds. Both these issueshave since died down due to effectivechecks by the law enforcement agencies ofPakistan and elsewhere.

Transnational trade of stolen vehicles isa recent phenomena as far as Pakistan isconcerned. Our western borders areinhabited by tribal groups on both sides.The area is called, in the local language,“Illaqa Ghair”, meaning, the land of aliens.The tribes traditionally don’t acknowledgethe international boundaries. Their freemovement provides opportunities toestablish safe havens - on the other side ofthe border - for contraband items. Thesehavens have become smuggling rendezvouspoints because of the restrictions or heavyduties imposed on certain items, whichincludes vehicles. The vehicles aretransported to settled areas of Pakistanillegally and plied on roads with fictitiousnumber plates. Similary, vehicles stolenfrom the settled areas of Pakistan - mostlyluxury cars & vans - are transported totribal areas from where they are sold atdirt cheap prices or returned to the actualowner after receiving “handling charges”,

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which often amount to millions of rupees.This problem is almost a localized issuewhich can only technically be termed astransnational.

This leaves us with the actual problemarea for Pakistan i.e. drug trafficking andthe resultant money laundering, whichconsumes most of the energy of lawenforcment in Pakistan.

II. DRUG TRAFFICKING:CURRENT SITUATION

Drugs have remained a social menace,(in some form or other) since the timeimmemorial. We can not overlook theopium addiction in China, which paved wayfor the revolution. The Indian subcontinenttoo, has remained in the spiral of addiction.There is always a growing demand which,as per economic theory, creates theresultant supply. In this regard thesituation in Pakistan is no different.

A. Pakistan a Victim - not a SourceCountry

At the time of independence in 1947,Pakistan was a unable to supply its ownopium addicts, therefore opium wasimported from India until 1956. After 1956,a few areas were allowed to produce‘licensed opium’ under strict controls. Thenumer of opium addicts never reached asignificant mark. The production oflicensed opium continued until 1979, whentwo very important developments tookplace:

(a) The Islamic revolution of Iran inFebruary 1979;

(b) The promulgation of the IslamicHudood laws in Pakistan whichtotally banned opium production.Farmers were therefore left withhuge stockpiles - about 800 tons ofopium - and did not know what to dowith them At this point, someWesterners taught them how to

convert opium into heroin. This ishow heroin - discovered back in 1898- was introduced to this part of theworld in 1980.

As against 800,000 square kilometers ofterritory, opium production is confined toonly a few isolated pockets of Pakistan. Thearea under cultivation has been reducedfrom 32,200 hectares in 1978, to 5215 in1995; and poppy production from anestimated 800 tons in 1978-79, to 109.5tons in 1995. In 1996 opium production wasfurther reduced to only 2.8 metric tons.Pakistan is thus no longer a centralproducer country. It is thus clear that a verynegligible area of Pakistan territory wasconnected with narcotics in the past. Since1996 Pakistan has ceased to be a producercontry.

The war in Afghanistan led to porousborders with the country, resulting inspread of the narco-guncultre. With noheroin addicts in 1979, Pakistan is nowburdened with 1.52 million heroin addicts.Pakistan needs anything between 600 or800 tons of poppy or 60 to 80 tons of heroinper year to feed its own drug addicts. Weare, now therefore, net importers notexporters of heroin.

B. Alarming Domestic ConsumptionOn the consumption side of heroin

Pakistan is badly effected. To know theactual ground situation, a “NationalSurvey on Drug Abuse” was conducted in1993. The survey dawned facts whichcreated panic among sociologists. Thefollowing are the salient features of thesurvey:

(a) There are 3.1 million drug users (0.77million in 1988).

(b) Most popular drug is heroin, whichis used by 1.52 million (51%).

(c) Second most popular drug is hashish,used by 0.89 million (29.5%)

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(d) Proportion of drug users:Urban - 52%Rural - 48%

(e) 71.5% of drug users were under 35years of age with the highestproportion in the 26-30 year agegroup.

(f) Almost 60% were literate and asimilar percentage were employed.

(g) Among occupational categories, thefrequency of drug use was highest(53.3%) for those in skilled andunskilled labour categories, followedby sales (14.1%), students (11.4%)and agriculture (10.9%).

(h)The average monthly personalincome of drug users was Rs. 3054/-(US $ 28).

(i) 97.2% drug users were male. 2.98%were female.

(j) Over time, the drug abuse patternhas changed in favour of heroininstead of hashish and othertraditional drugs.

(k) Sources of introduction to drugs weremostly attributed to friends in 68.6%,and to casual acquaintances or drugpushers in 15%, of the cases. Familymembers made up another 9% of thecases.

No doubt the dark clouds of drug menaceare surrounding Pakistan, but there is athin silver lining also. About 60% of heroinaddicts expressed desire to quit by havingrecourse to treatment centres. Also, theincrease in the number of drug addicts wasonly 7% during the period 1988-93 while itwas 12% during 1983-88.

C. Economic Factors leading toTransnational Traffic

Traditionally poppy cultivation is takenas a cash crop - like other cash cropselsewhere - in the tribal areas and inAfghanistan. This used to be the bread andbutter, of the smaller land holders who, inthe rugged terrains, had nothing else for

subsistence. Cultivantion of poppy was alsoencouraged by the then co lonia lgovernment for export to China. Still thearea constitutes a very small fraction of the“Golden Crescent” of South West Asia. Forcenturies, the tribal area was thelegitimate supplier of opium until theIslamic Hadood Laws were introduced in1979. Evolution of heroin after this (due toreasons already explained ) reduced thevolume of opium but increased its price tentimes. As heroin production took less hidingspace than crops, clandestine operationsbecame easy and resulted in handsomereturns. Profit margins had a cumulativeeffect with the increase of distance fromthe source point. Price differentials skyrocketed when the drug reached theinternational market.

Price difference in the internationalmarket can be well illustrated by the factthat the heroin which costs Rs. 70,000/-to1,00,000 (USD $ 1550 to 2200) per kg inPakistan, is sold for over USD $100,000 inthe streets of some developed westerncountries. The Criminal IntelligenceDirectorate of Royal Canadian MountedPolice have carried out an analysis of theinternational prices of illicit drugs in 1996for comparative reference.

The huge difference in international andlocal market prices resulted in billions ofdollars in illicit export trade. This has notonly created a dearth of drugs inside ourcountry, but also has inflated the domesticspending on drugs. A UNDCP (UnitedNation Drug Control Programme) study in1994 estimated consumer expenditure onheroin in Pakistan to be in the range of Rs.35 billion (US $ 1.2 billion) per year. Thisvolume of drug trade has logically createdand underground parallel economy with itsown supply and demand mechanism, andits own style of corruption.

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Pakistan has also been affected by whatis known as the balloon effect. If drugproduction is reduced in a given area, theimpact of continued demand inevitablyensures that greater production occurs ina neighbouring area. Thus while Pakistanhas been able to reduce its output of opiumconsiderably, increased production inAfghanistan (2300 tons in 1996 - UNDCPestimate) due to the prevalent politicalsituation there has served to effectivelynegate whatever progress we have beenable to achieve. The impact to the ballooneffect has clearly shown that efforts atsolving the narcotics problem must also beinitiated at regional levels; as increasedopium production and heroin laboratoriesacross the borders in Afghanistan havecontributed significantly to the supply ofopium and heroin in Pakistan.

