KARACHI (AFP) - Militants are fanning out across countrys financial capital, where crime fuels funding for insurgency and its 14 million residents offer perfect cover for extremists resting from the battlefield. Karachi is one of the biggest Muslim cities in the world, its Arabian Sea port a gateway to the Middle East and the key transit point for NATO supplies heading to the war effort in neighbouring Afghanistan. Countrys richest city, Karachi, has historically been connected with the criminal underworld and more recently with religious fundamentalism. Indeed it was here that US journalist Daniel Pearl was kidnapped and beheaded in 2002. Police have in recent weeks arrested three suspected militants accused of both plotting attacks in the city and trying to recruit potential militants. We often go to large cities to hide and rest from fighting. These places are ideal to save us from the American (drone) attacks, said one man, who told AFP he is a follower of Taliban commander Baitullah Mehsud. Giving the name Manzar Khan, he said he does low-paid work in Karachi and goes back and forth to the mountains of tribal region. Karachi is the most ideal place of all. It is packed and congested with people so the risks for us are minimal compared to other places, he said. We come and go quite often, he added. Karachi has long been a centre of migration, with an estimated 2.5 million Pashtuns from the northwest said to be living here. The influx began in the 1950s but accelerated in recent years with successive Pakistani offensives against militants. Ethnic tensions between Pashtuns and the local population have spilled over into riots, and stalwarts in traditional local politics complain that the 'Talibanisation of their region is eating away at liberal values. An Army offensive against the Taliban in the three northwest districts launched in late April has also raised fears that militants are relocating and intensifying attacks across the nuclear-armed nation to avenge the operation. Since late May police have arrested three would-be suicide bombers in Karachi, one of whom they said was linked to Mehsud. (Naeem Rehmani) is one of Mehsuds men who is an expert in making suicide jackets and is recruiting people here and sending them for training to tribal areas, said Javed Bokhari, a deputy inspector general of police. We are on the lookout for his accomplices who wanted to bomb government and security agency buildings in the city. Karachi, with its moneyed residents and big business, is also proving fertile ground for financing the insurgency. We have come across kidnapping gangs with links to militants in the northwest and Al-Qaeda, said Sharfuddin Memon, head of the Citizen-Police Liaison Committee, a state-run watchdog organisation. Some of those gangs have been exposed and their members arrested. We have also found them involved in many bank robberies. The money is wired to the northwest through the traditional but illegal method of 'hundi, then used to bankroll the insurgency. Alternatively, families of kidnap victims in Karachi are asked to pay ransoms in the tribal areas, Memon said. Another investigator, with extensive experience on jihadi cases in the city, said their involvement in organised crime had increased recently, following a government ban on jihadi groups and the seizure of their bank accounts. The Urdu-speaking Muttahida Qaumi Movement (MQM), which sits in government and often locks horns with Pashtun political parties, says militants are entering the city in significant numbers. At least 15 per cent of the people coming to Karachi from the troubled northwest are Taliban, said Farooq Sattar, Federal Minister for Overseas Pakistanis and a senior MQM leader, without giving a source for his statistics. Their number could easily be in the hundreds if not thousands. There are thousands of seminaries in the city where the presence of militant sleeper cells cannot be ruled out, he told AFP. Many locals bitterly resent the presence of extremists in their neighbourhoods, and women in working-class areas complain of marauding vigilantes who tell them to dress more conservatively or face punishment. Memon wants the authorities to compile a database of mosques and seminaries where people from the northwest are concentrated. What is being preached in mosques and seminaries should be checked, as the audience there is mostly poor and unemployed people whose minds could easily be exploited, he said. At Karachis Jamia Binoria madrassa, one of the citys thousands of religious schools, students and teachers say there is a conspiracy against the religious political parties and groups. None of those arrested in Karachi are Taliban, it is a part of the game plan of the rulers to take action against madrassas and appease the West, said one teacher who did not want to be named.