Indian investigating agencies dealing with money laundering and related crimes are yet to follow up on the leads provided by US agencies on the money-laundering operations of Dawood Ibrahim, Lashkar-e-Tayyaba and Jaish-e-Mohammad. The United States had provided the leads after arresting a Pakistani money launderer, Altaf Khanani, in September 2015. A Florida district court sent Khanani to prison for 68 months, earlier in April. According to the US State Department, Khanani was laundering money for Dawood, LeT and JeM. Last month, the State Department of the United States, which released its 32nd international narcotics control strategy report, said that there was a lack of follow up by the “Indian counterparts” on leads that were shared with them by the US officials.
This observation has assumed importance because the State Department, in the same annual report that was released last year, had said that the Altaf Khanani money laundering organisation (Khanani MLO) was involved in the movement of funds for the Lashkar-e-Tayyiba, Dawood Ibrahim, Al-Qaeda, and Jaish-e-Mohammed. Khanani MLO is a transnational organised crime group based in Pakistan, laundering billions of dollars in organised crime proceeds annually.
The US State Department said in its report, which was released last month, that the “U.S. investigators have had limited success in coordinating the seizure of illicit proceeds with Indian counterparts. While intelligence and investigative information supplied by U.S. law enforcement authorities have led to numerous money seizures, a lack of follow-through on investigative leads has prevented a more comprehensive offensive against violators and related groups. India is demonstrating an increasing ability to act on mutual legal assistance requests but continues to struggle with institutional challenges, which limit its ability to provide assistance”.
The report said although the 8 November demonetisation exercise addressed the problem of counterfeit currency, it did little to mitigate the long term money laundering risks. The report said India is one of the top four sources of illicit financial outflows, primarily based on trade based money laundering (TBML) and abusive trade mis-invoicing.
“The most common money laundering methods include opening multiple bank accounts to hide funds, intermingling criminal proceeds with licit assets, purchasing bank checks with cash, and routing funds through complex legal structures. Transnational criminal organizations use offshore corporations and TBML to disguise the criminal origins of funds, and companies use TBML to evade capital controls. Illicit funds are sometimes laundered through real estate, educational programs, charities, and election campaigns. Laundered funds are derived from narcotics trafficking, trafficking in persons, and illegal trade, as well as tax avoidance and economic crimes”, it said.
The Financial Intelligence Unit (FIU) is the nodal national agency responsible for receiving, processing, analysing and disseminating information relating to suspect financial transactions in India. The FIU, which reports directly to the Economic Intelligence Council (EIC) that is headed by the Finance Minister, is also responsible for coordinating and strengthening efforts of national and international intelligence, investigation and enforcement agencies in pursuing the global efforts against money laundering and related crimes.