Drug production in Afghanistan is notonly meeting the domestic demand ofPakistan but it is also forming the basis ofan international supply route usingPakistan territory as a conduit. The mostrecent trend of international drug trafficis that Central Asian States are being usedfor the transportation of drugs to Europe/U.S.. This fact is acknowledged by theINCB report for 1995 and 1996, and theConference of 37 countries in Europe inFebruary, 1995. Given the stringentmeasures adopted by the Government ofPakistan, Pakistan may soon cease to be acountry utilized as a major conduit for theexport of drugs.

According to one estimate, about USD$1 trillion is involved in the global narco-business, out of which at least USD $ 200billion is the share of the United States ofAmerica alone. This huge volume of moneydwarfs any thing earned by legitimatemeans, leading the former U.N. SecretaryGeneral to say before the GeneralAssembly, “Drugs are the most profitablecommodity in the world today” affecting the

health of financial markets and even localeconomics. According to various estimates,not more than 5% to 15% of narcotic drugsand psychotropic substances areinterdicted by the law enforcementagencies of the world. It is thus obvious thatthe drug interdiction enforcement strategyhas failed to produce the desired results.It is estimated that 90% of narcotics slipthrough the net of enforcement agencies,and reach the drug market to meet theconsumers demand.

III. INTERNATIONAL AWARENESSAND COMBATTING STRATEGIES

Due to the transnational nature of drugtrafficking, it would be improper to thinkthat it could be fought single handedly byany nation, no matter how developed it is.The international community as a wholehas to embark on a crusade against drugs.The United Nations, being the solereqresentative institution in this respecthas come forward on this issue due to thecontinuing drug menace. Drug trafficking,coupled with the resultant moneylaundering, forms the major portion oforganized crime transnationally. Effortsmade to curb organized crime are,therefore, mainly targeted at these twospecialized crimes. The seventh congresson the Prevention of Crime and theTreatmet of Offenders, held in Milan in1985, adopted the “Milan Plan of Action”.Key statements in that plan of actionincluded:

“Crime is a major problem of nationaland, in some cases, internationaldimensions. Certain forms of crime canhamper the political, economic, social andcultural development of peoples andthreaten human rights, fundamentalfreedoms, and peace, stability and security.In certain cases it demands a concertedresponse from the community of nations inreducing the opportunities to commit crimeand address the relevant socio-economic

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factors, such as poverty, inequality andunemployment. The universal forum of theUnited Nations has a significant role toplay and its contribution to multilateralcooperation in this field should be mademore affective”.

and:“Interested Governments should

cooperate bilaterally and multilaterally, tothe fullest extent possible, with a view tostrengthening crime prevention measuresand the criminal justice process byundertaking action-oriented programmesand projects”.

In furtherance of the objectives of theMilan Plan of Action, in 1990 the eighthcongress adopted four practically-orientedbilateral model treaties designed to assiststates in building the necessary frameworkfor increased co-operation. Those treaties,subsequently adopted by the UnitedNations General Assembly, are: the ModelTreaty on the Transfer of Supervision ofOffenders Who Have Been ConditionallySentenced or Conditionally Released; theModel Treaty on the Transfer o fProceedings in Criminal Matters; theModel Treaty on Extradition; and theModel Treaty on Mutual Assistance inCriminal Matters.

The origins of international co-operationor mutual assistance in the suppression ofcrime date back to the beginnings of formaldiplomacy. In what has been described asthe oldest document in diplomatic history,provision was made for the return ofcriminals in a peace treaty entered into in(Circa 1280 BC) by Rameses II of Egyptand Prince Hattusili III of the Hittites. Theneed for mutual assistance, particularly inthe granting of help in the provision ofevidence to facilitate investigation andprosecution, has been recognazed for sometime by the international community. Forexample, the Single Convention onNarcotic Drugs 1961 imposed a number of

obligations on signatory states (Pakistanincluded as a signatory to it) to ensure thatpersons committing offenses could notescape justice. It required that each partymake conduct proscr ibed by theConvention a criminal offense carrying anadequate penalty, and to try a person forsuch an offence committed outsideterritorial jurisdiction where the offenderis found in that country’s territory andthere is no extradition.

1990 also saw the production of the finalreport of the Financial Action Task Forceon Money Laundering set up by the Headsof State or Governments of the seven majorindustrial nations (the G7), in which 8other nations were invited to participate.Another milestone was the adoption, by aplenipotentiaries conference on 20December 1988, of the United NationsConvention, coming into force on 11November 1990. The convention hasbroken new ground in number of respects.First, it creates an obligation on the partof all signatories (including Pakistan) tocriminalise conduct constituting what maybe loosely referred to as “moneylaundering” in relation to narcotics activity.This facilitates international cooperationwhich, due to the application of the dualcriminality principle, is presentlyhampered by the fact that many countriesdo not at present criminalise such conduct.

Secondly, Article 6 dealing withextradition, imposes obligations oncountries, interalia, to conclude bilateraland mltilateral agreements to carry out orto enhance the effectiveness of extraditionand, in relation to the conduct proscribedby the Convention, to expedite extraditionprocedures and to simplify the attendantevidentiary requirements.

Finally, Article 5 deals comprehensivelywith identifying, tracing freezing andconfiscating proceeds, or instrumentalities,

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of conduct proscribed by the Conventionand obliges countries to adopt suchmeasures as are necessary to enable themto fulfill those obligations, both nationallyand on behalf of other signatory states. Italso adopts mutual assistance provisionsfor requests for action in relation to theproceeds of crime, and obliges countries toseek to conclude bilateral and multilateraltreaties, agreements or arrangements toenhance the effectiveness of internationalco-operation in relation to the tracing,freezing and confiscating of proceeds ofcrime. The Convention also expresslyprohibits a refusal of assistance based onbank secrecy. The principal reason for itsemergence is the recognition that financialprofit is the essential motivation oforganized crime and that an effectivecountermeasure is the interdicting of suchprofits, which would otherwise be re-invested in further criminal enterprises. Soseen, it is a significant deterrent and crimecontrol mechanism. Furthermore, somecountries utilize confiscate proceeds tostrengthen the law enforcement armoryand to finance, for example, rehabilitationprogrammes for drug addicts. Pakistan hasalready established for this purpose, aNational Fund for control of Drug Abusein accordance with the provision of thenewly promulgated Control of NarcoticsSubstances Act, 1997.

IV. LEGISLATIVE MEASURES INPAKISTAN

In line with the recommendations of theConvention against Illicit Trafficking inNarcotic Drugs & Psychotropic Substances1988, Pakistan enacted comprehensivedrug laws. A Control of Narcotic SubstanesOrdinance was promulgated in 1995. Aftersome positive amendment, the ordinancebecome an Act of Parliament in 1997.(Control of Narcotic Substances Act(CNSA), 1997. Similarly through an Anti-Narcot i cs Force Ord inance 1995

(subsequently enacted in 1997, thePakistan Narcotics Control Board and AntiNarcotics Task Force were merged into oneAnti-Narcotics Force for move effectiveoperation.

