FATF Report on Terror Financing Risks
The Financial Action Task Force (FATF) released a comprehensive report highlighting the misuse of e-commerce platforms and online payment services for terror financing.
Key Incidents Highlighted
- Pulwama Attack (2019): Essential materials for the attack, like aluminum powder, were procured through Amazon.
- Gorakhnath Temple Incident (2022): Investigation revealed ₹669,841 ($7,685) transferred via PayPal to support ISIL, using VPNs and online services to obscure the transfers.
Methods of Terror Financing
- State Sponsorship: Some terrorist organizations continue to receive financial support from national governments, using state sponsorship as a fundraising technique.
- Online Payment Services: Provide less traceability, facilitating fund movement without clear identification of initiators and recipients. Low-cost, fast transfers are attractive to terrorists.
- E-commerce Platforms: Used for procurement of equipment, chemicals, and weapons. Also used to sell items for financing terrorist operations.
Case Studies and Examples
- E-commerce and EPOMs: Terrorists used platforms like Amazon and online marketplaces for operational procurement and fund-moving purposes inspired by trade-based money laundering schemes.
- Use of VPNs and Online Payment Services: In the Gorakhnath Temple case, international transactions were facilitated via PayPal, masked by VPNs to support ISIL activities.
Implications and FATF Observations
- Payment Apps and Traceability Issues: Online platforms need enhanced scrutiny due to lower traceability, complicating the identification of terror financing networks.
- Diverse Channels for Fund Movement: Terrorists use fintech services, offering low-cost solutions to diversify fund-moving methods, appealing for the anonymity they provide.
- Recruitment and Crowdfunding: Online services integrated with social networks allow for recruitment, crowdfunding, and fund transfers using a single platform.
- Europol's Assessment: Peer-to-peer payment systems are commonly used by terrorist cells, foreign fighters, and EoRMT groups to procure resources and sell extremist materials.
The report underscores the need for international cooperation and stringent monitoring of financial networks to counteract terror financing effectively.
