Why terror financing is difficult to clamp down on in Pakistan

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There are two problems that Pakistan faces in fighting terror financing. One is that groups and individuals designated by the United Nations as terrorists continue to roam freely and operate large organisations in the country, largely because they enjoy protection from high quarters. The kinds of operations that these groups run cannot function on cash alone.

Banning these groups may not cause terrorism to disappear from Pakistan, but it will certainly complicate the groups’ ability to operate on such a large scale because their transactions will then need to be done through benami accounts. It may not be difficult, but given the scale we are talking about, it would certainly hamper their operations.

The second difficulty is a bigger one. Pakistan’s economy has a large amount of informal activity, which routinely uses the banking system yet evades other regulatory controls and tax measures. Former State Bank governor Shahid Kardar rightly pointed out once that Pakistan must be the only country in the world that has a legally recognised category of “non-filer of income tax returns”. All you have to do, if you don’t wish to pay tax and have your income registered with the state, is to pay a flat penalty on some transactions, like banking transactions, and you’re all good.

https://www.dawn.com/news/1329393/terror-financing