A. Salient Features of NewLegislation

Before independence Pakistan inheritedthe Opium Act 1878 and Dangerous DrugAct 1930 which covered most of the drugrelated issues relevant to that time.However with the passage of time, theselaws gradually became obsolete because ofthe new dimensions that emerged in drugtrade. With the introduction of the CustomsAct of 1969 and Prevention of SmugglingAct 1977, the unauthorized flow of drugswas somewhat controlled. To enhancepunishment, Islamic laws were enacted bythe Prohibition (Enforcement of Hadd)Order 1979. Enactment of the Control ofNarcotic Substances Act 1997 (CNSA),being a comprehensive law, covered mostof the lacunas which had developed in theexisting laws due to technological andinformation based advances. Very briefly,the following are the salient features of theCNSA:

(a) Progressive punishments from twoyears to death have been prescribed.For the first time, the intensity ofpunishment has been linked with theq u a n t i t y a n d t y p e o f d r u g .Progression is well illustrated withthe help of Table 1.

(b) Money laundering has been declaredas a distinct crime and stringent anti-money laundering provisionsincorporated.

(c) Comprehensive provisions for civiland criminal forfeiture of assetswhich are derived from the proceedsof drug trafficking.

(d) Creation of special courts for speedydisposal of cases.

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(e) Compulsion to include publicwitnesses in narcotics seizuresdispensed with.

(f) No bail for offenses punishable with5 years or more. For other offensesno bail if public prosecutor socertifies.

(g) Controlled delivery operationslegalized.

(h)Comprehensive provis ions toenhance international cooperation.

(i) Provision for the registration of drugaddicts.

(j) First t ime detoxif ication andtreatment made statutory obligationof Government.

(k) National fund for drug abuse controlset up.

In the past, drug laws were notapplicable to Federally Administered TribalA r e a s ( FATA ) a n d P r o v i n c i a l l yAdministered Tribal Areas (PATA) but nowthe Islamic Hudood Laws have beenextended to these areas. Frontier corps (awell organized force) have been empoweredto perform enforcement duties in FATAwhere, previously, there was no suchauthority.

B. Enforcement AgenciesAll of the above measures have resulted

in activities entailing large seizures andinterdictions. It is not out of place tomentioned here that the Anti-NarcoticForce (ANF) is not the only agency whichtakes action against drug pushers. Alongwith all the Provincial Governments, notless than five Federal ministries are, insomeway or other, engaged in anti-narcotics activities. Details of agenciesworking in this respect are outlined inTable 2. The Anti Narcotics Force (ANF),however, is the primary enforcementagency. It coordinates the activities of allenforcement agencies in the field ofinterdiction. Important cases of otheragencies are normally transferred to ANF

for specialized investigation. Assistanceand advice to other enforcement agenciesis also provided by ANF. It liaises with theINCB, UNDCP, DEA and DLOs for latestdevelopments and information exchange.Apart from this, the ANF is renderingcommendable services in reducing thedemand for drugs. The new Master Plangives priority to demand reductionactivities, such as preventive education andmass awareness, besides making drugenforcement more effective. Drug addictswill be treated as psychotropic patientsrather than criminals. Registration of drugaddicts and their first-time treatment hasbeen made a statutory obligation of thegovernment.

C. Enforcement StatisticsThe salient feature of the enforcement

campaign in 1995 has been two deep druginterdiction raids undertaken by theFrontier Corps (FC) in Tribal Areas. TheFrontier Corps in a swift/massive raid inthe Khyber Area on January 27 and 28,1995 seized 480 kgs of heroin, 170 tons ofhashish and arrested 19 drug offenders.The above raid was followed by morestringent action deep in the Choora Valley,where FC/ANF seized 6,300 kgs of heroin,105,000 kgs of opium and 3,705 liters ofAcetic Anhydride in March 1995. Inaddition to the above, 15 heroin processingunits were also destroyed. Similarly raidsin December 1996 led to the destruction of10 heroin laboratories and the seizure of143 kgs heroin, 38 kgs hashish, 757 kgsopium and 1,754 litres of Acetic Anhydride.In March 1997, also the Tribal Lashkardestroyed a non functional heroinlaboratory and siezed 70 kgs of heroin,arresting 5 Afghans. The significance ofthis raid lies in the fact that the Tribalsthemselves took the initiative fordestruction. Their self motivation is adevelopment of monumental proportions.

Apart from these mentionable seizures,

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other agencies have also remained activein drug hauls. The following figuresrecording seizures by all Agencies (in Tons)may be of interest:

1994 1995 1996Opium 14.36 107.233 7.377Heroin 6.02 9.416 5.763Hashish 178.29 294.525 189.136

Agency wise details are provided inTable 3 for the first 10 months of 1997.

A considerable reduction in seizures hasbeen noticed after 1995, which is anindication that Pakistan has ceased to bea producing country. Drugs illegallyimported from Afghanistan for domesticconsumption and export to foreigncountries are, however, interceptedregularly. Due to the stringent measuresof enforcement agencies, Afghan drugtraffickers are now diverting their illicitexports through Central Asian Statesinstead of using Pakistan as transitconduit.

D. Two Recent Interesting CasesThe details of two interesting cases of

drugs seizure are attached at Appendix Aand B.

E. Seizure of Assets of Drug BaronsAfter years of international struggle, it

has been concluded that only way to combatdrugs is to control drug money launderingand to seize drug assets. In Pakistan, theconcept of forfeiture of assets dates backto 1977 and our Prevention of SmugglingAct 1977, deals with it at length. Assetscan be forfeited if acquired through theproceeds of the smuggling of narcotics.These assests could be in the name of thesmuggler or any other person on theirbehalf. The law was also applicable toassets held outside Pakistan. The burdenof proof was not on the prosecution, theonus was on the defendant. The seizure of

assets has become easier after the CNSA1997, through which money laundering hasalso been made a criminal offence.

The Anti-Narcotics Force has frozenassets worth Rs. 3612.92 million (US $ 82.1million) of 60 notorious drug traffickers inthe country. Prominent names among thesedrug traffickers are Mirza Iqbal Baig, HajiAyub Afridi, Anwar Khattak, Ashraf Rana,Dawood Jat, Fahim Babar, Sarder Gujarand Munawar Manj. Out of these, assetsworth $181 million belonging to Haji AyubAfridi have been forfeited under courtdecision. Dawood Jat, a notorious cross-country drugs smuggler, also surrenderedrecently due to relentless ANF pressure,and is now on bail.

F. Extradition of Drug PushersPakistan extradited major drug barons

like Haji Mirza Iqbal Baig, MuhammadAnwar Khattak, Tariq Butt, KhawajaAbdul Majeed, Hafeez-ur-Rehman,Zulqarnain Khan, Misai Khan, KhalidKhan, Taviz Khan, Shahid HafeezKhawaja, Muhammad Saleem Malik andMain Muhammad Azam, while cases ofothers are being judicially scrutinized bythe Interior Ministry. Haji Ayub Afridi alsosurrendered to the USA, in the UAE, dueto ANF pressure.This was made possibleonly because Pakistan already had theeffective Extradition Act 1972, long beforethe need was stressed in the UN conventionagainst Illicit Trafficking in Narcotic Drugs& Psychotropic Substances 1988. Pakistanalso has extradition treaties with 25countries. Moreover extradition ispermissible even to non-treaty states on amutual basis. The present position ofextraditions for drug traffickers is:

Extradited 14Pending in courts 11To be arrested 2Total 27

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G. Mutual Assistance Laws andInitiatives

It is true that the drug menace can notbe tackled - because of its transformationinto a transnational phenomena - withoutthe mutual assistance of the affectedcountries. Simple exchange of informationcan lead to substantial success. Timelyintimation from Drug Enforment Agencies(DEAs) regarding the seizure of 6,660 kgsof hashish at Antwerp, Belgium, led to thefurther seizure of 5,980 kgs of hashish fromIslamabad by the ANF. Details of the caseare Appendix A and B. The UN conventionagainst Illicit Trafficking in Narcotic Drugsand Psychotropic Substances 1988,stressed the need for mutual assistance ona reciprocal basis. A model mutualassistance treaty was also adopted in 1990by the UN General Assembly.

