The Financial Action Task Force (FATF), in its latest Mutual Evaluation Report, released on September 20, has highlighted that a significant portion of terrorism financing (TF) in India, particularly in four out of six conflict zones, originates from outside its borders. The report specifically points to funding linked to ISIL or Al-Qaeda (AQ) groups, which are active in and around Jammu and Kashmir.
Key Findings from the FATF Report:
External Funding: The report underscores that the most critical TF threats in India are linked to foreign entities, with funds often masquerading as donations for charitable activities through Non-Profit Organisations (NPOs).
Diverse TF Sources: Beyond external sources, the report identifies various internal funding methods including extortion, fake currency, narcotics, virtual assets, and illicit arms trafficking. Each conflict zone shows a unique pattern of funding.
Emerging Trends: The use of virtual assets or cryptocurrencies for TF is noted as an emerging trend, posing challenges due to the difficulty in tracing these transactions.
Government Initiatives: The FATF praised initiatives like the ‘Sahi Raasta’ program aimed at counter-radicalisation in Jammu and Kashmir and Maharashtra’s campaign allowing for the rehabilitation of terror financing offenders.
Investigative Capabilities: The National Investigation Agency (NIA) and the Enforcement Directorate (ED) were commended for their ability to conduct complex financial investigations, effectively tracing money trails linked to terrorist activities.
Compliance and Effectiveness: India received positive feedback for its high level of technical compliance with FATF recommendations and effectiveness in implementing anti-money laundering and counter-terrorism financing (AML/CFT) measures.
Implications of the Report:
International Cooperation: The report’s findings suggest a need for enhanced international cooperation to curb the flow of funds from abroad. It calls for stricter monitoring of NPOs and better tracking mechanisms for virtual asset transactions.
Domestic Policy Adjustments: Indian authorities are likely to bolster their AML/CFT frameworks, focusing more on the prevention of radicalisation and the rehabilitation of individuals involved in TF.
Economic and Security Impact: Understanding the sources of TF can help in mitigating the broader economic impact of terrorism, protecting sectors like finance, trade, and tourism from the indirect effects of terrorism.
The FATF’s detailed analysis not only reaffirms the complex nature of terrorism financing in India but also acknowledges the country’s proactive steps in combating these threats. As India continues to refine its strategies, the global community’s support and cooperation are crucial in fully addressing this multifaceted issue. This report serves as a blueprint for both national and international efforts to dismantle the financial networks that fuel terrorism.
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