What is Money-Laundering and how to curb other financial crimes

Money laundering is the one of most widely committed crimes in Pakistan due to the lack of proper infrastructure to curb it. which is why Pakistan is currently on the grey list of FATF.

Definition of Money-laundering
The Conversion of property, knowing that such property is derived from any { Drug Trafficking} offense or offenses or from an act of participation in such offense or offenses, to conceal or disguise the illicit origins of the property or of assisting any person who is involved in the commission of such an offense/offenses to evade the legal consequences of his/her action.

some background on FATF, money laundering, and Terror financing.

Both are interlinked because of their nature, Terror financing usually comes from money laundering because, in money laundering, There would be no source of funds, as no traces of its origin. In other words, money laundering is an illegal method of creating wealth through criminal means. Terrorist organizations need sources that can be concealed and could go undetected and for that reason, money-laundering is a major way to do that. FATF (Financial Action Task Force) is the global body that monitors worldwide money-laundering and terror financing and ranks countries accordingly how they have been improving their institutions to curb both, it found a major flaw in Pakistan's managing of terror financing and put it in grey list and recommended some measures. For instance, it recommended Pakistan improve its legislative flaws, lack of coordination among state and provinces, and strengthen concerned institutions.

 

Pakistan has been evolved various mechanisms to curb the ongoing rapid expansion of money-laundering in specific terms and financial crimes in wider perspectives but unfortunately it has not achieved significant success in terms of handling the financial crimes which ultimately benefits the organizations within Pakistan and out Pakistan which causes harm to its security and peace. According to some estimations, Pakistan is facing serious challenges due to money laundering, hawala Hundi and other financial crimes in terms of social unrest, such as poverty, increasing violence and crimes in-country, government institutions throughout recent years had put extra efforts to end the illegal activities from the country to end the menace of financial crimes and the said efforts somehow proved fruitful and lead to the somewhat reduction in financial crime after the crackdown by the institutions on traffickers in border areas. But it is not a long-term solution, it will create resistance for the traffickers and money-launders but it is not going to help in long term perspective because it lacks sustainable and systemic countering approach. Pakistan is willing to counter or curb various financial crimes such as money-laundering, terror financing, and corruption but lack of institutional structure to deal in systematic is the major fault line in response.

For curbing the money-laundering, it is imperative to first curb the source of origin of illicit wealth such as,

Drug Trafficking

Human Trafficking

Weapon smuggling

Local Criminal activities which help gangs to generate wealth

After countering the source of origin of illicit wealth, Pakistan then has to build robust institutional infrastructure with well-equipped techs and tools and be free from any influence. This would ensure that the free-roaming and commission of financial crimes by the criminals would become almost rare. Legislation in this regard is also important because without the proper, efficient, and well-defined legislation no institution will work efficiently.