Syllabus: GS3/ Security
In News
- India has intensified its efforts to combat terror financing and actively engage with international financial institutions to curb the misuse of such funds in supporting terrorist activities.
More about the News
- India is urging institutions like the International Monetary Fund (IMF), World Bank, and Asian Development Bank (ADB) to review their financial aid to Pakistan to ensure that development funds are not diverted towards financing terrorism.
- India is advocating for Pakistan’s re-entry into the Financial Action Task Force (FATF) grey list, emphasizing the need for stringent monitoring of its financial systems to prevent terror financing.
Terror Financing
- Definition: Terror financing involves the provision of funds or financial support to individual terrorists or terrorist organizations. These funds can originate from both legitimate and illegitimate sources and are used to sustain terrorist operations, including recruitment, training, and execution of attacks.
- Major Sources of Terror Financing:
- Hawala Transactions: An informal method of transferring money without physical movement, often exploited to fund terrorist activities.
- Fake Currency: Circulation of counterfeit currency undermines the economy and provides untraceable funds for terrorist operations.
- Drug Trafficking: Illicit drug trade serves as a significant revenue stream for terrorist groups.
- Extortion and Kidnappings: Terrorist organizations engage in extortion and abductions to extract funds from individuals and businesses.
- Charitable Organizations and NGOs: Some entities are misused as fronts to collect and channel funds towards terrorist activities.
Challenges in Combating Terror Financing
- Complex Financial Networks: Terrorist groups utilize sophisticated and decentralized financial systems, making detection and disruption challenging.
- Lack of International Cooperation: Inadequate collaboration among nations hampers the global fight against terror financing.
- Legal and Regulatory Gaps: Variations in legal frameworks and enforcement capabilities across countries create loopholes exploited by terrorists.
- Misuse of Technology: The rise of cryptocurrencies and digital payment systems offers anonymity, facilitating untraceable transactions.
India’s Measures to Counter Terror Financing
- Legislative Framework:
- Unlawful Activities (Prevention) Act (UAPA): Empowers authorities to designate individuals and organizations as terrorists and seize their assets.
- Prevention of Money Laundering Act (PMLA): Provides for the confiscation of property derived from or involved in money laundering.
- Institutional Mechanisms:
- Financial Intelligence Unit (FIU-IND): Analyzes suspicious financial transactions and disseminates information to enforcement agencies.
- National Investigation Agency (NIA): Investigates and prosecutes offenses related to terrorism and its financing.
- International Collaboration:
- Active participation in global forums like FATF and the “No Money for Terror” (NMFT) conference to enhance international cooperation.
- Technological Advancements:
- Implementation of the National Intelligence Grid (NATGRID) to facilitate real-time information sharing among security agencies.
Source: TH