The black money issue has been making headlines ever since the Government of India showed interest in bringing back the millions stashed away abroad. While the list of persons who have stashed black money away abroad involve businessmen, sports personalities, actors and politicians, one must not forget the blood money that is kept in the same banks by terrorists too.
2.4 trillion dollars is what terrorists and drug lords have parked abroad as per the reports of the United Nations. While this is a global figure, a rough estimate prepared by the Financial Intelligence Unit of India would show that Pakistan based terrorists and drug lords with a specific intent of funding terror against India have parked around Rs 10595 crore in banks abroad.
Investigations have shown that such blood money amounting to Rs 10595 crore parked abroad specific to India have been earned through various channels which include arms and drug smuggling. There is also a considerable amount of money that has been earned by Pakistani terrorists including Dawood Ibrahim through counterfeiting, flesh trade and piracy.
Once the money is earned, they reach banks abroad through their agents. Several banks have been extremely accommodating and very often have not bothered to check the trail of the cash. Take the HSBC case for instance where it was found that money from all sources were parked in their banks.
HSBC had however apologized and claimed that it had not done enough verification before allowing the depositor park the money into the bank.
How vulnerable are financial institutions
The HSBC case is a pointer to the vulnerability in the system. Several banks have not bothered to check the money trail and have played into the hands of crime cartels and terrorists. The HSBC case was exposed first by the United States, but then one must not forget that there is enough of more of the same problem that the Indian institutions also face.
Terrorists have found parking money in banks extremely easy due to a lot of factors. With the competition rising, banks have not been cautious when it comes to scrutinizing their customers. Banks have often said that they act when they have specific intelligence.
However banks have clearly not been able to cope with the problem blaming it on a growing customer base and the lack of resources to carry out a thorough scrutiny. All they have managed to do is seek out pan card details which has become good enough to open an account. The source is never questioned.
Banking with confidence
Terrorists have banked with confidence and managed to get their way through at least 9 out of 10 times. In some cases it has been found that the executive from the bank himself has suggested ways of parking the money.
For the executive the amount is more important and in the bargain he does not bother about the source. An officer with the Financial Intelligence Unit tells OneIndia that terrorists operate through a number of middlemen.
The middle man approaches the bank and opens several accounts in the names of companies that do not exist. Fake documents are given and papers of a company which is non-existent are also handed out.
Money is constantly deposited into these accounts for years together. For the investigating agency it looks like a legitimate deposit since it is coming from a company.
Only when the probe gets deeper and it is found that the company is non-existent is the bluff caught. However terrorists have managed to better the agencies and very often close down the account and open a new one when they realize the heat is on.
Banks will have to cooperate
The Financial Intelligence Unit says that the probe can attain a finality only if there is cooperation from the bank. What does one do when some executives of the bank have teamed up with these middlemen.
We lose the battle at the start itself. In many cases we have found the executive making suggestions to the middlemen. This would mean that there is no proper scrutiny of the documents being provided and hence the crime goes on unabated.
If it is not financial institutions, terrorists invest in the diamond market. All the money earned through illicit trade is pumped into the diamond markets in India.
The first time this trail of terrorist money being invested into the diamond market was found during the 26/11 probe. This modus operandi once again operates through middlemen. Several crores of rupees were invested into the diamond trade in India.
This ensures that the money keeps rolling in the market and is pulled out for a specific cause. In the 26/11 probe it was found that a lot of money had been pulled out of the diamond market over several years and pumped into funding the attack.
This had infact opened up the pandoras box and went on to reveal how many different ways the terrorists had when it came to operating. While the agencies watched transactions being made through banks and other channels, they failed to watch the diamond market through which a majority of the amount was pulled out to fund the attack.