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Introduction

Terror funding in India is a serious threat to national security. It involves both domestic and foreign sources of money, which are used to support terrorist activities and organisations using various formal and informal channels, such as hawala, NGOs, fake currency, etc., to transfer funds. Recently, ED arrested 5 people in Kerala for hawala dealings worth ₹300 crore possibly being used for Terror financing. Also 105 cases related to terror funding were registered, 94 charge sheets were filed against 876 accused, 796 accused have been arrested, out of which 100 accused have also been convicted by NIA

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Major Sources of Terror Funding in India

• Hawala Transactions: It provides a quick and secretive method for transferring money, making it a favourite among terrorist organizations. For instance, hawala networks played a significant role in funding the 1993 Bombay bombings.
• Drug Trafficking: The Golden Crescent region is notorious for opium production. This opium is often processed into heroin and smuggled into India, especially in states like Punjab. Revenue from drug trafficking is a significant source of funding for extremist groups like the Taliban.
• Fake Currency: Counterfeit currency destabilizes the economy and funds criminal enterprises. Operations by the NIA have uncovered such activities, where counterfeit notes were printed in foreign countries and then pumped into India to fund terrorist activities.
• Cybercrime: Extremist groups are using sophisticated online methods, such as ransomware attacks and identity theft, to generate funds. The investigations into the Uri attack in 2016 revealed the involvement of digital transactions to fund the assailants.
• Charities and NGOs: Organizations like Jamaat-ud-Dawa disguise themselves as charitable entities to attract donations. However, these funds are often channelled into activities like recruiting and arming militants, as was the case in multiple attacks by its front, Lashkar-e-Taiba.
• Kidnapping and Extortion: Criminal organizations and terrorist groups sometimes overlap in activities like kidnapping for ransom. Groups like the Indian Mujahideen have targeted high-profile individuals to finance their activities through extortion money.
• Crowdfunding and Online Donations: Extremist groups exploit the anonymity of the internet for fundraising. Websites and social media campaigns solicit donations under false pretences, only for these funds to be funnelled into extremist activities.
• Local Taxes: In areas under the control of groups like the Naxals, a form of “revolutionary tax” is imposed on businesses and even individuals. These funds are then used to procure weapons and sustain insurgent activities.
• Sale of Stolen Goods: Theft of vehicles and electronic items is another avenue for raising funds. These stolen goods are often sold in neighboring countries, and the proceeds are used for financing extremist activities.
• Foreign Funding: External funding from states or organizations can substantially bolster extremist activities within India. An example is the alleged involvement of Pakistan’s ISI in the 26/11 Mumbai attacks.

Efforts to Curtail These Sources:

• Strong legal framework: India has enacted laws such as the Unlawful Activities (Prevention) Act, 1967, the Prevention of Money Laundering Act, 2002, and the Foreign Contribution (Regulation) Act, 2010, empowering authorities to prosecute and confiscate the assets of terror financiers.
• Comprehensive monitoring framework: India has established institutions such as the Financial Intelligence Unit (FIU), the NIA and the ED to monitor and act against terror funding. They also coordinate with other agencies such as the RBI, SEBI, CBDT, CBIC, etc., for better compliance .
• Actionable intelligence sharing: India has enhanced its intelligence sharing mechanism with other countries through bilateral and multilateral platforms such as the FATF, the SAARC Terrorist Offences Monitoring Desk (STOMD), the Regional Anti-Terrorism Structure (RATS) of SCO,
• Provision for confiscation of property: India has made provisions for confiscation of property of individuals and entities involved in terror financing under various laws such as the UAPA, PMLA, FCRA, etc. For instance, in 2020, NIA attached properties worth crores belonging to Asiya Andrabi, chief of banned outfit Dukhtaran-e-Millat.
• Prevent misuse of legal entities: To prevent the misuse of legal entities such as NGOs, trusts, companies, etc., for terror financing. India has made it mandatory for such entities to register with the government and disclose their sources and uses of funds.
• Boosting international cooperation: India has signed bilateral agreements and memoranda of understanding with several countries such as the USA, UK, UAE, France, etc., to exchange information and assistance on terror funding cases.
• OECD Initiative: OECD launched money-laundering-and-terrorist-financing-awareness programme for international collaboration and awareness.
• Participation in global forums: India has also participated in multilateral forums such as the No Money for Terror Conference, which aims to foster global collaboration in countering terrorist financing.

The ‘No Money for Terror (NMFT)’ Conference is a global initiative to combat the financing of terrorism. It was launched in 2018 by France, followed by Australia in 2019. India hosted the third edition of the conference on 18-19 November 2022, with the participation of 78 countries, including 20 ministers.

Aims & Objectives the ‘No Money for Terror (NMFT)’ Conference

• Global Collaboration: The Conference aimed to foster global collaboration to combat the financing of terrorism. Participation of 78 countries and 20 ministers illustrated a collective will to address this issue. Eg: The FATF guidelines were discussed as a standard for international cooperation.
• Policy Harmonization: Synchronizing anti-terrorism financing policies across countries to create a unified front. Example: The European Union’s 4th Anti-Money Laundering Directive is an exemplary framework that countries could consider emulating.
• Capacity Building: It aimed to equip countries, especially those with developing economies, with the tools and knowledge to fight terror financing. Eg: Training programs modelled after the U.S. Department of the Treasury’s counter-terrorism financing courses were proposed.
• Transparency and Information Sharing: To improve the transparency of financial systems and foster information sharing among nations to trace illicit funds. Eg: The SWIFT messaging system’s role in tracking financial transactions was discussed as a way to enhance transparency.

Aims & Objectives of the ‘No Money for Terror (NMFT)’ Conference

• Knowledge Exchange: An immediate objective was to serve as a platform for countries to share insights, best practices, and intelligence for combating terror financing. Example: Israel’s use of financial intelligence to dismantle terrorist cells served as a case study.
• Resource Mobilization: To help countries mobilize financial, technical, and human resources to strengthen their counter-terrorism financing efforts. Eg: Australia’s “Countering Violent Extremism” program, backed by substantial funding and resources, was cited as a model to follow.
• Monitoring and Evaluation: Implementing regular monitoring mechanisms to evaluate the effectiveness of anti-terrorism financing measures. Eg: The UN’s Counter-Terrorism Committee Executive Directorate (CTED) assessment protocols were discussed as a potential global standard.
• Civil Society Engagement: Engaging with civil societies, NGOs, and the private sector to broaden the net of surveillance and action against terror financing. Eg: Tech Against Terrorism initiative involving tech companies in the fight against online extremist content, was discussed.

Conclusion

Combating terror financing is not just a national but a global imperative. Initiatives like the ‘No Money for Terror’ conference are a step in the right direction. By pooling resources and knowledge at both the national and international levels, it is possible to strangle the financial lifelines of terrorist organizations and make the world a safer place.

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