In pursuance of the 1988 Convention,Pakistan added a full chapter on mutualassistance in the Control of NarcoticSubstances Act 1997 (refer to chapter VIIIof the Act). In the presence of thissubstantive law, there is little need fortreaties, however, friendly countries stillenter into protocols for special assistance.

H. Recent International InitiativesUndertaken by Pakistan

(a) UN International Drug ControlProgramme sponsored the PakIranBorder Electronic Monitoring Projectaimed at checking the flow ofnarcotics across the Pak-Iran border.Proposed to be extended to Afghanborder.

(b) Pak-India cooperation inn drugrelated matters.

(c) Memorandum of understanding withKazakhastan.

(d) Agreements to make joint efforts forcontrol of drug trafficking have beensigned with United Arab Emirates,China, Uzbekistan, Kyrghistan andRussia.

(e) Agreements with Saudi Arabia maysoon be signed.

(f) Agreements envisaged with severalother countries.

(g) Two helicopters have been providedfor the ANF by the UK, to augmentdrug interdiction in Baluchistan andthe coastal areas of Sindh.

I. Controlled DeliveriesBesides the US Drug Enforcement

Administration (DEA), the followingGovernments have posted their DrugLiaison Officers in Pakistan: Australia,Britain, Canada, France, Germany, Iran,Italy, Netherlands, Norway, Saudi Arabiaand Turkey. Their main function is toexchange information expeditiously inrespect to narcotics offenses committed byPakistani nationals in their countries,where the narcotics originated fromPakistan or were transmitted throughPakistan. The Anti-Narcotics Force ineither case provides a timely two wayexchange of drug related intelligence andassists them in those investigations. Alsocontrolled deliveries are being arrangedwith the cooperation of these Drug LiaisonOfficers, to eliminate international druggangs operating in Pakistan or in theircountries for the control of drug trafficking.The controlled delivery means thetechnique of allowing illicit or suspectedconsignments of narcotic drugs orpsychotropic substances to pass outthrough or into the territoy of one or morecountries-with the knowledge and underthe supervision of their competentauthorities-with a view to identifyingpersons involved in the commission ofoffenses established in accordance withArticle 3, Paragraph 1 of the UnitedNations Convention against Illicit Trafficin Narcotic Drugs and PsychotropicSubstances 1988. Therefore, in pursuanceof the above, during 1996, 23 requests ofcontrolled delivery operations werereceived from the following countries:

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Australia (1), Canada (2), Germany (1),Kuwait (3), UK (13), & USA (3). A total 62kilograms of heroin was exported throughthese operations. However, the results ofonly 2 controlled deliveries have beenreceived. Those successfully culminatedwere in the United Kingdom, where 9persons have reportedly been arrested.Other operations are under progess.

V. MONEY LAUNDERING

There has always been a paralleleconomy in Pakistan, whatever thefinancial system may be. We can call it a‘black economy’, ‘underground economy’ or‘shadow economy’ which challenges theregular financial channels. Changingvalues have created a lust for easy moneywhich, of course, is often contrary to law.Money earned out of the (legal) systemscannnot be declared as taxable, thereforeit is either kept hidden or it is launderedto appear legitimate. ‘Money laundering’covers all procedures to change the identityof ill-gotten money so that:

(a) it appears to have originated from alegtimate source;

(b) to conceal the true ownership andorigin of the money; and

(c) to put the proceeds beyond the reachof the authorities.

There is no one method of launderingmoney. Methods can range from thepurchase and resale of a luxury item (e.g.a car or jewellery) to passing moneythrough a complex international web oflegi t imate businesses and ‘ shel l ’companies. Initially however, as in the caseof drug trafficking, the proceeds usuallytake the form of cash which needs to enterthe financial system by some means. Streetlevel purchases of drugs are almost alwaysmade with cash. Despite the variety ofmethods employed, the laundering processis accomplished in three stages which may

comprise of numerous transactions by thelaunderers that could alert a financialinstitution to criminal activity:

(a) Placement: The physical disposal ofcash proceeds devived from illegalactivity.

(b) Layering: Separating illicit proceedsfrom their source by creating complexlayers of financial transactionsdesigned to disguise the audit trailand provide anonymity.

(c) Integration : The provision ofapparent legitimacy to criminallyderived wealth. If the layeringprocess has succeeded, integrationschemes place the launderingproceeds back into the economy insuch a way that they re-enter thefinancial system appearing as normalbusiness funds.

These three basic steps may occur asseparate and distinct phases or they mayoccur simultaneously or, more commonly,they may overlap.

Certain points of vulnerability have beenidentified in the laundering process, whichthe money launderer finds difficult toavoid, and where their activities are,therefore, more susceptible to beingrecognised:

(a) entry of cash into the financialsystem;

(b) cross-border flow of cash; and(c) transfers within and from the

financial system.

Thus e f f or ts t o combat moneylaundering largely focus on those points inthe process where the launderer’s activitiesare more susceptible to recognition. Thesehave therefore, concentrated to a largeextent on the deposit taking procedures ofbanks and building societies in theplacement stage.

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A. Combatting the MenaceThe U.S.A. was the first major country

which initiated legislation in 1970 andbegan to plug some of the loopholes in thebanking system. The Bank Secrecy Act of1970 required all banks to report cashtransactions of more than $ 10,000 per dayand demanded that all individuals takingmore than $ 5,000 in cash across borders,submit currency reports. Still, few bankstook little more than passing notice of thesenew regulations, and some bankers weredelighted to break large deposits into lotso f $9 ,900 to avoid the report ingrequirements. It took 16 years for the U.Sgovernment to crack down on suchavoidance. In 1986, Congress made it aseparate federal crime to avoid thereporting requirements of the BankSecrecy Act of 1970. Moving cash in andout of U.S banking institutions became anincreasingly high-risk operation.

The International Convention (theUnited Nations Convention against IllicitTraffic in Narcotic Drugs and PsychotropicSubstances in 1988) seriously addressedthe need to attack the internationalproblem of drug money laundering and theforfeiture of drug assets. The internationalcommunity resolved to deal with theproblem in an effective manner withcollective will and cooperation. A soundfoundation for a viable internationalmechanism to grasp and control theincreasing menace of drug money was laid.It mandated that all signatory Statescriminalize any activities connected withmoney laundering. Since 1990, when thisConvention came into effect, a largenumber of countries have ratified theConvention. Many States have legislatednew laws, or have amended the existingones, and have introduced regulations toimplement money laundering counter-measures. Some countries have gone a stepfurther and adopted the recommendationsmade by the Financial Action Task Force

of the ‘Group of Seven’ which go beyond thescope of the 1988 Convention. Quite a fewcountries have enacted laws and haveentered into treaties stipulating specificprocedures to facilitate and promotemutual legal assistance, in accordance withthe provisions of 1988 ConventionConcerning Drug Trafficking, moneylaunder ing and assets for fe i tureinvestigations. As a result of joint drugassets forfeiture efforts, countries like theU.S, Canada, U.K, Switzerland, Colombia,Venezuela, Paraguay, Guatemala, CostaRica, Cayman Islands, Argentina, Egyptand Bahamas have shared the value offorfeited assets amounting to about USD$87 million up to December 1993.

