Global Response to Terror Financing

The Financial Action Task Force (FATF) reports inadequacies in the global response to terror financing, with many countries displaying security gaps.

Shift to Online Funding

• Funding for terrorist activities is increasingly moving online, bypassing traditional financial channels.
• Tracking protocols in digital channels are less robust, raising regulatory challenges in countries with growing e-commerce sectors.

Decentralisation and Digital Platforms

• Digital funding of terrorism is decentralized, utilizing social media and crypto assets.
• Individuals can easily raise funds through crowdsourcing on instant messaging platforms.
• Funds are transferred into cryptocurrencies via digital payment systems.
• E-commerce logistics networks are used to purchase and ship materials for terrorism.

Enforcement and Regulatory Challenges

• Digital channels expand the risk assessment methodologies for enforcement agencies.
• There is a need to build institutional capacity for detection and enhance online reporting structures.
• Regulatory frameworks must adapt to technological advances, targeting abuse by rogue elements.

Traceability and Legislation

• Online activities possess higher traceability, which can aid investigators.
• Legislation is needed to illuminate dark areas of digital transactions, such as crypto havens.

India's Position

• India must address vulnerabilities to radicalization and new forms of terror funding.
• Harmonization with international regulatory practices is crucial.
• India leads in advocating for global regulation of cryptocurrencies due to security and financial risks.
• The primary focus should be on enforcement to detect and deter terrorist activities domestically.