Convicted Money Launderer Altaf Khanani Had Close Ties to Top Pakistani Politicians

Convicted money launderer Altaf Khanani and his patrons among Pakistani politicians appear to have brought FATF's attention to Pakistan when the country was first put on its grey list back in 2012. A new national financial crimes bill was introduced by the ruling Pakistan People's Party which was so full of holes that a senior FIA official complained publicly it was "drafted by a money-launderer".  Khanani is believed to have moved over $12 billion a year of dirty money through Pakistani banking system. Altaf Khanani's 2015 conviction on money laundering charges by a US court and recent FinCEN files confirm that Khanani was a big time international criminal. Khanani has recently been released after serving a 5 year sentence in a US jail. His current whereabouts are unknown.  Pakistan was removed from FATF grey list in 2015 but it was back on it again in 2018. 


Pakistan on FATF Grey List

Who is Altaf Khanani?

Altaf Khanani is a member of Karachi's memon business community. Along with his twin brother Javed, he started their money-changing business under the name of Khanani and Kalia Inc (KKI) in 1984. By the 1990s, more foreign currency was passing through KKI than the banking system of Pakistan! By 1997 many governments were looking into KKI’s network but the twins were close to Pakistan's ruling elite. In 2008, Khanani brothers were charged with money laundering in Pakistan but later exonerated due to lack of evidence. FIA's appeal against their acquittals were rejected by the Sindh High Court as recently as 2019. However, a US court convicted Altaf Khanani of money laundering in 2015 and sentenced him to 5 years in jail. His brother Javed died in mysterious circumstances in 2016.  His death was labeled as suicide.  KKI partner Munaf Kalia now lives in Karachi. Altaf has recently been released from a US prison after serving his 5 year term. His whereabouts are unknown. 

US Report:

A 2017 US State Department report labelled the Altaf Khanani group as a money laundering organization (MLO) and said it laundered billions of dollars of dirty money. 

The 2017 US report said: “The Altaf Khanani money laundering organization (Khanani MLO) is based in Pakistan. The group, which was designated a transnational organized crime group by the United States in November 2015, facilitates illicit money movement between, among others, Pakistan, the United Arab Emirates (UAE), United States, UK, Canada, and Australia.” “There is a substantial demand for money laundering and illicit financial services due to the country’s black market economy and challenging security environment,” the report added. 

Australian Report: 

In 2007 and 2008 alone, Khanani's company  Khanani and Kalia's official banking records showed the company handled $2.3 billion, according to the Australian Federal Police. David Stewart, an assistant commissioner of Australian Police, said the Khanani's hawala-based operation was "turning over between 14 and 16 billion US dollars annually".

Pakistan FIA: 

In 2008, Pakistan's Federal Investigation Agency (FIA) alleged  that Khanani's company had illegally siphoned $US10 billion out of Pakistan. But few among the ruling politicians seemed to want to see the case proceed. "For fear of their own identities being revealed," Dawn newspaper columnist Khurram Husain said, "a very wide spectrum of very powerful interests mobilized in order to try and protect these [KKI] people." 

In 2010, a critical affidavit omitted the names of the very KKI directors who had been originally arraigned, according to ABC News. A new national financial crimes statute was introduced by the ruling Pakistan People's Party which was so full of holes that a senior FIA official complained publicly it was "drafted by a money-launderer". In 2012, a specially convened banking court acquitted the eight company officials, and in 2013, Altaf Khanani was also exonerated by the District and Sessions Court in Karachi.

Chaudhry Nisar:

In 2016, Pakistan's then Home Minister Chaudhry Nisar Ali Khan accused the Pakistan People's Party of being hand-in-glove with Khanani. He said: “During the tenure of the previous government, PPP officials had massively laundered money with the help of one of the biggest money changers, Khanani and Kalia, and later destroyed the evidence". 

“Billions of rupees had been laundered by the currency dealer in connivance with people in the then government. On the direction of ‘these people’ the record had been destroyed and now I am looking for this record,” Nisar added.


British Crime Agency Report:

In its 2018 annual assessment of serious and organized crime, the British National Crime Agency named Pakistan among the top 3 sources of money laundering. It said: “Investment in UK property, particularly in London, continues to be an attractive mechanism to launder funds....As the UK moves towards exiting the EU in March 2019, UK-based businesses may look to increase the amount of trade they have with non-EU countries....We judge this will increase the likelihood that UK businesses will come into contact with corrupt markets, particularly in the developing world, raising the risk they will be drawn into corrupt practices.”