The United Nations International DrugControl Programme (UNDCP) in its 1997over-view in the World Drug Report hasobserved the following trends/issues inmoney laundering:

(a) The need to legitimize ill-gotten gainshas grown in proportion to both theexpansion of the illicit drug industryand to the propensity of criminals tooperate in the legitimate businessworld.

(b) Two trends have characterized moneylaundering in recent years. The firsto f t h e s e i s t h e i n c r e a s i n gprofessionalization of the industry.The internationalization of moneylaundering is the second major trend,and has been brought about by twofactors: the integration of financialmarkets into a complex, global,entity; and the efforts by traffickersto avoid detection by concentratingoperations in countries whereenforcement is weak and legislationis absent or embryonic.

(c) The above recent developments innational and international areashave created a favourable climate fordrug traffickers, smugglers, tax

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evaders and other corrupt elementsto launder their ill-gotten proceedsincreasingly through domestic formaland informal financial institutions.The magnitude of the problemindicates that the challenge isformidable, and the responsibilitiesimmense, and if needs an all outeffort from all affected fields tocombat this menace. An integratedenforcement programme whichembraces in its fold not only thearrest of traf f ickers and theinterdiction of drugs, but also theconfiscation of assets as well as anarrest of the growth of moneylaundering, thereby establishingintegrity in financial institutions andthe credibility of the economicsystem.

B. Pakistan ExperienceIn the past, some developments have

created conditions which were conducivefor money laundering in Pakistan. Therewas an exodus of a large number ofPakistani workers abroad in the early1970s who, for sending their foreignremittances to their families, often reliedon non-formal banking facilities orunderground bank-like channels. Later,the same channels were used bybusinessmen and industrialists to taketheir capital/payment abroad due to strictforeign currency regulations; thusspawning a reliable, discreet and illegalalternate banking system which remainedthe preferred mode of banking for criminalelements in Pakistan.

As discussed earlier, large scale domesticheroin addiction created a booming marketwithin Pakistan. A UNDCP studyestimated the market volume at Rs. 35billions (USD $ 1.2 billion). Obviously, thisblack economy created a number of drugbarons, who had to resort to moneylaundering for ‘whitening’ their wealth.

This process was further intensified whenthese drug barons joined hands withinternational syndicates and moneylaundering gained a transnational status.A UNDCP’s report titled “The Illicit OpiateIndustry of Pakistan” estimated the turnover of the Pakistan’s heroin industry tobe 5% of the 1992-3GDP and 20-25% of thetotal estimated ‘shadow’ or ‘parallel’economy. The validity of the UNDCP’sreport estimates were later seriouslyquestioned/contested by Pakistanauthorities and economists. However onething is very clear, that Pakistan’s domesticheroin trade generates considerably largeprofits which are presumed to be launderedby criminals through formal and non-formal banking systems. The studyestimates that drug export revenues wereabout USD$ 950 million in 1985, andincreased to USD$ 1.6 billion in 1990. Drugearnings estimated in 1992 at USD$ 1.8billion include a significant amount ofwithdrawals from overseas bank depositsbuilt up in previous years. Drug earningsaveraged USD$ 1.0 billion in the period1985-91.

Is late 1980s, Pakistan (like many otherresource-deficient, developing countries)had to liberalize the economy throughderegulation, to create a conduciveenvironment of savings and investments.In this regard, the government of Pakistanpromulgated the Economic ReformsOrdinance 1992 to attract foreign exchangeheld by its citizens abroad. Although thislaw was designed to attract illegallystashed foreign exchange back to Pakistan,this law provided protection to the sourceof foreign exchange accounts from beingquestioned by the tax authorities inPakistan. However, law enforcementagencies could still investigate the sourceof such accounts in the case of reasonablesuspicion of involvement of the accountholder in drug trafficking.

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C. Principal Sources of IllegalProceeds

In Pakistan, the main sources of illegalproceeds are as follows:-

(a) Drug Traf f i ck ing : As ear l iermentioned, Pakistan has a veryserious drug abuse problem whichhas spawned a large domestic drugmarket, accruing significantly largeprofits to the drug peddlers and drugbarons. Mainly, it is the proceeds fromthe domestic heroin trade whichforms the major part of moneylaundering in Pakistan. In additionto this, a considerable part of the drugproceeds must be coming from abroadto Pakistan, although most of it findsits way to various tax havens aroundthe world.

(b) Smuggling of Contraband : InPakistan, despite its best efforts toroot out the evil of smuggling,c o n s i d e r a b l e s m u g g l i n g o fcontraband still takes place. Thisusually includes luxury goods,electonic appliances, gun runningand gold smuggling. The proceedsfrom smuggling are one of the majorsources of black money in Pakistan.

(c) Organized Crime: Organized Crimelike gambling, counterfeiting,cheating, car theft, bank robber andabduction for ransom are also sourcesof Pakistan’s black economy.

(d) Criminal Malfeasance in Public andPrivate Sector: Proceeds from corruptpract i ces , f raud or c r iminalmisappropriation in the government/public, commercial, banking andcorporate sectors also contribute toblack economy of Pakistan.

(e) Evasion of Taxes and Duties: Theproceeds acquired by dishonestcitizens/entrepreneurs by avoidingtaxes and duties from various sectorsof economy also contribute toward theblack economy.

D. Principal Money LaunderingMethods

The principal money launderingmethods detected or suspected in Pakistanare as follows:

(a) Hawala/Hundi.(b) Bearer Investment Schemes.(c) Investment and Speculation in Real

Estate.(d) Expenditure on Luxury Goods.(e) Over/Under Invoicing of Imports and

Exports.(f) Bogus Imports/Exports.(g) Loan Bank Methods.(h) Prize Bond Racketeering.(i) Smuggling of Currency.(j) Money Shown as Proceeds of

Agriculture or Poultry.

Among these methods, ‘Hawala’ remainste preferred mode of money laundering inPakistan. Users of Hawala services includenon-resident Pakistanis working abroad,sending hard earned money to their familesback home; parties indulging in criminalactivities ranging from smuggling ofcontraband to al l types of moneylaundering; and organizations having anexus to terrorist activities. Obviously theobjectives of these users are different, whilelegitimate in one case, criminal and evenanti-state in others. Some of the reasonsare:

(a) In case of Pakistani expatriatessending money to Pakistan, thereasons include a time testedconfidential system which is efficientand convenient for the parties at bothends. It hardly involves any formaldocumentation unlike the bankingsystem, which becomes cumbersomefor the semi or un-educated person.The “Hawala” dealer, like a goodbusinessman, also offers a better rateof rupee conversion, being thedifference of the official and theprevailing market rate, which may

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range from 5-10% on account ofhigher demand of hard currencies.Yet another reason is the lack ofbanking facilities in the remote areasfrom where most of the Pakistaniexpatriates hail. Deregulation offoreign exchange controls since 1992(after the introduction of Protectionof Economic Reforms Act in Pakistan)have not affected the preference forthe “Hawala” system on account ofthe aforementioned reasons againstthe formal banking system.

