New Delhi: The Financial Action Task Force (FATF) has highlighted India’s seizure of dual-use equipment used in developing missiles from a Pakistan-bound merchant vessel in 2020 in a new report flagging vulnerabilities in the global financial system for countering the financing of weapons of mass destruction (WMDs).
The report from the multilateral financial watchdog listed the incident involving Pakistan among six case studies in a section covering the misuse of the maritime and shipping sectors, including a vast network of vessels, ports and logistics, by illicit actors to evade sanctions and transport a range of commodities, including dual-use equipment.
The stopping of the Pakistan-bound ship and the seizure of dual-use equipment cited in the FATF report was widely reported by the Indian media, including Hindustan Times, when it happened in February 2020. However, some aspects of the incident mentioned in the FATF report - such as the fact that the importer of the cargo was linked to Pakistan’s National Development Complex, which is involved in the country’s missile development programme - haven’t been reported before.
The FATF listed the incident as one of “non-declaration of dual use goods under the prescribed export laws of the exporting country”. Though the FATF didn’t name the exporting country, the ship was stopped in Indian waters while on its way from China’s Jiangyin port to Pakistan’s Karachi port.
{{/usCountry}}The FATF listed the incident as one of “non-declaration of dual use goods under the prescribed export laws of the exporting country”. Though the FATF didn’t name the exporting country, the ship was stopped in Indian waters while on its way from China’s Jiangyin port to Pakistan’s Karachi port.
{{/usCountry}}“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,” the FATF report said.
“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 report said, adding that these sensitive items are included in dual-use export control lists of the Missile Technology Control Regime (MTCR), India and other countries.
The report said 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 export of equipment such as the autoclaves without formal approval from various authorities is a violation of existing law, the FATF said.
The National Development Complex (NDC), also known as the National Defence Complex, is a defence and aerospace agency under Pakistan’s defence ministry. It has played a crucial role in the development of Pakistan’s missile programme. HT had reported last month that a NDC facility at Attock in Pakistan’s Punjab province that builds transporter-erecter-launcher vehicles for missiles was among military installations targeted by Indian drones on May 8 during hostilities between the two countries.
HT had reported that the merchant vessel Da Cui Yun, which sails under the flag of Hong Kong, was stopped by India’s customs department at Kandla port in Gujarat on February 3, 2020, for wrongly declaring an autoclave, which can be used in construction of missiles, as an “industrial dryer”. At the time, the vessel was sailing from the Chinese inland port of Jiangyin to Port Qasim in Karachi.
Indian authorities intercepted the vessel when it dropped anchor at Kandla following an intelligence tip-off. Experts from the Defence Research and Development Organisation (DRDO), including a team of nuclear scientists, examined the cargo and determined that the 18x4-metre autoclave – a pressure chamber for carrying out various industrial and scientific processes - was a dual-use item that could be used for civilian or military purposes.
The vessel was allowed to leave Kandla after the autoclave was seized. Reports at the time had suggested that the Da Cui Yun had sailed several times from China to Karachi via Indian ports carrying several cargoes of machinery.
The FATF report said despite the “grave threat posed by proliferation financing”, only 16% of countries assessed by the watchdog and its global network have demonstrated high or substantial effectiveness in a process that evaluates the implementation of targeted financial sanctions under the United Nations Security Council resolutions on proliferation.
The report said that unless the public and private sectors “urgently bolster technical compliance and effectiveness, those seeking to finance WMD proliferation will continue to exploit weaknesses in existing controls”.
The report highlighted the evolving methods and techniques used to evade sanctions related to proliferation financing and national and multilateral regime, and outlined how proliferation networks are sourcing dual-use goods, technologies, and knowledge - often through procurement networks and front companies - and using various financial channels to access the global financial system. The report listed the misuse of the maritime and shipping sectors as one of four main methods used to evade sanctions.