The Telegraph
Since 1st March, 1999
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Pak struggles to cut rebel funds

Karachi, April 18 (Reuters): Pakistan’s central bank is fighting an uphill battle to crack down on financing for Islamic militant groups, after moves to freeze bank accounts failed to cut off their financial lifeline, officials said today.

The State Bank of Pakistan has frozen 24 accounts held by outlawed Islamic militant groups over the last year and a half, containing Rs 591 million ($10.2 million) in deposits, a senior SBP official said on condition of anonymity. But intelligence officials say the militant groups, banned in a crackdown on Islamic extremism in the wake of the September 11, 2001, attacks on the US, had already withdrawn most of their funds from the accounts before they were frozen.

“Now accounts are operated mostly in the name of individuals by these groups,” said an intelligence official.

In response, the State Bank last month issued strict directives to banks to “know their customer,” said a senior banker at a state-run bank. “There are strictly defined guidelines in these directives on how to open new accounts and monitor old ones,” he said.

Many militants operate under a variety of aliases, and the State Bank has asked commercial banks to make every effort to discover a customer’s “true identity”, as well as investigating the nature of their business and source of funds.

But senior police and intelligence officials said that tracking down money transfers was easier said than done. “The majority of their transactions are in cash now. And monitoring every client is not easy, even for the banks,” a police official said.

Kaiser Bengali, managing director of the independent Social Policy and Development Centre, agrees banks cannot be expected to monitor every client and every account. “It’s very difficult to completely stop the use of banks by such groups for moving their funds,” he said.“If they are unable use banks, they will use other channels.”

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