(b) Criminal organizations prefer thissystem for laundering their money, aswell as making payments to theconcerned parties in Pakistan orabroad. Their preference is basicallyon account of the anonymity affordedb y i t d u e t o l i t t l e f o r m a ldocumentation involved, leaving nopaper trail. Obviously the use offormal international bankingsystems for conducting illegaltransactions/trading is fraught withgreat risks of being traced andconnected to unlawful activities, evenat a later stage. The “Hawala” systemtherefore suits the criminal/drugmafia not only for laundering theirdirty money, but also for settlingfinancial claims in connection withtheir illegal trading and smuggling,without running the risk of beingdetected. However, it is pertinent tomention that taking advantage ofbank secrecy provisions, and thea b s e n c e o f s u s p i c i o n / c a s htransactions reporting requirementsin the past, resulted in drugtraffickers also using formal bankingchannels for the transfer of funds.The “Hawala” operators, now, afterthe deregulation of foreign currencyaccounts by Pakistanis and the freemovement of foreign exchange to/outof Pakistan without questioning, aretaking full advantage of the change

in law and policy to promote theirbusiness. Without fear of beingquestioned, they are using foreigncurrency bank accounts opened inlocal banks to receive funds frominterested parties, for payments todesignated parsons in Pakistan.Instances have come to notice wheresome authorized money changers,maintaining foreign currencyaccounts in their own names or someother person, have helped drugtraffickers receive payments of drugmoney from abroad.

(c) An other category of “Hawala” systemusers are the smugglers of consumergoods and arms dealers. On accountof higher tariff rates on importablegoods and restrictions imposed on theimport of arms, the black market ofsmuggled goods keeps the demand forforeign exchange for paymentsabroad constantly at a higher pitch,thus making hard currencies moreexpensive in the currency market, ascompared to the official sources.

E. Relationship Between HawalaSystem & Drug Trafficking/GoldSmuggling.

The Hawala bankers, in addition to largescale money transactions, are alsoindulging in gold smuggling. Reportedly,gold worth billions of dollars was beingsmuggled from UAE, Hong Kong andSingapore into Pakistan and India. Muchof the smuggled gold through this systemcan be linked to narcotics trafficking.Subsequently, liberalization in the goldimportation policy announced by theGovernment of Pakistan in the early 1990swas aimed at reducing the significantcapital affiliated with the Undi or Hawalasystems and to secure foreign exchange.

Presently, Dubai is the main centre forMiddle Eastern and South Asian goldsmuggling networks. Most of the goldimported in Dubai, comes from Swiss

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Banks and metal dealers in London. TheHawala/Hundi systems facilitate the goldtrade and smuggling activities in theMiddle Eastern and South East AsianRegions. According to one estimate, 99percent of gold purchased in Dubai isobta ined through Hundi /Hawalatransactions. It was also reported in anINTERPOL conference held in 1991, thatif gold and silver smuggling in stopped, 80to 90 percent Hundi/Hawala transactionswould automatically cease. Moreover,Hundi/Hawala systems provide the hardcurrency to broker’s need to finance goldpurchases and smuggling operations.

F. Bearer Investment SchemesThe bearer investment schemes,

introduced by the government in the lasttwo decades, conveniently provided theopportunity for exploitation for moneylaundering purposes. These schemes are:

(a) Bearer National Bond Fund (nolonger operative).

(b) F o r e i g n E x c h a n g e B e a r e rCertificates (FEBC).

(c) NIT Bearer Units.(d) WAPDA Bearer Bonds.(e) Bearer Certificates of Investment/

Growth Certificates.(f) Bearer Certificates of Deposits.(g) Foreign Currency Bearer Certificates

(FCBC).(h)Prize Bonds Schemes of various

denominations for Rs. 50, 100, 500,1000 and recently introduced PrizeBonds of Rs. 10,000 and 25,000.

The government was moping up somerevenue from these beasrer investmentschemes by imposing tax ranging from 1%to 7.5%, which may be described as the costof laundering black money. Bearer bonds/certificates found in the possession of drugtrafficker or their associates are still liableto forfeiture under the law.

G. Government of Pakistan’sMeasures to Control MoneyLaundering.

The Government of Pakistan, due to theworsening drug situation, has takenseveral legal, administrative and policymeasures not only to counter moneylaundering but also to forfeit assetsacquired through drug trafficking and thesmuggling of contraband goods. Inpursuance of the 1988 UN Convention, towhich Pakistan was a signatory, theControl of Narcotics Substance Act (CNSA)1997 (previously an ordinance of 1995) waspromulgated, effectively putting animpediment on freely practiced moneylaundering, particularly for drug proceeds.It is the first time that money launderinghas been declared a crime and the reportingof suspicious transactions by the banks andfinancial institutions has been madeobligatory in this substantive law (refer sec.67-69 of the Act). Section 67 (2) providesimprisonment for up to three (3) years ifthere is a failure to supply information. TheState Bank of Pakistan (the Central Bank)has also issued the ‘Required PrudentialInstructions (1989) and Regulations (1992)to the banking sector. In contrast to USAlaws there is no lower limit for reportingsuspicious transactions, which eliminatesthe loophole of breaking the transactionsin smaller parts. The State Bank has alsoagreed, in principal, to bring all types offinancial institutions/corporate sectors,including money changers/stock markets,within the purview of money launderinglaws and regulations. The State Bank hasalready issued guidelines to non-bankingfinancial institutions for preventing theirinvolvement in the money launderingactivities of other unlawful trades.

Regarding money changers, it is relevantto mention that as part of exchange controlreforms, Pakistani nationals and residents,Pakistani companies/firms have beengranted licences to act as authorised money

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changers (AMC). These licences are issuedstrictly in accordance with the procedureand conditions laid down by the StateBank. These conditions aim at makingAMC’s business transparent and forhelping in identifying transactions.

Under section 12 and 13 of the CNSA,acquisition and possession of assets derivedfrom narcotic offenses has been madepunishable with up to 14 years ofimprisonment, plus fine and forfeiture ofdrug money.

Although Pakistan is already extendinglegal assistance to requesting countries forcarrying out investigations in the field ofdrug trafficking/money laundering, theGovernment of Pakistan, included in theCNS Act 1997 a separate chapter onmutual legal assistance. At the momentPakistan has not yet entered into mutuallegal assistance treaties with othercountries.

In 1994, the Government of Pakistandiscontinued Dollar Bearer Certificates inEurope and America for the primaryreasons that these certificates could havebeen conveniently used for moneylaundering.

VI. CONCLUSION

From the above discussions it is clearthat transnational organized crime can notbe fought without developing transnationalcombatting strategies. That is why thisissue has been taken up at the UN ori n t e r n a t i o n a l l e v e l . N u m e r o u sdeliberations have resulted in the presentstate of awareness about this everincreasing menace. Still, the community ofthe world is lacking in its efforts to matchthe advancements being made by cross-country outlaws. We have already seen thatthe UN is just an advisory institution andcan not interfere with the sovereignty of

States. Some recommendations made maybe considered as such interference by someStates, because of their own internalpolitical and financial circumstances.However such states must consider that inthe long run they might be the losers.Pakistan, as we have seen in previoussection, has honoured its commitment toall the international conventions to whichit is a signatory. Enactments/actions mayhave been a bit late, but these are still astep ahead of the international response.The following are worth mentioning inregard to Pakistan:

(a) We have reduced poppy cultivation toalmost “zero”.

