June 26, 2025 marks as International Day against Drug Abuse and Illicit Trafficking as decided by the United Nations General Assembly in 1987 to raise the level of awareness in the international community about the dangers of drug abuse, to prevent its spread and to encourage all efforts to combat the menace at the international level. Each year the United Nations Office on Drugs and Crime (UNODC) selects a theme for the day, this year the theme is: Breaking the Chains: Prevention, Treatment, and Recovery for All!
“Pakistan’s geographic location and porous borders with Afghanistan and Iran make it vulnerable to narcotics trafficking, illicit financial trade, and contraband smuggling. Pakistan’s Financial Monitoring Unit (FMU), the financial intelligence unit (FIU), conducted a national risk assessment (NRA) in 2019 to identify the greatest money laundering risks facing the country. Designated non-financial businesses and professions (DNFBPs) in Pakistan are involved in, or help to facilitate, money laundering using the formal financial system. The NRA indicates most proceeds generated from major crimes in Pakistan are transferred overseas. The black market, the informal financial system, porous borders, a permissive security environment, and under-resourced Pakistani law enforcement, investigative, and prosecutorial agencies all contribute to the substantial demand for and facilitation of money laundering and illicit financial services in Pakistan”—International Narcotics Control Strategy Report (INCSR, Vol. II, March 2025)
Successive governments in Pakistan have provided tax amnesty schemes to facilitate money launderers, tax evaders, the corrupt and plunderers of national wealth in the name of “good economic measures” (sic) and/or mobilising tax revenues—unfortunately these were tacitly approved or not interfered with even by the country’s highest court observing “we cannot intervene in policy matters” and “we will not intervene in the tax amnesty scheme and if the scheme fails, the government will be responsible for it”.
The above observations of the Supreme Court were highlighted by one of the biggest online realtors in the country as immovable property in Pakistan is an established sanctuary for shady money. Resultantly, tax evaders, drug barons and persons engaged in other organised crimes, availed “legal means” to whiten assets worth billions under the State patronage.
Till recently, anybody could bring money in Pakistan or remit outside through normal banking channels without being probed by officers of Federal Board of Revenue (FBR) and Federal Investigation Agency (FIA) about its ‘source’—courtesy the Protection of Economic Reforms Act, 1992 [“PERA 1992”]—it was amended by the Finance Act, 2018 to withdraw blanket immunity from probe. In other parts of the world through asset-seizure legislation, governments confiscate unlawful assets/dirty money and punish offenders—Pakistan has yet to pass any such law.
There is sufficient evidence that militant groups working against the security and stability of the State generate huge funds through criminal activities and also get huge “donations” from “sympathisers” in and outside Pakistan
Law once assuring complete and blanket immunity, PERA 1992, was the brainchild of Muhammad Ishaq Dar, presently fourth Deputy Prime Minister and 39th Foreign Minister—known as economic wizard of Pakistan Muslim League (Nawaz). He is samdhi (in-law) of three-times elected Premier Mian Muhammad Nawaz Sharif, disqualified for lifetime and ousted from politics by the Supreme Court of Pakistan in a case which is considered highly controversial. He was punished in an Iqama matter whereas the case recommended by the Joint Investigation Team (JIT) was for non-furnishing of money trail by the accused for buying the expensive Avenfield apartments (Mayfair properties) in London through offshore companies.
In the Income Tax Ordinance 2001, promulgated on September 13, 2001, a special provision [section 111(4)] was inserted, facilitating tax evaders and criminals for laundering their ill-gotten money through banking channels, surrendering the foreign currency to the State Bank and getting Pakistani rupees as encashment. A military dictator, General Pervez Musharraf (late), did this through a Presidential Ordinance. Thus, both civilian and military regimes have extended immunities from probe into sources of shady funds. The Finance Act, 2018 placed a limit of Rs. 10 million for exemption from probe, which was later reduced to Rs. 5 million through the Finance Act, 2021 with effect from July 1, 2021.
