Discuss counterfeit currency and money laundering as major sources of terror funding in India. State the actions being taken at International level to check these menaces. Highlight the role of Financial Action Task Force (FATF) and methods of compliance by its member states in preventing terror funding.
Terror financing sustains recruitment, weapons, propaganda and logistics; counterfeit currency and money laundering are its principal Indian conduits.
Counterfeit Currency:
- Fake Indian Currency Notes (FICN) primarily printed in Pakistan (Malir, Peshawar) and routed via Bangladesh, Nepal, Sri Lanka, Gulf.
- Erodes economic stability, funds Kashmir militancy and Punjab/Northeast insurgencies.
- Demonetisation (2016) and new security-featured notes disrupted networks; NIA's Terror Funding & Fake Currency Cell dedicated to it.
- Recent seizures at Bangladesh border and via Myanmar route indicate persistent inflow.
Money Laundering:
- Hawala (informal value transfer), shell companies, over/under-invoicing of trade, real-estate, gold smuggling, cryptocurrencies, NGO misuse.
- Case examples: Hurriyat-linked hawala racket, PFI funding trail, drone-dropped narcotics-financing terror in Punjab.
- Enabled by porous borders, weak KYC in some layers, and jurisdictional gaps.
International Actions:
- UN Security Council Resolutions 1267, 1373, 2462 — sanctions and criminalisation of terror financing.
- International Convention for the Suppression of the Financing of Terrorism (1999).
- UN Global Counter-Terrorism Strategy and Egmont Group of Financial Intelligence Units for cross-border cooperation.
- No Money for Terror (NMFT) Conference — India hosted the third edition (Delhi, 2022).
- INTERPOL notices; Palermo Convention on organised crime.
Financial Action Task Force (FATF):
- Inter-governmental body (1989, Paris) setting global AML/CFT standards through 40 Recommendations.
- Maintains Grey List (jurisdictions with strategic deficiencies) and Black List (High-Risk Jurisdictions — Iran, North Korea, Myanmar).
- Pakistan was on Grey List (2018–2022); its removal remains contested by India given continued terror-financing evidence.
- India is a full FATF member (2010); underwent Mutual Evaluation (2024), placed in the "regular follow-up" category — a positive rating.
Compliance Methods by Member States:
- Enacting AML laws (India's PMLA, 2002).
- FIU-IND analysing suspicious transaction reports.
- KYC/CDD norms for banks and DNFBPs.
- Beneficial-ownership registers.
- Targeted financial sanctions on UNSC-designated entities.
- Regulation of virtual assets and hawala.
- Cross-border information sharing via MLATs and Egmont Group.
- Prosecution and asset confiscation.
Choking terror finance is central to defeating terror.
Answered By:
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