Here are some of the key excerpts of the UK NCA report titled "National Strategic Assessment of Serious and Organized Crime 2018":

1. "The UK is a prime destination for foreign corrupt PEPs (politically exposed persons, a euphemism for politicians and their family member) to launder the proceeds of corruption. Investment in UK property, particularly in London, continues to be an attractive mechanism to launder funds. The true scale of PEPs investment in the UK is not known, however the source countries that are most commonly seen are Russia, Nigeria and Pakistan".

2. "The overseas jurisdictions that have the most enduring impact on the UK across the majority of the different money laundering threats are: Russia, China, Hong Kong, Pakistan, and the United Arab Emirates (UAE). Some of these jurisdictions have large financial sectors which also make them attractive as destinations or transit points for the proceeds of crime." 

End UK Safe Haven:

 Some have called London the "Money Laundering Capital of the World" where corrupt leaders from developing nations use looted wealth from their people to buy expensive real estate and other assets. Private individuals and businesses from poor nations also park money in the west and other off-shore tax havens to hide their incomes and assets from the tax authorities in their countries of residence.

Daniel Bruce, the head of Transparency International UK, has recently called on the British government to act against corrupt politicians who have found safe haven in London. Here's what he told the Financial Times:  “Foreign politicians with convictions relating to corruption should not enjoy impunity in Britain. Nor should their unexplained wealth, stashed in luxury London properties, fall out of the reach of law enforcement. The UK government should work constructively with democratic countries such as Pakistan to uphold the rule of law. Action should also be taken to seize and return illicit assets held here in Britain in order to deliver justice for the victims of corruption. Failure to act on cases such as this, earns the UK an unwelcome reputation as a safe haven for dirty money.”

Terror Financing: 

FATF may have been used against Pakistan as a political tool of the imperial powers. It may turn out to be a blessing in disguise to help document Pakistan's vast underground economy, cut rampant financial corruption and reduce widespread tax evasion. The loopholes in laws and systems that permit money laundering are used by corrupt politicians, businessmen and the terrorists alike. FATF is asking for these loopholes to be closed. Closing these loopholes will help Pakistan's economy and help fight terrorism at the same time. Recent anti-AML legislation passed by Pakistan's parliament is good start.

Summary:

Pakistan first came on the radar of the Financial Action Task Force (FATF) in 2008 when reports emerged that Altaf Khanani, Pakistani foreign exchange dealer, was moving over 12 billion US dollars a year of dirty money from Pakistan via Dubai. Pakistan's Federal Investigation Agency (FIA) filed charges against him that did not result in conviction when powerful politicians ordered key evidence destroyed. Later, a new national financial crimes bill was introduced by the ruling Pakistan People's Party which was so full of holes that a senior FIA official complained publicly it was "drafted by a money-launderer". As a result, the FATF decided to put Pakistan on its grey list in 2012.  Altaf Khanani's 2015 conviction on money laundering charges by a US court and recent FinCEN files confirm that Khanani was a big time international criminal. His brother and business partner Javed died in mysterious circumstances in 2016. Javed's death was ruled as suicide.  KKI partner Munaf Kalia now lives in Karachi. Altaf has recently been released from a US prison after serving his 5 year term. His whereabouts are unknown. Pakistan was removed from FATF grey list in 2015 but it was back on it again in 2018. 

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Comments

Shams N. said…
Really - so it was out of FATF in 2015 and back in 2018 when Khanani was in jail, Zardari and Nawaz were out, AH was out, and IK was in power.

Thanks to IK, all money laundering is now being done inside Pakistan through "construction projects" on Sindhi islands stolen by Punjabi federal government.

One of these days you will understand the crap you publish without thinking, investigating, or cross verifying.
Moin A. said…
A good report. Good Investigation by you.

However, I am concerned about development on Sindhi islands and like Shams I am against Malik Riaz’s schemes. Malik Riaz has convinced the government to ignore the delicate ecology and environment of the Sindhi Islands so he can make a lot of money by developing new cities.

I think one of the Kalia brothers was an NEDian.
Riaz Haq said…
Shams: "Really - so it was out of FATF in 2015 and back in 2018 when Khanani was in jail, Zardari and Nawaz were out, AH was out, and IK was in power."

The problem goes back to Zardari years when PPP politicians laundered billions of dollars under a legislation that an FIA official said was "drafted by a money launderer".

