Financial Crime World

TERROR FUNDING HUB: Punjab’s Major Road Artery Under Scrutiny

A major road artery in Punjab has been identified as a hub for terrorist financing, with evidence suggesting that millions of rupees were being collected from unsuspecting citizens at mosques and shops.

How Terrorist Financing Works

According to sources, the sacrificial hides collected during Eid-ul-Adha were another way for terrorist organizations to generate funds. People would hand over the hides to private individuals and humanitarian organizations without scrutinizing their cause, which was exploited by terrorist groups.

  • One such group, Jamaat-ud-Dawa (JuD), a proscribed front organization of Lashkar-e-Taiba, used to collect sacrificial hides to finance its militant activities.
  • Terrorist groups in Pakistan have also been known to turn to legitimate businesses to generate funds. Examples include:
    • Trading companies that traded commodities like sugar
    • Schools and hospitals run for profit

External Actors Involved in Funding Terrorist Groups

External actors, including state and non-state actors, have also been involved in providing funds to terrorist groups in Pakistan. These include:

  • Saudi Arabia, which has been donating billions of dollars annually to madrassas in the country
  • India, which has been accused of providing financial support to Tehrik-e-Taliban Pakistan under the guise of legal transactions with multinational firms in Pakistan, as well as through informal monetary transactions using Hawala/Hundi (informal funds transfer system)

Punjab Government Takes Action

The Punjab government has taken note of these allegations and is working to address the issue. In November 2020, Pakistan made public a dossier detailing India’s alleged involvement in funding terrorist organizations.

Efforts to Stem the Flow of Funds

As the authorities continue to investigate and crack down on terrorist financing activities in the region, it remains to be seen whether these efforts will be enough to stem the flow of funds to terrorist groups and bring stability to the country.