TERROR FINANCING – INTERNATIONAL
News: Third edition of the ‘No Money For Terror’ conference to discuss crowdfunding of terrorism
What's in the news?
● India will host the Third No Money for Terror (NMFT) Conference on November 18-19. Delegates from 75 countries and international bodies are expected to attend the event, which will take up ways to combat global terrorist financing.
No Money for Terror:
● The “No Money for Terror” conference was started in 2018, as an initiative of the French government, to specifically focus on cooperation between countries to choke terror funding.
● In 2019, the conference was held in Australia.
● It was to be held in India in 2020 but was postponed due to the Covid-19 pandemic.
Significance:
● It offered a unique platform for participating nations and organisations to deliberate on the effectiveness of the current International regime on Counter Terrorism Financing and the steps required to address emerging challenges.
Conference 2022:
● It was attended by delegates from 72 countries and 15 international organizations.
● During the Conference, deliberations were held in four sessions with focus on:
○ Global Trends in Terrorism and Terrorist Financing.
○ Use of Formal and Informal Channels of Funds for Terrorism.
○ Emerging Technologies and Terrorist Financing.
○ International Co-operation to Address Challenges in Combating Terrorist Financing.
What is terror financing?
● It involves the solicitation, collection or provision of funds with the intention that they may be used to support terrorist acts or organizations.
● Terrorist financing encompasses the means and methods used by terrorist organizations to finance their activities.
SOURCES OF TERROR FINANCING:
1. NGOs, Charities and Donations:
● Traditional societies in countries like Saudi Arabia have been supporting traditions and customs which encourage donations.
● Example: In Pakistan, the Government has limited control over charities and NGOS. A similar challenge is faced in countries like Saudi Arabia.
● Funds from NGOs and charities flow into India through hawala, cash, legal financial routes and trade.
2. Zakat:
● The primary source of traditional funding in Islam is based on zakat. This is an accepted and legal system of almsgiving.
● A percentage of this element of zakat finds its way into TF in countries like India.
3. Charities and Diaspora:
● Charities have mushroomed in a number of countries which have a very strong radical component.
● Charities, through acts of omission or commission, become a part of this funding effort and money is transferred through international channels to terrorist groups. Example: Funding of charities like Jamaat- ud-Dawa (JuD) in Pakistan is a case in point.
● The outbreak of the insurgency in J&K, especially during the early 1990s, saw the Jammu and Kashmir Liberation Front (JKLF) receive substantial support from Kashmiri diaspora, from both sides of the LoC.
● Terrorist groups in the Indian hinterland have also been supported by a large diaspora in West Asian countries, Europe and the US.
4. Remittances:
● Links of former Students Islamic Movement of India (SIMI) and Indian Mujahideen (IM) cadres in India have also been established with financiers in the Gulf.
● The large flow of foreign remittances into Kerala has also become a source of concern for agencies.
5. Counterfeiting of Currency:
● Counterfeiting of Indian currency not only funds terrorism, but, more importantly, it is used as a tool by Pakistan to destabilize the Indian economy.
● Fake Indian Currency Notes (FICN) are produced in Pakistan and to a much smaller extent locally in India. FICN is used to fund groups like LeT, Al- Badr, Harkat-ulJihad al-Islami (HuJI), Khalistan Commando Force (KCF), and Dawood Ibrahim-run operations.
● High quality FICN are printed in Pakistan and brought to Bangladesh by air. Thereafter, these are smuggled into India, with bundles of notes being thrown into villages across the border.
6. Narco Finance:
● Drugs are a major source for terror financing.
● This involves 3 stages such as
○ Production
○ Transfer of drugs or its financial proceeds into the country.
○ Its circulation to terrorist groups.
● Afghanistan has emerged as the hub for the global production of opiates.
● There is evidence of terrorist groups in Pakistan gaining access to the proceeds of drug trafficking. This has been used by the ISI to spread terrorism and fight Pakistan’s proxy war against India. This threat has been exploited in the Indian context as a result of porous borders with states like Nepal.
● Criminal and terrorist groups from Bangladesh have also exploited drug trade to fund terrorism. In the case of Pakistan, besides criminals, state sponsorship of terrorism leads to exploitation of the lucrative drug trafficking business.
7. State Sponsorship:
● Pakistan has employed its intelligence agency, the ISI to directly fund terrorist activities in India.
● This is not only employed as part of the proxy war in J&K, as is widely known, but also in the North-East.
● The NIA’s interrogation report of David Coleman Headley provides detailed account of state funding by the ISI for the 26/11 terrorist attacks.
● The ISI uses various sources for funding terrorism to include charities, NGOs, drug trafficking, zakat donations, counterfeit and trading amongst others.
HOW ARE FUNDS USED?
The funds are used for various operations, including:
● Terrorist attacks
● Pre-operational surveillance
● Travel to and from the target location, vehicles and other machinery, firearms, false identity documents and basic living expenses.
● Propaganda and recruitment through social media to solicit funds from supporters, purchasing internet domain names and administering websites.
● Training operatives and sympathisers.
