Curb terrorism financing now

The Prime Minister has formed a subcommittee headed by Finance Minister to choke the funding channels of terrorism financing. The situation has, therefore, underscored the need for offering insights into debates about how terrorist organizations are being financed and how money is making its way into the hands of militants, particularly Tehrik-e-Taliban Pakistan (TTP). This is a good development as finally the authorities have some realization of putting brakes on one of the key drivers of terrorism. But the focus is still not on the right channels to curb the sponsor money coming to the organizations that run terror operations.
Commercial banks and the central bank cannot be of much help in tracing the tons of money, human resource and equipment flowing into the country. As rarely, a formal channel is used to transfer funds for various factions of militants. And beyond the formal segment of economy, banking system doesn have tools to trace the flows.
The onus rather lies on FIA, IB, police, customs and other spy and government agencies to keep their eyes open. There are number of foreign spy agencies directly and indirectly running proxy war on our turf and the cash circulated by them is perceived to have close linkages with militant activities.
CIA is on the top of them, and analysts fear that piles of hard cash are bought in by the VIPs to run their covert operations. There are number of incidents of finding under-cover agents doing suspicious activities across the country. The foreign office has to be strong and ought to back the customs and FIA to check indiscriminately any amount of cash being brought by anyone.
Apart from direct cash coming into the country through air routes, the porous Pak-Afghan border is paving way for easy flow of money into the country through Afghanistan. Its really hard to track the long culturally-mingled border as not only cash but much of the weapons and other gadgets find the way in Pak land through Afghanistan or Iran borders.
No wonder, the flurry of dollars in KP is impacting the currency trade in the open market as usually rupee to dollar parity is stronger in Peshawar than in the rest of the country. With the regions contribution to the formal economy much less than its share in trade in foreign currency, one may ponder, who else than militants, drug lords and smugglers are operating in the region?
Apart from hard cash, Hundi or Hawala system is also funding a bit of these activities. But since that system does not involve cash coming in or out of the country, it cannot be a main source of oversupply of foreign currency in KPK. The informal currency exchange usually runs two books say one in Peshawar and the other in Dubai, so its not easy to trace its exact source. Nonetheless, that system has been in use even before the banking system and has been deployed by people working abroad to send remittances home.
The banking system is working hard through various initiatives to incentivize people to use legal channels to remit money back home and has had some success in doing so. Let these efforts to continue and keep on discouraging people to use informal channels as much as they can. But that is not at all enough to eradicate terrorism financing.
Then there is a domestic element of directly and indirectly financing terrorists activities and that is based on ideological grounds.
There are foreign elements from the Middle East, especially, Saudi Arabia, the UAE and Iran, to run a number of madrassas. As such, the foreign office needs to take up this matter seriously with our friends and all the madrassas are not bad as a great majority of them are doing a great job of providing shelter, food, clothes and some form of education to the vulnerable section of population. The need is for government to register all these madrassas and keep a close eye on the donations they receive and how that donation is used. There has to have a strong audit system in it.
Additionally, the law enforcement and security agencies are not trained to investigate the financing of terrorism and militant organization. There is an urgent need to equip them with international standard to trace the elements so that they are able to stop them.
Last but not least, our policymakers must not lose sight of the fact that there were three events of 1979 that immensely contributed towards the birth of radical terrorism and its financing. These were the Soviet invasion of Afghanistan; removal of the Shah of Iran; and the seizure of the Grand Mosque of Saudi Arabia. Hence, the need for finding a solution to terror financing through correct approaches to the issue.