In 2017, FATF gave the PML N government a list of 27 actions required to stay off the grey list.

When they failed to act on it, Pakistan ended up on the grey list in June, 2018. The PTI government has now satisfied FATAF on 21 of the 27 items, including strong anti money laundering legislation, and managed to keep the country off the black list.
VM said…
FATF is not that bad after all for all the Corrupt countries. FATF should not be used as a tool in the hands of imperial powers to enforce their agenda on the weaker states but should be used to help the countries to get on the right track.
Riaz Haq said…
VM: "FATF is not that bad after all for all the Corrupt countries. FATF should not be used as a tool in the hands of imperial powers to enforce their agenda on the weaker states but should be used to help the countries to get on the right track"

FATF may have been used against Pakistan as a political tool of the imperial powers. I hope it turns out to be a blessing in disguise to help document Pakistan's vast underground economy, rampant #corruption and widespread #tax evasion. Recent anti-AML legislation is good start.
Riaz Haq said…
This is Hard Talk not Capital Talk, Ishaq Dar gets butchered on #Pakistani Twitter. Ex-finance minister feels the heat in #BBC interview with Pakistani trolls ready to pounce. #IshaqDar #Pakistan #PMLN #NawazSharif #Corruption | The Express Tribune


https://tribune.com.pk/story/2274249/this-is-hardtalk-not-capital-talk-ishaq-dar-gets-butchered-on-pakistani-twitter


BBC journalist Stephen Sackur is known for grilling his guests on his show 'HardTalk and former finance minister Ishaq Dar was no exception as he was posed with hardhitting questions.

Soon after the interview was aired snippets were widely shared on Pakistani Twitter Dar answering Sackur's questions with #IshaqDar and #StephenSackur becoming the top trends in the country.

One Twitter user said that Dar expected the interview be like Pakistani journalist Hamid Mir's 'Capital Talk', however, he the PML-N leader was in for a rude awakening.

Journalist Shiffa Yousafzai drew attention to Sackur telling the former minister that "Nawaz Sharif worked hand in glove with Zia ul Haq and now the PML-N is complaining about military interference in politics".

Yousafzai added that the journalist interviewing PML-N vice-president would be "interesting"

Even the BBC journalist himself wrote on his Twitter handle that his interview had caused quite a stir in Pakistan.

The interview

Dar said PML-N supremo Nawaz Sharif is struggling for democracy and supremacy of the parliament in Pakistan and the current government is a form of 'judicial martial law'.

The now absconding former minister said he does not accuse the army, as an institution, of undermining the democratic process in Pakistan but stated that "it is the will and plan of some people, the same people who enforce martial law in Pakistan".

When Dar was asked if the army or the army chief were undermining democracy, he said that the PML-N is not alone and international reports also have said the same. "I am not talking about the entire institution, we need to differentiate. These are the wishes and plans of certain people, the same people who enforce martial law in Pakistan."

"We are saying that if the elections were rigged, and this has now been proven, without doubt, someone is planning the entire thing. This is not us saying it, but the interior minister of Pakistan said that if Nawaz Sharif did not have issues with the institutions and the deep state, he would have become prime minister for the fourth time."

When asked if he had come to London seeking refuge as he is an absconder in Pakistan, the former finance minister said corruption allegations have been used repeatedly in the country's history and in the present circumstances, the current government is a "judicial martial law".


Riaz Haq said…
Perceptions of Government
Accountability in Pakistan

Most likely outcome if a high-ranking government officer is caught embezzling public funds.

https://worldjusticeproject.org/sites/default/files/documents/Thematic%20Infographics.pdf
Riaz Haq said…
#US says #Pakistan has made significant progress on #FATF's first action plan. #Islamabad has managed to avoid the 'black list', for which it needs the support of 3 countries. #China, #Turkey & #Malaysia have been its consistent supporters. https://in.news.yahoo.com/us-says-pakistan-made-significant-002053427.html?soc_src=social-sh&soc_trk=tw&tsrc=twtr via @YahooIndia

Washington, Jul 20 (PTI) Pakistan has made significant progress on its first action plan of the Financial Action Task Force (FATF) by largely addressing 26 of the 27 action items, the US has said.

It has also urged Pakistan to swiftly complete the remaining action item by demonstrating that terrorism financing, investigations and prosecutions target senior leaders and commanders of UN-designated terror groups.

