TERRORIST FINANCE: PAKISTAN FOLLOW-UP TO ACTION REQUEST ON

UNCLAS ISLAMABAD 004926 SIPDIS SENSITIVE SIPDIS E.O. 12958: N/A TAGS: EFIN ETTC KTFN KCRM PREL PTER PK SUBJECT: TERRORIST FINANCE: PAKISTAN FOLLOW-UP TO ACTION REQUEST ON ILLICIT CASH COURIERS REF: STATE 152088 ¶1. (U) The following is Embassy Islamabad's response to reftel request for additional information on illicit cash couriers. ¶2. (SBU) Pakistan places statutory limits on the international transportation of currency. The State Bank of Pakistan (SBP) legally allows individuals to carry up to USD 10,000 in US dollars or foreign currency equivalent. According to the Central Board of Revenue, couriers caught carrying more than the maximum amount are subject prosecution and prison terms of between three to five years. ¶3. (SBU) While it is technically illegal to bring more than USD 10,000 into Pakistan except through legal banking channels, there are no reporting requirements upon entering or exiting the country. There are joint SBP-Customs counters at international airports to monitor the transportation of foreign currency. However, enforcement is insufficient. Post contacts at the State Bank of Pakistan report that charges are rarely filed for exceeding currency importation limits and can recall only two cases in recent memory. ¶4. (SBU) In June 2004, the State Bank of Pakistan required all informal money changers (or hawaladars) to register as authorized foreign exchange dealers and meet minimum capital requirements. The regulation has had limited success in consolidating the national foreign exchange regime, subjecting it to more stringent regulation and accounting standards. Despite the SBP's efforts, unlicensed hawalas still operate illegally in parts of the country (particularly Peshawar and Karachi). The informal and secretive nature of the unlicensed hawalas makes it difficult for SBP regulators to effectively combat their operations. Most illicit funds are transacted through these unlicensed operators. ¶5. (SBU) The U.S. Department of Homeland Security conducted a cash courier training seminar in May 2006 and plans to hold more training sessions in the future. PATTERSON