Millions of dollars from Saudi donors routed to Afghanistan through Pakistan’s tribal areas, have fuelled terrorism in the country during the last four years, Afghan financial intelligence unit has claimed.

The funds, totalling more than 920 million pounds, entered from Pakistan where they are converted into rupees or dollars, the favoured currency for terrorist operations, the Afghan financial intelligence unit FinTraca has claimed.

“We can trace it back as far as an entry point in Waziristan,” said Mohammed Mustafa Massoudi, the director-general of Fintraca in Kabul.

“Why would anyone want to put such money into Waziristan? Only one reason – terrorism”.

Although Saudi Arabia - the home of the bin Laden family - is considered a key ally in the war against terror, a U.S. government report last year said that private Saudi backers were the chief source of finance for the Taliban.

Moreover, influx of Saudi money is on the increase.

The 920 million pounds, or five billion Saudi riyals, monitored by FinTraca since 2006 have gone up, peaking this year.

Most of it entered Afghanistan through the Pakistani tribal area, in particular North Waziristan, which is infamous as al-Qaeda’s heartland.

According to a report in The Times, the revelations bring to light the difficulties in dividing the Taliban from al-Qaeda influence and the continuing involvement of Saudi donors in sponsoring the insurgency.

The Afghan government, which favoured reconciliation with a section of the Taliban, has demanded that insurgents renounce their relations with al-Qaeda as a precondition for any integration into the political process.

According to the report, direct al-Qaeda involvement in southern Afghanistan is seen as minimal.

Coalition intelligence officers recently told The Times that only half a dozen foreign voices had been detected among 13,000 intercepted conversations in the area in April.

However, the flow of Arab funds to the Taliban poses a strategic obstacle to the counter-insurgency campaign.

It also said that al-Qaeda in the Arabian Peninsula still has a potent and far-reaching financial ability.

Officials, however, did not disclose the precise route taken by the Saudi money before arriving in North Waziristan.

“That is a question for Pakistan to answer,” a Fin Traca official said.

Mr. Massoudi said that the Saudi riyals were moved from Waziristan to Peshawar, capital of the North West Frontier Province, where Pakistani nationals were used to exchange the cash for local currency or dollars.

Exactly what happens to this cash is unclear, given the murky nature of the transactions and the absence of controls on money leaving or entering Afghanistan.

The riyals, in the hands of Pakistani money—changers, are recycled back into regular cash channels, also through Afghanistan.

Kabul’s international airport is where most of the riyals are declared officially, bound this time for Dubai and conversion into dollars.

FinTraca was established four years ago with British and American help — including input from the Serious Organised Crime Agency — as a semi—autonomous institution within the Central Bank of Afghanistan.

To fight money laundering and the funding of terrorism, it monitors Afghan banks and informal hawala brokers as well as working with the Afghan intelligence service, the NDS, and international organisations.

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