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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Comment by Riaz Haq on July 19, 2021 at 5:59pm

#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-0020534... 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

Comment by Riaz Haq on July 19, 2021 at 6:03pm

India's admission on FATF politicisation vindicates Pakistan's stance: FO

https://www.dawn.com/news/1635854/indias-admission-on-fatf-politici...

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.

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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.

Comment by Riaz Haq on January 6, 2022 at 10:48am

UAE Faces Risk of Inclusion on Global Watchlist Over Dirty Money

https://ca.finance.yahoo.com/news/uae-faces-risk-inclusion-global-0...




(Bloomberg) -- The United Arab Emirates is at increased risk of being placed on a global watchdog’s list of countries subject to more oversight for shortcomings in combating money laundering and terrorist financing, even after a recent government push to stamp out illicit transactions.

The Financial Action Task Force is leaning toward adding the UAE to its “gray list” early this year, one of two classifications used by the intergovernmental body for nations determined to have “strategic deficiencies,” according to people familiar with the matter, who requested anonymity because the discussions are private.

Should the FATF approve the designation, it would be among the most significant such steps in the Paris-based group’s three-decade history given the UAE’s position as the main financial hub of the Middle East. The FATF currently puts 23 countries -- including Albania, Syria and South Sudan -- under closer scrutiny, with only Iran and North Korea on its highest-risk “black list.”


“There are undoubtedly costs associated with being gray-listed,” said Katherine Bauer, a former Treasury Department official who led the U.S. delegation to the Middle East and North Africa Financial Action Task Force, a regional body modeled after the FATF.

“Many global regulators require that banks and financial institutions review, if not revise, their risk ratings and associated due diligence measures for counterparties in countries on the FATF list,” said Bauer, who’s now a fellow with the Washington Institute for Near East Policy.

The UAE submitted a report to the FATF in November but hasn’t reached many of the thresholds needed to stay off the gray list, the people said. The group is expected to make a decision at a plenary meeting set for late February. There are still several opportunities for Emirati officials to make their case to the FATF, including during a planned trip to Paris in the coming weeks, they said.

“We are taking this very seriously, having partnered with highly skilled and experienced specialists with a track-record in meeting best international practices and standards,” Hamid Al Zaabi, director general of the UAE Executive Office for Anti-Money Laundering and Counter-Terrorist Financing, said in a statement to Bloomberg News.

EXPLAINER: All About FATF, a Global Weapon to Fight Dirty Money: QuickTake

‘Fully Committed’

“The UAE is fully committed to upholding the integrity of the international financial system, which includes working closely with our partners around the world to combat financial crime,” he said.

A FATF spokesperson declined to comment. A gray-listing applies to countries that have “strategic deficiencies in their regimes to counter money laundering, terrorist financing, and proliferation financing” but which are committed to address the issues “swiftly,” according to its website.

In a report published in April 2020, the FATF questioned the UAE’s system despite what it called “significant steps” to strengthen regulations, including new legislation in 2018 and 2019.

“Fundamental and major improvements are needed across the UAE in order to demonstrate that the system cannot be used for money laundering/terrorist financing and the financing of proliferation of weapons of mass destruction,” the group said at the time.

Since the FATF’s warning in 2020, the UAE government has taken numerous steps to better align with global standards on anti-money laundering and countering terrorist financing, according to Ibtissem Lassoued, the Dubai-based head of advisory in financial crime at law firm Al Tamimi & Co.

Comment by Riaz Haq on May 27, 2022 at 4:24pm

HOUSE OF GRAFT: Tracing the Bhutto Millions -- A special report.; Bhutto Clan Leaves Trail of Corruption

https://www.nytimes.com/1998/01/09/world/house-graft-tracing-bhutto...

Officials leading the inquiry in Pakistan say that the $100 million they have identified so far is only a small part of a windfall from corrupt activities. They maintain that an inquiry begun in Islamabad just after Ms. Bhutto's dismissal in 1996 found evidence that her family and associates generated more than $1.5 billion in illicit profits through kickbacks in virtually every sphere of government activity -- from rice deals, to the sell-off of state land, even rake-offs from state welfare schemes.

The Pakistani officials say their key break came last summer, when an informer offered to sell documents that appeared to have been taken from the Geneva office of Jens Schlegelmilch, whom Ms. Bhutto described as the family's attorney in Europe for more than 20 years, and as a close personal friend. Pakistani investigators have confirmed that the original asking price for the documents was $10 million. Eventually the seller traveled to London and concluded the deal for $1 million in cash.

The identity of the seller remains a mystery. Mr. Schlegelmilch, 55, developed his relationship with the Bhutto family through links between his Iranian-born wife and Ms. Bhutto's mother, who was also born in Iran. In a series of telephone interviews, he declined to say anything about Mr. Zardari and Ms. Bhutto, other than that he had not sold the documents. ''It wouldn't be worth selling out for $1 million,'' he said.

The documents included: statements for several accounts in Switzerland, including the Citibank accounts in Dubai and Geneva; letters from executives promising payoffs, with details of the percentage payments to be made; memorandums detailing meetings at which these ''commissions'' and ''remunerations'' were agreed on, and certificates incorporating the offshore companies used as fronts in the deals, many registered in the British Virgin Islands.

The documents also revealed the crucial role played by Western institutions. Apart from the companies that made payoffs, and the network of banks that handled the money -- which included Barclay's Bank and Union Bank of Switzerland as well as Citibank -- the arrangements made by the Bhutto family for their wealth relied on Western property companies, Western lawyers and a network of Western friends.

As striking as some of the payoff deals was the clinical way in which top Western executives concluded them. The documents showed painstaking negotiations over the payoffs, followed by secret contracts. In one case, involving Dassault, the contract specified elaborate arrangements intended to hide the proposed payoff for the fighter plane deal, and to prevent it from triggering French corruption laws.

Comment by Riaz Haq on June 19, 2022 at 8:53pm

From CBS 60 Minutes on "Londongrad" aired June 19, 2022:

For years, Britain actively courted Russian billionaires, ignoring reports that some of their wealth was suspect. Today, there's so much Russian cash in Britain, the capital has been nicknamed "Londongrad." British Intelligence has warned that oligarchs' money is propping up Putin's regime – and helping to fund the war in Ukraine. As we first reported in April, the U.K. is under pressure to show its Western allies it can stop the flood of corrupt money.

https://www.cbsnews.com/news/londongrad-united-kingdom-russian-olig...


Dominic Grieve: Money has been flowing into the United Kingdom — absolutely no doubt about this — which often has had what I can only describe as a tainted source. But then Russia is a mafia state.

Dominic Grieve is a former conservative member of Parliament, who served as attorney general and chaired Britain's intelligence committee. His 2019 report on Russian interference in U.K. politics, found Britain was awash in Russian oligarchs' money — much of it from untraceable sources.

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This is Belgravia. These neighborhoods around Eaton Square are some of the most expensive on Earth. Once the exclusive preserve of dukes and barons, now…

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Oliver Bullough: There was a general feeling that if the money was coming here and paying taxes that was building schools and building roads and building hospitals, then we didn't care where it came from.

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