Pakistan madrasas fund jihadists from illegal trade: Experts

The long-anticipated purge, a concerned over the practice, Congressman Stephen F Lynch said trade-based money laundering (TBML) involves using trade and products or commodities for value in order to divert and obscure the true nature of the illicit wealth. 

John Cassara, former US Intelligence Officer and Treasury Special Agent, told a Congressional hearing that in one example of TBML and terrorist financing, a Pakistani madrassa was linked to radical jihadist groups and it received large amounts of money from foreign sources. “It was engaged in a side business dealing in animal hides. In order to justify the large inflow of funds, the madrassa claimed to sell a large number of hides to foreign customers at grossly inflated prices. This ruse allowed the extremists to ‘legitimise’ the inflow of funds which were then passed to terrorists,” Cassara said. 

According to World Bank and IMF estimates, unofficial remittances could be well over $1 trillion as against the World Bank estimates that global remittances through official channels will reach $707 billion by 2016. 

Nikos Passas, professor of criminology and criminal justice at Northeastern University’s College said, “In Mumbai, the attacks of Mumbai and the Indian parliament — those cases were solved because of hawala collaboration. In Dubai, the Dubai police and D A made a big money laundering case with trade because of hawala information,” Prof. Passas said in response to a question from Lynch, who is also a ranking member of the Committee. 

Cassara said he believes trade-based money laundering is a major problem. “But it depends on the part of the world you’re talking about. Certainly, if you’re talking about South Asia, you’re talking about Afghanistan, Pakistan, the Afghan Transit Trade, it’s absolutely huge,” he said.