Human Smuggling and the Missing Money Trail

On 13th January 2023 the Financial Crimes Enforcement Network (“FinCEN”), the financial intelligence unit of the United States, issued Alert FIN-2023-Alert001, telling the American banking system in plain terms what the money of human smuggling looks like: smuggling fees, often paid by relatives of migrants already settled in the United States and disguised as ordinary remittances, gathered into “Funnel Accounts” along the southwest border; serial cash deposits by unconnected individuals into a single account far from their residence or employment; and currency deposits followed at once by outward wires inconsistent with the customer’s known pattern. The Alert asked that every suspicious activity report arising from it carry the reference code “FIN-2023-HUMANSMUGGLING” in a designated field so that the intelligence could be collated nationally; Peter D. Hardy and his colleagues at Money Laundering Watch, writing on 26th January 2023, read it as what it was: a working manual of methodologies, typologies and red flags for bank compliance officers.

Pakistan counts the same trade differently: in bodies.

On 14th June 2023 the fishing trawler Adriana, which had sailed from Libya with as many as 750 persons aboard, capsized in international waters off Pylos in Greece, and the data compiled by the Government of Pakistan placed at least 209 Pakistanis among the dead and missing by 22nd June 2023. On 2nd January 2025 another vessel left Mauritania for the Canary Islands carrying 86 persons, of whom 66 were Pakistanis; it capsized near the Moroccan port of Dakhla after nearly a fortnight at sea, and the migrant rights organisation Walking Borders counted 44 Pakistanis among the roughly 50 dead. Every drowned passenger had paid an agent; every agent had collected, moved and banked his fee; and it is that second ledger, the financial one, which Pakistan has never seriously opened.

The statute book is not the problem

The Prevention of Smuggling of Migrants Act, 2018 (Act XXVIII of 2018) and the Prevention of Trafficking in Persons Act, 2018 (Act XXXIV of 2018), both drafted by the Federal Investigation Agency (“FIA”) with the assistance of the United Nations Office on Drugs and Crime, have been in field since May 2018; and after the amendments which Parliament passed in February 2025, in the shadow of the Dakhla sinking, smuggling of migrants carries imprisonment of up to ten years with fine of one million to ten million Rupees, and where the migrant suffers life-threatening illness or dies the term runs from seven to fourteen years with fine of up to ten million Rupees. The Emigration Ordinance, 1979 (Ordinance XVIII of 1979) stands beside them, licensing the lawful “Overseas Employment Promoter” and criminalising the unlicensed agent who receives money for providing foreign employment.

On the criminal side the pressure is visible. The FIA’s “Red Book” of most wanted human smugglers, in its thirteenth edition of September 2025, names 143 fugitives, of whom 70 belong to Gujranwala district alone against 25 to Islamabad and 14 to Lahore, and records 51 arrests from its lists since 2023. After Pylos the agency arrested twenty-nine suspected agents and sought red notices against twenty more based abroad; in February 2025 the principal suspect, one Mohammad Iqbal, resident in Libya since 2013, was taken into custody on arrival at Lahore airport.

Two items in a quarter

Very unfortunately, the financial side of the same effort can be stated in a single figure.

In the last quarter of 2022 the Financial Monitoring Unit (“FMU”), Pakistan’s financial intelligence unit under the Anti-Money Laundering Act, 2010 (Act VII of 2010), recorded exactly two financial intelligence items for trafficking in human beings and migrant smuggling in its predicate-offence table.

Two items, in a year in which the FMU, whose reporting machinery had been rebuilt at speed during the “Grey List” years of June 2018 to 21st October 2022, received 24,107 Suspicious Transaction Reports; two, against ninety-nine items for tax crimes and eighty for Hawala and Hundi in the same quarter (FMU, Quarterly Report, October to December 2022). The reporting map completes the picture: the top reporting districts were Karachi with 1,285 reports, Lahore with 821 and Islamabad with 570, whereas Gujranwala, which supplies seventy of the 143 names in the “Red Book”, appears nowhere among them. Since no Pakistani bank has ever been told by the FMU or its regulator what the smuggler’s money actually looks like, therefore no Pakistani bank reports it; the geography of reporting and the geography of smuggling do not meet, and the fees of Pylos and Dakhla moved through accounts which no state functionary had asked anyone to watch.