At its virtual plenary meeting last month, the FATF had retained Pakistan on its 'grey list' for failing to check money laundering, leading to terror financing. It had also asked Pakistan to investigate and prosecute UN-designated terrorists based in the country like Jaish-e-Mohammad (JeM) chief Masood Azhar and Lashkar-e-Taiba (LeT) founder Hafiz Saeed.

The global body against money laundering and terror financing had also asked Pakistan to work to address its strategically important deficiencies.

At his daily news conference on Monday, State Department spokesperson Ned Price said, 'We do recognise and we support Pakistan's continued efforts to satisfy those (first action plan) obligations. Pakistan has made significant progress on its first action plan with 26 of 27 action items largely addressed.' 'We encourage Pakistan to continue working with the FATF and the international community to swiftly complete the remaining action item by demonstrating that terrorism financing, investigations and prosecutions target senior leaders and commanders of UN-designated groups,' he said.

In response to a question, Price said the US encourages Pakistan to expeditiously work on its new second action plan.

Pakistan was placed on the 'grey list' by the FATF in June 2018 and was given a plan of action to complete by October 2019. Since then the country continues to be on this list due to its failure to comply with the FATF mandates.

With Pakistan's continuation on the 'grey list', it is increasingly becoming difficult for the country to get financial aid from the International Monetary Fund, World Bank, Asian Development Bank and the European Union at a time when it faces a precarious financial situation.

Islamabad has managed to avoid the 'black list', for which it needs the support of three countries. China, Turkey and Malaysia have been its consistent supporters. PTI LKJ DIV DIV
Riaz Haq said…
India's admission on FATF politicisation vindicates Pakistan's stance: FO

https://www.dawn.com/news/1635854/indias-admission-on-fatf-politicisation-vindicates-pakistans-stance-fo

A day ago, India's Minister for External Affairs S Jaishankar said the Bhartiya Janata Party (BJP) government led by Narendra Modi ensured that Pakistan remained on the 'grey list' of the Financial Action Task Force (FATF), Hindustan Times reported.

“Due to us, Pakistan is under the lens of FATF and it was kept in the grey list," Jaishankar was quoted as saying while addressing a virtual training programme on foreign policy for BJP leaders.

He added: “We have been successful in pressurising Pakistan and the fact that Pakistan's behaviour has changed is because of pressure put by India by various measures.”

During the session, the minister also credited the Indian government’s efforts "through the United Nations" for sanctions on proscribed organisations such as Lashkar-e-Taiba and Jaish-e-Mohammed, according to the report.

FATF assessment of Pakistan
The FATF had on June 25 announced that Pakistan will continue to remain on the watchdog's "increased monitoring list" till it addresses the single remaining item on the original action plan agreed to in June 2018 as well as all items on a parallel action plan handed out by the watchdog's regional partner — the Asia Pacific Group (APG) — in 2019.

---------

The Foreign Office (FO) said on Monday that the Indian foreign minister's statement that the Narendra Modi government had ensured Pakistan remained on the Financial Action Task Force (FATF) grey list had vindicated Pakistan's longstanding stance on "India's negative role" in the global financial watchdog.

The FO said the India foreign minister's statement had exposed India's "true colours" and "duplicitous" role.


"Pakistan has always been highlighting to the international community the politicisation of FATF and undermining of its processes by India. The recent Indian statement is just further corroboration of its continued efforts to use an important technical forum for its narrow political designs against Pakistan.

"While Pakistan has been sincerely and constructively engaged with FATF during the implementation of the action plan, India has left no stone unturned in casting doubts on Pakistan’s progress through disgraceful means," said the FO statement.

It said Pakistan would continue exposing India's role to the international community by bringing the recent "confession" to the FATF's and international community's notice.


It added that Pakistan was also considering approaching the financial watchdog for "appropriate action" in the matter.

"Following the recent confession by [the] Indian government, India’s credentials for assessing Pakistan in FATF as co-chair of the Joint Group or for that matter any other country are subject to questions, which we urge FATF to look into," the statement said.

The FO said Pakistan's "immense progress" in Anti-Money Laundering/Combating the Financing of Terrorism (AML/CFT) had been demonstrated through "concrete, tangible and verifiable actions" that were acknowledged by FATF.

"We are resolved to sustain this momentum and trajectory with the support and cooperation of our international partners. India’s delusions of putting pressure on Pakistan have always remained unfulfilled and would never see the light of day.

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