New Delhi: The Financial Action Task Force (FATF) Friday flagged the case of mis-declared goods emanating from China for Pakistan linked to Islamabad’s ballistic missile programme. The goods were seized by Indian authorities in February 2020.
“In 2020, Indian custom authorities seized an Asian-flagged ship bound for Pakistan. During an investigation, Indian authorities confirmed that documents mis-declared the shipment’s dual-use items. Indian investigators certified the items for shipment to be ‘Autoclaves’, which are used for sensitive high energy materials and for insulation and chemical coating of missile motors,” the FATF report titled “Complex Proliferation Financing and Sanction Evasion Schemes” said.
The report added: “The sensitive items are included in dual-use export control lists of the Missile Technology Control Regime, India, and other jurisdictions. The Bill of Lading of the seized cargo provided evidence of the link between the importer and the National Development Complex, which is involved in the development of long-range ballistic missiles.”
The case referred to by the FATF occurred in February 2020, when a Chinese vessel named Da Cui Yun, was seized for mislabelling autoclaves, which can be used in the launch processes of ballistic missiles, as an industrial dryer. The ship was seized at Gujarat’s Kandla Port and was en route to Karachi’s Port Qasim.
It had begun its voyage from China’s Jiangyin port.
India’s intelligence agency, the Research and Analysis Wing (R&AW), had received specific inputs that the ship was carrying dual-use goods. The incident raised the spectre of nuclear proliferation in the region, especially between Beijing and its “all-weather” ally in Islamabad.
According to media reports, the autoclave, which was seized, could be used for manufacturing of motors of very long range missiles of more than 1,500 km. The seizure of the autoclave indicates Islamabad may be violating the Missile Technology Control Regime, which is an informal understanding amongst its 35 members to prevent proliferation of missile technologies. Pakistan is not a member of MTCR, which India joined in 2016.
In March 2024, ThePrint reported the seizure of more dual-use technology heading to Pakistan from China. The dual-use items seized in 2024 was Computer Numerical Control machinery, which is useful in the manufacturing of ballistic missiles. The consignment was en route to Karachi, before being seized at the Nhava Sheva Port in Mumbai.
The latest case flagged by the FATF comes after the task force, last week, “condemned” the “brutal terrorist attack” in Jammu and Kashmir’s Pahalgam, which left 26 people dead. The FATF further in its statement said that such an attack could not have occurred without the “money and means” to move funds between terrorist supporters.
India has renewed its push to have Pakistan added to FATF’s grey list, which would indicate that its anti-money laundering, and counter terrorist financing standards needs further international scrutiny. Islamabad was removed from the FATF grey list in October 2022.
European firms help Russia evade sanctions
The FATF also highlighted a number of case studies, which show European companies have been involved in schemes to transfer dual-use technologies to Russia, despite the tough sanction regimes imposed by the European Union (EU) on Moscow since its war with Ukraine began in February 2022.
Its report highlighted the case of two French companies that acted as intermediaries in the purchase of electronic components, which were then re-sold to a firm in West Asia. The goods were then transferred to a Russian firm, from the West Asian entity.
The Russian firm is on a US sanctions list, which points towards Moscow’s ability to circumvent sanctions aimed at curtailing its defence industry.
“This complex sanctions evasion scheme involved the use of many common evasion tactics, including the transfer of ownership to a non-sanctioned third party (the individual’s wife), the use of numerous bank accounts, and entities with a business model fully export-oriented, which nonetheless were acting as pass-by entities,” the FATF report said.
A Portuguese company in 2022 attempted to export motors for unmanned aerial vehicles (UAVs) via the United Arab Emirates, with an alleged final destination of Kazakhstan, the FATF report notes.
However, the goods actual final destination was likely to be Russia. The Kazakh company had strong ties to Russia with a number of indications that the goods from Portugal would be diverted towards Moscow. This, it cited as another example of how European companies have looked to circumvent the Russian sanctions.
(Edited by Amrtansh Arora)
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