One-third of illicit money ($500 billion) is generated annually through narcotics trade globally, says 2003-04 report of Anti-Narcotics Force (ANF). The report says that Pakistan being in the wrong neighbourhood suffers badly from the 'ills of evil money'. It shares a boundary more than 2,500 kilometres with Afghanistan, which is the major heroin producing country of the world.
Afghanistan, Iran and Central Asian Republics are vulnerable to narcotics trafficking on account of their geographical proximity with Afghanistan, the report says.
Sources told Business Recorder that drug smugglers in Pakistan invent new techniques to conceal their wealth. Banks and financial institutions are favourite sanctuaries for drug traffickers for concealing huge sums of money.
These drug smugglers keep transferring their money from one bank account to another in different parts of the world, thereby making it virtually impossible for law enforcement agencies to trace the real owner and the beneficiary of the wealth.
The report says that drug barons have adopted a new way to legalise black money through film industry. Drug smugglers invest small sums of money in this business but reflect large profits. After paying nominal taxes to the government on the money earned they legitimise the remaining amount.
The report says that black money earned through drug trafficking is transferred through 'Hawala'(often used with the word 'hundi') by drug smugglers and terrorists. 'Hawala' is an unofficial alternative of remittance for inter-regional transfer of money and this money exchange system enables transfer of funds without their actual physical movement.
Establishment of offshore companies at secured locations, international travellers' cheques, credit cards and insurance policies are also the ways through which drug smugglers legitimise their black money, the report says.
Ministry of Narcotics Control has forwarded the recommendation to start a proactive monitoring system on scientific grounds to study drug money laundering patterns.
"Government should pursue a constantly evolving strategy because of dynamic nature of the crime and national and transnational interests should be kept in view while devising any formula to counteract laundering of narco-money", Ministry officials demanded.
The Ministry of Narcotics Control has suggested that intelligence sharing to tighten grip on drug smugglers among institutions at the national and international levels should be enhanced.
A comprehensive policy should be hammered out for identification and removal of weakness in the formal and informal banking system to curb drug money laundering, the Ministry recommended.