(b) Due to the non-production of opium,Pakistan has become an importing(illicit) country to fulfil the demandof its 1.52 million addicts.

(c) Effective crack downs by lawenforcement agencies have compelledthe change of route from Pakistan tothe Central Asian States.

(d) Punishments for drugs have beenmade harsher.

(e) Pakistan is liberal in extraditions. Wehave Extradition Treaties with 25countries, and extradition is stillpossible with non-treaty States.

(f) Special emphasis has been placed onmutual assistance and particularprovisions have been made in thesubstantive/procedural laws.

(g) Laws for the forfeiture of ill-gottenassets are more effective then therequired international standards.

(h) Money launder ing has beenconsidered as a distinctive crime andlegal provision and prudentialregulations have been promulgated.

(i) A fund has been established torehabilitate drug addicts.

(j) Anti-narcotics agencies have beenstrengthened, despite financialrestraints.

(k) Constitution of Special Courts forDrug Offences would go a long way

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for speedy justice.(l) Promulgation of Control of Narcotics

Substances Act 1997 would be alandmark in the control of drugs.

Despite all of the above steps, we stillfeel handicapped in or efforts to combattransnational organised crime. Decreasedpoppy production in Pakistan has beencountered by a reciprocal increase inAfghanistan, which means that there ishardly any difference in supply (except thesource). So we have to concentrate now ondemand reduction. The National Fund forDrug Abuse Control has been set up, butdue to financial restraints, the requiredresu l t s are d i f f i cu l t t o ach ieve .International aid agencies should now takestock of the situation and sufficient fundsshould be provided to augment the Fund.A consortium may be established forcoordinating aid programmes.

A sound foundation has been laid by theVienna Convention of 1998 to build a viableinternational mechanism to control thelarge scale international money launderingof illicit drug traffickers, throughpreventive measures and enforcement bythe forfeiture of drug assets. There ise v i d e n c e t h a t d r u g t r a f f i c k i n gorganizations frequently make use ofterritories of countries:

(a) tha t a re no t par t i e s t o theinternational drug control treaties;

(b) t h a t h a v e f o r m a l l y r a t i f i e dconventions without implementingtheir provisions;

(c) that suffer from civil war, terroristactivities, political instability, ethnicconflict, economic depression or socialtension;

(d) that are not in a position to ensuregovernment control over some partsof their territories; and

(e) that are not able to maintainadequate law enforcement, customs

and pharmaceutical control services.

Drug traffikers also seek out countriesand territories with weak central banks,restrictive bank secrecy practices andlimited control on foreign exchange.

Although there are many extraditiontreaties and mutual assistance agreementsbetween different countries, there are stillpockets where no extradition treaties exist,and the drug pushers make full use of this.Similarly, despite the adoption of modelmutual assistance treaty by the UN, therehas not been a sufficient response from thesignatory countries.

The desired objective of completelystopping money laundering can not beachieved unless a further measure ofrequir ing banking and f inanc ia linstitutions to examine the origin of adeposit , and commercial act iv i tygenerating it, before it is accepted, isuniversally adopted. Illicit funds must bestopped before entering the internationalbanking system.

VII. RECOMMENDATIONS

In the light of the discussion on problemareas, the following recommendations aremade to effectively deal with internationalmoney laundering and the enforcement offorfeiture of drug assets:

(a) There is need to educate and sensitizenational governments to the evileffects of drug money and theuniversal need to combat it by theadoption of stringent countermeasures through domestic policy onmoney laundering, as well as offeringmeaning fu l cooperat i on andassistance to a regulatory body (to beestablished, if not existing) and lawenforcement agencies.

(b) The issue of the lack of universal

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adoption and enforcement of viableanti-money laundering provisions,contained in the UN Convention of1988 and supplemented by therecommendations of Financial ActionTask Force (FATF), must be seriouslyaddressed by all affected nations oft h e w o r l d . A m e c h a n i s m o fpressurizing the non-signatory, aswell as signatory but non conforming,countries through economic andfinancial sanctions should bedeveloped and adhered to as a matterof policy under the umbrella of theUnited Nations. One such actioncould be black listing the defaultingnations/banks and withholdinginternational loans/aid to them; inaddition to stopping the handling ofany transactions originating orpassing through black listed nationswhose banks are prepared to handleillegally accumulated funds. Thesepressures could be applied by the loangiving countries, with the blessing ofthe United Nations.

(c) In order to ensure uniform andregular enforcement of various anti-money laundering provisions in thebanking, financial and commercialsectors, there is need to create a truemulti-national banking, financial andcommercial regulatory body. Thisbody should be empowered to inspectand ensure compliance of the variousc o u n t e r - m o n e y l a u n d e r i n gprovisions. Within each country alsoan effective central body comprisingof banking experts, charteredaccountants and law enforcementpersonnel should be charged with theresponsibility of inspecting andensuring the implementation of thevarious anti-money launderingprovisions adopted under the localstate laws.

(d) Equally important is the pressurefrom the client countries and

important depositors in internationalbanks, who must insist that they willnot do business with instututionsthat fail to adhere to the new toughinternational reforms on examiningmoney sources.

(e) Law enforcement agencies operatingin countries who are just beginningto in i t ia te asse ts f o r fe i tureinvestigation, under newly enactedlegislation, lack the necessaryexpertise. Extensive trainingprogrammes covering intelligencegathering, financial investigationtechniques involving local and foreignjurisdictions, and prosectutionaspects must be init iated incooperation with the UNDCP ando t h e r s u c h i n t e r n a t i o n a lorganizations. The launching of jointfinancial drug assets investigationsby various national law enforcementagencies, for better cooperation andco-ordination to trace drug assets forforfeiture, could prove to be veryrewarding, especially for the lessexperienced enforcement agencies.

(f) Regular exchange of intelligencereports/data on transnational drugcartels, their modus operandi andtheir money laundering networksshould be ensured.

(g) An international fund of forfeiteddrug assets may be set up, which mayreceive fixed percentage of allforfeited assets from all concernedcountries. This fund should beutilized to:

• d e v e l o p w e l l r e s e a r c h e di n t e l l i g e n c e d a t a b a s e o ninternational drug trafficking andmoney laundering organizations,their assets, bank accounts andother relevant information ontheir criminal activities;

• t o s e t u p a n e f f i c i e n tcommunications network between

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drug enforcement agencies in allcountries, to enable them to makeuse of this database in their dayto day operational work;

• to design and conduct variouscourses at the regional level forimproving the professional skillsof the intelligence, investigativeand prosecution personnel of thelaw enforcement agencies.