● Salaries and member compensation, as well as for the families of jailed or deceased members.
● Social services providing public health, social and educational services, designed to undermine the credibility of the legitimate governments.
ROLE OF DIGITAL TECHNOGIES IN THE TERROR FINANCING:
1. Emergence of Crypto currencies:
● Swift technological developments in areas of blockchain or cryptocurrencies which transcend national boundaries and international currency systems have emerged as a new channel for financing terrorist and other illegal activities.
2. Dark web:
● Now a days, the terrorists are using dark web as a medium to purchase and sell weapons for their usage with an anonymous identity.
3. Social media role:
● The act of giving money or other forms of support to lone terrorists or other non-state actors is known as terrorism financing.
● Terrorists and terrorist organizations frequently exploit every financial source they can get their hands on to finance themselves.
● The ability of the internet to safeguard the anonymity it can offer to the donor and recipient makes it a growing source of modern terrorist financing.
● Social Media platforms are growing as medium to gather finance to terror activities by using platefrom for advertising, and other activities.
● Propaganda tool is also used by terrorist organizations to enlist financial support from their supporters.
● Social media is used to give effect to money laundering, the cash may potentially originate from an illicit source but appear to be legitimate.
CHALLENGES ABOUT TERROR FINANCING FOR INDIA:
1. Internal security:
● Terrorist financing not only hinders internal security, but it can also hinder economic development and financial market stability.
● It is therefore critical to halt the flow of funds to terrorists.
2. Misuse of social media:
● Crowd funding is the main method by the terrorists to mobilise the required funds for their activities through social media platforms.
3. Financial transaction apps:
● High number of illegal applications are roaming around the internet.
● They have been used for radicalizing the young students.
4. Lack of international cooperation:
● Due to poor coordination in curbing of terror financing, many terrorist organisations are raising their funds in the countries where the regulation is poor and using it in other countries.
INDIA'S EFFORTS TO CURB TERROR FINANCING:
1. PMLA Act:
● The Prevention of Money Laundering Act, 2002 seeks to prevent and control money laundering in India and confiscate and seize property obtained from the laundered money.
● All suspicious transactions are reported in a prescribed format to the Financial Intelligence Unit (FIU-IND).
● The Enforcement Directorate (ED) is empowered to carry out investigations in offenses of money laundering.
● It also seeks to coordinate with other countries to curb the menace of money laundering.
2. UAPA Act:
● Strengthening the provisions in the Unlawful Activities (Prevention) Act, 1967 to combat terror financing by criminalizing the production or smuggling or circulation of high-quality counterfeit Indian currency as a terrorist act and enlarge the scope of proceeds of terrorism to include any property intended to be used for terrorism.
3. Terror Funding and Fake Currency Cell:
● A Terror Funding and Fake Currency (TFFC) Cell has been constituted in National Investigation Agency (NIA) to conduct focused investigation of terror funding and fake currency cases.
4. Financial Action Task Force:
● India is a Member of Financial Action Task Force (FATF), an inter-Governmental Body, which makes recommendations relating to Combating of Financing of Terrorism, Money Laundering, etc.
● India is also member of the Eurasian Group on Combating Money Laundering and Financing of terrorism (EAG) and Asia Pacific Group on Money Laundering (APG) which are FATF styled regional bodies.
5. Terrorism prevention branch under UN:
● The Terrorism Prevention Branch (TPB) of the United Nations Office on Drugs and Crime (UNODC) works on the legal aspects of countering the financing of terrorism, including promoting the ratification of the relevant universal legal instruments, in particular the International Convention for the Suppression of the Financing of Terrorism (1999), and the implementation of these international standards.
6. MoU with other countries:
● A Memorandum of Understanding (MoU) has been signed between India and Bangladesh to prevent and counter smuggling and circulation of fake currency notes.
7. Demonetisation:
● India had demonetised ₹.500 and ₹.1000 notes in 2016 in order to counter the fake currency notes.
● This action had a great impact on the terror financing prevention activities.
8. Recent steps:
● India is going to set up a separate secretariat against terror financing and money laundering under Ministry of Home affairs.
● Recent introduction of the Central Bank Digital Currency by the RBI is the main step. It will regulate the cryptocurrency activities in the country.
WAY FORWARD:
1. Well improved training to the forces:
● The first step in identifying and forestalling the flow of funds to terrorists is to understand the funding requirements of modern terrorist groups.
● The adaptability and opportunism shown by terrorist organisations suggests that all methods that exist to move money around the globe are to some extent at risk.
● Only accurate and well linked financial intelligence can reveal the structure of terrorist groups and also the activities of individual terrorists.
2. Regulation of new age technologies:
● As the world shrinks with technological and communication changes, terrorists, criminals, weapons and funds are also able to move across national boundaries easily.
3. Mutual cooperation:
● International cooperation between law enforcement authorities in this area is a sine qua non for combating such cross border challenges
● India’s hosting of the “No money for terror” conference should go a long way in focussing on the issue of state sponsored terror financing.
4. Public awareness:
● Awareness should be given by the government to the public about the usage of social media in terror financing.