A Schedule with a hole in it

The deeper reason lies on the legal front. Money laundering under Sections 3 and 4 of the Anti-Money Laundering Act, 2010 can only attach to the proceeds of a “predicate offence”, and a “predicate offence” means an offence specified in the Schedule to that Act. The Schedule does include specified offences under the Emigration Ordinance, 1979, among them fraudulently inducing to emigrate and receiving money for providing foreign employment; hence, on paper, the agent’s fee is already capable of founding a laundering charge. Yet when the Schedule was expanded in the wake of the amendments of September 2020, the FMU’s own circular records the addition of offences from eight statutes, namely the Pakistan Penal Code, 1860, the Prevention of Corruption Act, 1947, the Foreign Exchange Regulations Act, 1947, the Customs Act, 1969, the Securities Act, 2015, the Sales Tax Act, 1990, the Federal Excise Act, 2005 and the Income Tax Ordinance, 2001; and, for the reasons best known to the drafters of that expansion, neither Act of 2018, the very statutes under which the FIA actually charges the boat cases, was among them. Only on 28th July 2026 was it reported that the National Executive Committee under the Anti-Money Laundering Act, 2010 has approved placing the two offences in the Schedule by executive order; that order has, as of this writing, yet to issue.

The omission is not academic. The Honourable Supreme Court of Pakistan held in Shahid Chaudhry v The State (Criminal Petition No.174 of 2026, decided 27th February 2026) that the charge of money laundering is derivative of the predicate, and that whether an asset is “proceeds of crime” cannot be assumed before the predicate is determined. Keeping in view that judgement, where the predicate fails, the laundering charge falls with it, and where the predicate was never scheduled at all, no laundering charge can be laid in the first place; so every month that the Acts of 2018 remain outside the Schedule is a month in which an agent may be imprisoned for the voyage yet keep the house bought with its fee, beyond the reach of confiscation under the Anti-Money Laundering Act, 2010.

What is to be done

In the light of the above, it is urgently required that, first, the executive order approved by the National Executive Committee be issued without further delay, so that the offences under both Acts of 2018 stand in the Schedule to the Anti-Money Laundering Act, 2010 before the next boat sails; secondly, that the FMU issue to Pakistani banks and exchange companies a typology alert on the model of FIN-2023-Alert001, describing the “Funnel Accounts”, the serial third-party cash deposits in the districts which the “Red Book” itself names, the smuggling fee disguised as a family remittance and the Hawala leg that so often precedes the deposit, with a reference code to be quoted in every Suspicious Transaction Report so filed; thirdly, that a parallel financial investigation be opened as a standing instruction in every “Red Book” case, since an agent stripped of his proceeds does not reopen his office on release, whereas an agent merely fined frequently does; and fourthly, that the FMU publish annually how many of its trafficking and smuggling items became prosecutions and convictions, because a predicate category which produced two items in the same quarter in which tax crimes produced ninety-nine hence needs serious reconsideration.

FinCEN asked its banks to write one code into one field of a report, and the smuggling money of the southwest border began reaching its analysts as data; Pakistan, which declared mourning for Pylos and repatriated its survivors from Dakhla, has so far asked its banks nothing. The Asia/Pacific Group’s Mutual Evaluation Report of October 2019 scored Pakistan at thirty-nine per cent for technical compliance against three per cent for effectiveness; the distance between those figures is the distance between the statute book and the ledger. Until the Schedule is completed, the alert issued and the financial investigation made routine, the counting in this trade will continue at sea, in bodies, rather than in the banks, in transactions.