Money Laundering Risks Associated with Travel Agents Business in Pakistan
Objective:
The focus of the study was to analyze the risk of money laundering and terrorist financing associated with the business of travel agents, and at the same time how they can be conduits for money laundering and terrorist financing.
Background of Analysis:
The analysis was carried out on the basis of suspicious and currency transactions reports which were reported from the banks and exchange companies on travel agents located in multiple cities of Pakistan as well as media news covering the involvement of travel agents in illicit activities and crackdowns by the law enforcement agencies. The key findings derived from this study are as follows:
- Most of the individuals carrying business of travel agencies were young and belong to the age bracket of 1985-1990.
- Registration of multiple travel agencies by a single person or group of person on the same office address.
- Maintenance of multiple bank accounts and channeling of high value funds through these accounts.
- Deposits of funds followed by immediate withdrawals.
- Conducting transactions through mix of cash deposits/ withdrawals, transfer by cheques and clearing.
- Structuring of transactions to avoid reporting requirements.
- Frequent sale/purchase of foreign currencies with exchange companies.
- Transactions with people from all walk of life and therefore can be conduits for money laundering and terrorist financing.
- Maintenance of multiple personal accounts by the partners/directors of travel agencies and float of high value funds through these accounts.
- Directors/partners of the travel agencies were also involved in other businesses as well, such as brokerage and commodities dealing.
- Payment of nominal taxes to revenues authorities in relation to high turnovers in their personal and business accounts.
- Most of the suspicious transactions reports were raised by the banks in the context of involvement of travel agents in the illicit business of hawala/hundi.
Findings from Media Reports:
Through various media news and studies it was observed that travel agents in Pakistan had also been found involved in following illegal activities;
- Human trafficking and smuggling of migrants especially to Turkey, Greece and Saudi Arabia.
- Running of travel agency businesses without obtaining proper license from the competent authorities and looting public.
- Involvement in Hajj and Ummrah scams by intending pilgrims on the pretext of arranging Umrah visas for them on cheaper rates.
Based on above findings the Strategic Analysis was shared with law enforcment agencies and regulators for probing of matter and necessary actions under AML Act-2010