KARACHI: After spending more than a year in a Miami jail, money changer Altaf Khanani has been sentenced to 68 months in prison and a $250,000 fine on one count of conspiracy to commit laundering by a United States District Court in Florida, according to documents available with Dawn.
The sentence was passed on March 29.
The remaining 13 counts of actually committing money laundering were dismissed at the request of the prosecution, which cited Khanani’s cooperation in the investigation after he agreed to plead guilty and “to make a full, accurate and complete disclosure… of the circumstances surrounding the relevant offense conduct”, according to the plea agreement signed in October 2016.
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The agreement says the prosecution will recommend leniency during sentencing because Khanani “has assisted authorities in the investigation or prosecution” of his crime. Going by the massive scale of the investigation, which involved coordinated action from six different law enforcement agencies from three countries, it appears that the scope of the cooperation demanded from him was far larger than just the sting operation that ensnared him.
For well over a decade, Khanani and Kalia International (KKI) was one of the largest and most sophisticated exchange companies in Pakistan, running a global network of franchises that could move “billions of dollars” around the world for a clientele that the US Treasury department says included Chinese, Mexican and Colombian organised crime groups and designated terrorist organisations. “Altaf Khanani is known to have had relationships with Lashkar-e-Tayyiba, Dawood Ibrahim, al-Qa’ida, and Jaish-e-Mohammed” the treasury department said in November 2015, a few months after his arrest in the US.
Being one of the principal directors of KKI, Altaf Khanani would have intimate knowledge of the bank accounts and intermediaries used by the groups whose money he was moving.
The court committed Altaf Khanani to the custody of the Bureau of Prisons, with a recommendation that he serve his time in a local facility in the Southern District of Florida. Upon his release, he will be handed over to immigration authorities for deportation proceedings.
In June 2015, Altaf Khanani was indicted on 14 counts of money laundering, each carrying a 20-year jail term with a $250,000 fine, following a sting operation by the Drug Enforcement Administration (DEA). The investigation spanned across the US, Australia and the United Arab Emirates and was carried out by multiple law enforcement bodies, including the DEA, Federal Bureau of Investigation, US Customs and Border Protection, Australian Federal Police, Australian Criminal Intelligence Commission and the UAE Police and Central Bank.
He was arrested in September 2015 and has been in jail ever since.
Initially he pleaded not guilty to all charges and demanded a jury trial. But on Nov 1 last year, changed his plea to guilty on one count of conspiracy to commit money laundering and the US Attorney’s Office agreed to drop the other 13 counts and seek leniency in sentencing in return for his cooperation in the investigation.
Around the same time, the treasury department issued a second press release designating nine entities and four individuals for their association with the ‘Khanani money laundering organisation’, which had been designated a Transnational Criminal Organisation a year earlier. Given the timing, it is highly probable that the evidence linking the entities and individuals to the larger money laundering enterprise was furnished by Altaf Khanani himself in the run up to his plea agreement.
The four individuals named in the second release were Obaid, Hozaifa and Javed Khanani, his son, nephew and brother, respectively, as well as Atif Polani, a general manager of their money exchange company in Dubai and also a relative. A month later, Javed Khanani died after falling from the eighth storey of an under-construction building in Karachi. His family claimed it was a suicide.
Altaf Khanani, along with all the other directors of KKI, was arrested in Pakistan during a large swoop by the Federal Investigation Agency in 2008 and accused of clandestinely transferring around $1.5 billion out of the country through illegal ‘hawala’ channels during that turbulent year, when the country faced the impact of a global economic crisis and a delicate political transition from military to civilian rule. The same month that they were arrested, Pakistan had to approach the International Monetary Fund for an emergency bailout package.
But that investigation floundered and by 2011 all parties were acquitted in all but one case. No appeals were filed by the government against the acquittals, until the interior ministry ordered an inquiry into the case in January this year.
Following that inquiry, an appeal was filed against the acquittal in the Sindh High Court and is still pending.