During the first government of Nawaz Sharif, many schemes like Bearer National Fund Bonds, Foreign Exchange Bearer Bonds, Special Bearer Bonds, US Dollar Bonds and Certificates were introduced to decriminalise dirty money [‘Economic Disaster under PML (N)’, address by Mohtarma Benazir Bhutto, to Peshawar High Court Bar Association on December 3, 1998—Benazir Bhutto: Selected Speeches from 1989 to 2007]. Since the era of General Muhammad Zia-ul-Haq [1977-1988], black economy has been flourishing at an amazing rate. According to various studies, the parallel economy is growing at an alarming rate of 20% per annum since 1980.
A 2010 study by State Bank of Pakistan, The Size of Informal Economy in Pakistan, estimates the size of informal economy at around 30% of GDP. It means that since 2010 annually some 1500-2000 billion rupees are being generated by parallel economy (informal, though not illegal).
Black money, generated through organised criminal activities e.g. bribery, kidnapping for ransom, rent-seeking, smuggling in goods and narcotic trade etc. is about Rs. 5000 billion per annum that does not appear in the study of SBP but documented in Pakistan: Enigma of Taxation. Another study—Pakistan: Drug-trap to Debt-trap—estimated the total figure of informal economy at US$ 200 billion in 2003.
Pakistan is one of the countries worst hit by tax evasion, corruption, terrorism and money laundering. There is sufficient evidence that militant groups working against the security and stability of the State generate huge funds through criminal activities and also get huge “donations” from “sympathisers” in and outside Pakistan. Yet, hardly any prosecution is reported under the provisions of the Anti-Money Laundering Act of 2010.
The banks do not diligently report suspicious transactions required under section 7 of the Anti-Money Laundering Act, 2010 or section 67 of the Control of Narcotic Substances Act of 1997. This shows the slackness of institutions and regulators/agencies responsible for implementing these laws.
The illicit trafficking in drugs is not possible without the connivance of police that has political connections and backing. The case of Lyari in Karachi is a classic study. It is sad to note that nobody has exposed the scandal of ephedrine in proper context—its business and political connections. The so-called experts writing on ephedrine in media do not even know how ephedrine is abused (many erroneously call it ‘poor man’s cocaine’ whereas it is a main ingredient of ‘ecstasy’ and is consumed by the rich who can spend thousands just for a single shot).
Accumulation of vast assets by drug barons in Pakistan has enabled them to continue large-scale operations even after the crackdown and arrest of some of their leaders (although they have also managed to defy proper investigation getting themselves released). On a serious note, over the past six decades, drug barons in Pakistan have established themselves as patrons of politicians and government functionaries.
The ‘Norwegian Connection’ story exemplifies as to how narcopower flourished in the country and how drug barons managed to influence the highest authority in the State—read details in Pakistan: From Hash to Heroin. The “financial assistance” provided to some politicians by drug barons in the 1995, 1988, 1990 and all subsequent general elections are nothing but a continuation of the ‘drug legacy’ of the mid-1970s.
The drug scene at its roots in Pakistan, like other countries, is nothing more than a business story. This is a stark reality of the emergence of ‘dirty money power’ in the country. A 2018 study revealed that the share of Pakistani drug cartels in the total world drug trade was not less than US$2 billion a year. It has now reached the level of US$5 billion as per estimates by various reports. A trade that started in the late 1970s has achieved this unbelievable proportion in five decades and so its institutional connections are understandable—those in power in Pakistan want to make quick bucks, irrespective of legality or illegality of their source.
The politics of drug trade has rendered millions of people, as a most helpless lot. This is a war against the people and humanity. Our present-day civilisation faces a great threat of annihilation if the rising tide of drug culture is not stemmed. Awareness alone can bring light to overcome the darkness caused by drug traders, merchants of death and destruction.