APPENDIX A

CASE NO. 1 - RECOVERY OF6660 KG HASHISH AT ANTWERP,

BELGIUM (AUGUST, 1996)5980 KG HASHISH AT ISLAMABAD

(AUGUST, 1997)

In August 1996, customs officials ofBelgium confiscated a container sent fromKarachi containing household effects fromwhich 6660 Kg hashish was recovered. Thehashish was hidden in the personal luggageof an Egyptian diplomat, MuhammadSalah Sadiq, who was transferred fromIslamabad. The luggage was being shiftedto Switzerland, where the daughter of thediplomat was residing. The informationwas received by the Government ofPakistan through the Drug EnforcementAgency of USA. The Anti-Narcotics Forcestarted the enquiry discreetly. It came tonotice that the consignment was sent byone Kamran Gul, Managing Director ofTotal Cargo Company, Islamabad. Onreceiving the information of the hashishcapture in Belgium, Kamran Gulregistered a report in a Islamabad policestation stating that the documents relatingto the container were stolen and some otherperson, misusing those documents, shippedthe container. Infact the report wasregistered by Kamran Gul to save himself.Kamran Gul had actually sent the hashish,after proper plannning, taking advantageof diplomatic immunity. His gang wasoperating transnationally and the followingpersons were the members of his gang:

i) Mehmat: He is a resident of Turkey andalso holds citizenship of Holland. Hewas the financier of the gang. He cameto Islamabad and stayed at the HolidayInn Hotel where he settled thesmuggling details.

ii) Kamran Gul: He was the ManagingDirector of Total Cargo Company who,along with his two workers Gul AfsarKhan and Mohsin Khalid, arranged thepacking and subsequent despatchthrough the company.

iii) Muhammad Javed Baig: He belongs toPeshawar and procured the hashishfrom Afghanistan. He also arranged itssafe transit from Afghanistan toIslamabad.

iv) Arshad: He is a Pakistani and wasliving in Holland. He was the organizerof this narco-gang.

The Anti-Narcotics Force of Islamabadkept close watch on the activity of KamranGul secretly. It came to notice that KamranGul was again trying to despatch a largequantity of hashish in the personal effectsof some diplomat. After 7 to 8 months ofsurveillance, 5980 kg hashish wasrecovered from his wharehouse inIslamabad which was kept in 46 bluecoloured plastic drums. The Anti-NarcoticsForce registered the case and Kamran Gul,Gul Afsar and Mohsin Khalid werearrested. The case has been sent to courtfor prosecution, where it is still pending.Muhammad Javed Baig absconded, whilerequests have been made to Turkish andDutch Governments for the arrest ofMehmat and Arshad. After the arrest ofKamran Gul it was disclosed that thehashish was brought from Afghanistan inthe “Ilaqa Ghair” (Tribal Area), from whereit was transported to Islamabad through aspecially made oil-tanker. The hashish waskept in a warehouse for three months. Thewarehouse was obtained at a monthly rentof USD$ 1000. The consignment was again

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shifted to another (lower rent) premisesfrom where it was recovered.

APPENDIX B

CASE NO.2 - RECOVERY OF 26 KGHEROIN FROM ISLAMABAD

INTERNATIONAL AIRPORT ANDHOLIDAY CROWN PLAZA HOTEL,

KARACHI

The proverb “where there is will, thereis a way” was proved right by the Anti-Narcotics Force when, in November 1996,26 Kgs of heroin was seized from IslamabadInternational Airport and the HolidayCrown Plaza Hotel, Karachi. As a result ofthe seizure, three African nationals,belonging to the Sudan and Zaire, werearrested. The ring leader was a Sudanesenational, based in Nairobi, by the name ofTariq Hji Idris. The others, a woman, HulluKyamuno and a man, Ali Kaita, were justcarriers who were promised USD $ 2000for the successful trip, excluding hotel stayand air tickets. Mr Ali Kaita was travelingon a forged Zairian diplomatic passport andan interesting aspect was that the passportwas in the name of a lady, Isankunya Fitila,which was written in French and theImmigration Officials at the Airport werenot able to discern that it was a femalename. Once Mr Ali Kaita arrived atIslamabad International Airport to fly toKarachi, he was accompanied by Tariq HajiIdris. When Tariq Hji Idris sensed danger,he left Ali Kaita and boarded the flight forKarachi. Later 13 Kgs of Heroin wasrecovered from the suitcase of Ali Kaita.Ms Hullu who had come to airport earlier,successfully boarded the aircraft along withthe drugs. Ali Kaita was interrogated onthe spot and he disclosed that Tariq HajiIdris had given him two suitcases and hedid not know what was in it. One thisinformation, the ANF and ASF (Karachi)were alerted. The moment Tariq Hajilanded at Karachi Airport he was taken

into custody by ASF and handed over toANF Karach. Search of his person led tothe recovery of USD$ 22,000. By then, ANFKarachi and ANF Islamabad had noknowledge of Ms Hullu being third memberof the gang. Mr Tariq Haji was laterb r o u g h t t o A N F I s l a m a b a d f o rinterrogation. It was during the course ofinterrogation that Ali Kaita and Tariq Hajidisclosed information about Ms Hullubeing their third partner. It was too late toarrest Ms Hullu as quite some time hadlapsed in the interrogation process, and itwas expected that Ms Hullu, along with thedrugs, must have left the country. Anyway,an effort was made by ANF to trace herand an officer was sent to karachi to findMs Hullu. While going through the FIAimmigration record, it was learnt that MsHullu had left the country a few days prior.The investigating officers traced the lastaddress of Ms Hullu in Pakistan, whichwas the Holiday Crown Plaza Hotel,Karachi. On reaching the Hotel it wasfound that the woman left behind two largesuitcases and had told the HotelAdministration that she would bereturning to collect them later. The twosuitcases were taken into custody andbroke open by ANF officers in the presenceof the Hotel staff, and another 13 Kgs ofHeroin was found. The hotel staff wereinstructed to inform ANF wheneversomeone came and asked for the suitcases.Suddenly, after a few weeks, the Hotel stafffound Ms Hullu asking for suitcases. Shehad come back from Nairobi, along withher boyfriend, to get them. She wasarrested and sent to jail. The boyfriendhowever, was not found to be involved inthe drugs business and was thereforereleased.

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Heroin�Cocaine�Opium derivative�Coca derivative

Drug�Type

0

0-2 Years with fine

10g

100g

200g

1000g�(1kg)

Quantity�of Drugs�Recovered�(not to scale)

Opium�Coca leaf�Other psychotropic�substances

Any other narcotic�drug or controlled�substance not�otherwise specified

3-7 Years with fineDeath or life term with fine�of Rs.1 million or more

TABLE 1

PROGRESSIVE PUNISHMENTS ACCORDING TO THE CONTROL OFNARCOTICS SUBSTANCES ACT 1997.

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F.C�N.W.F.P

Coast�Guards

Ministry�of�

Interior

Ministry�of Narcotics�Control

A.N.F

F.I.A

A.S.F

F.C�Balochistan

Ministry�of�

Defence

F.C

Rangers

Ministry�of�

SAFRON

C.B.R

Customs

Ministry�of�

Finance

PROVINCIAL GOVERNMENTS

PoliceExcise &�Taxation

Political Levies�Khasadar Force

A.S.F Airport Security Force

A.N.F Anti Narcotics Force

C.B.R Central Board of Revenue

F.C Frontier Constabulary/Frontier Corps

F.I.A Federal Investigation Agency

N.W.F.P North West Frontier Provance

SAFRON States & Frontier Regions

TABLE 2

GOVERMENT OF PAKISTAN

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