How we can further our efforts in curbing terror financing

Source– The post is based on the article “How we can further our efforts in curbing terror financing” published in The Indian Express on 16th November 2022.

Syllabus: GS3- linkages of organised crime with terrorism

Relevance: Terror funding

News- The article explain the issue of terror funding.

What are new emerging challenges related to terrorism?

Amorphous terror groups are emerging a big threat.

Terrorist are using newer cyber linked methods of recruitment of radical elements.

The increasingly lethal lone wolf attacks are all adding to the threats emanating from extremist violent elements.

What are methods used by terrorist groups for global flow of funds?

Traditional channels– First, is direct smuggling of cash through international borders.

Second is the use of hawala networks.

Third is banking networks including SWIFT and other international channels.

Terrorist organizations raise money through several sources like travel agencies, money changers, real estate, retail outlets, NGOs, charitable trusts, and even from state sponsors. Terrorists also derive funding from a variety of criminal activities ranging from low-level crime to organized fraud, narcotics smuggling, and illegal activities in failed states and other safe havens.

But now, 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.

What are global instruments used to tackle terror funding?

Financial Action Task Force (FATF) was formed in 1989 to tackle terror financing and money laundering.

The UNSCR resolution 1267 in 1999 and UNSCR resolution 1373 in 2001 formed the bedrock of the financial sanctions regime for terrorist organizations and individuals.

FATF has developed its entire paradigm around the word risk. It used the United Nations Security Council sanctions against terrorists and terrorist organizations to begin to evolve a complex body of documentation in order to assess technical compliance and effectiveness of countries in implementing those UN designations.

What is the way forward resolve the issue of terror funding?

The first step to stop the flow of funds to terrorists is to understand the funding requirements of modern terrorist groups. The costs associated are not only for conducting terrorist attacks. These are also related to developing and maintaining a terrorist organization and its ideology.

Funds are required to promote a militant ideology, pay operatives and their families, arrange for their travel, train new members, forge documents, pay bribes, acquire weapons and stage attacks.

Accurate and well linked financial intelligence is needed to reveal the structure of terrorist groups and also the activities of individual terrorists.

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