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Tightening the noose around terror financing

Updated on Nov 16, 2022 07:07 PM IST

Unless global terrorist networks and financing are uprooted in Pakistan, it would be difficult to subdue terrorism

PREMIUM
Terror financing is a hydra-headed monster. Its roots run deep, but nowhere as deep as in Pakistan (Hindustan Times)
BySujan Chinoy

An upcoming conference on No Money For Terrorism in India on November 18-19 will be a major milestone in the global fight against terror financing. On October 18, Prime Minister Narendra Modi called for concerted action against terror financing in his address to 195 representatives of countries and organisations attending the 90th general assembly of Interpol in New Delhi.

The forthcoming conference is taking place against the backdrop of India assuming the role as the chair of the Shanghai Cooperation Organisation (SCO), president of the G20 from December 1, and president of the United Nations Security Council (UNSC) for the second time in December. More than 90 countries are expected to participate in the event, of which 25 will be represented at the ministerial level.

Terrorist incidents in the opening decade of this century – including the 9/11 attacks on the United States (US) mainland and the 26/11 assault on Mumbai – demonstrated that geography is no longer an impediment for international terrorists. They often receive the financial support of deep States and terrorist networks, and act with impunity around the world. The illegal narcotics trade in the Afghanistan-Pakistan region also financed terrorism for several decades.

The UNSC was galvanised into action in the aftermath of 9/11. It adopted several resolutions to cut off the financial flows that are the lifeblood of terrorism. The results were laudable, but gaps remained to be plugged. The UNSC established the Counter Terrorism Committee (CTC) in 2001 to oversee the implementation of resolutions related to counter-terrorism, and, more specifically, funding. As its current chair, India recently hosted the first overseas meeting of the committee. The Delhi Declaration, issued on October 29, drew attention to the mala fide use of financial technologies, products and services, including crowdfunding platforms, for terror financing.

The Financial Action Task Force (FATF), created in 1989 by the G7 to combat money laundering, was mandated in 2001 to curb terror financing through a norm-setting and evaluation process. Over the years, individual countries established Financial Intelligence Units (FIUs) to collect financial intelligence. The Egmont Group (an international body that facilitates cooperation and intelligence-sharing between nations) provides a coordinating mechanism. There is no denying that these measures helped curb terrorist activities. The FATF evaluation led to Pakistan being placed on its grey list in June 2018. The FATF sets the standards for global anti-money laundering (AML) and counter-terrorist financing (CFT). Global financial institutions take cues from the FATF in denying financial services to listed countries.

But progress is hindered by the failure of the international community to arrive at a common definition of terrorism. Home minister Amit Shah highlighted this aspect at the concluding session of the Interpol Conference in New Delhi. Pakistan and some other nations have a history of describing terrorist networks as “freedom movements” and hailing global terrorists as freedom fighters. The turmoil in Afghanistan in the past two decades gave Pakistan the perfect opportunity to hunt with the hounds and run with the hares. Islamabad drew a distinction between good terrorists and bad terrorists, favouring those who carried out its bidding in waging a proxy war against India, especially in Kashmir.

Terror financing is a hydra-headed monster. Its roots run deep but nowhere quite as deep as in Pakistan. Unless global terrorist networks and financing are uprooted in Pakistan, it would be difficult to subdue terrorism. With high stakes in Pakistan, China is loath to cooperate with the international community in cracking down on Pakistan-based global terrorists. A combination of Chinese expediency and the removal of Pakistan from the FATF grey list gravely undermine global efforts to eliminate terrorism. Pakistan’s assurances are often naively accepted at face value by the international community, its dubious track record notwithstanding.

Today, technology assists law enforcement in myriad ways in the financial sector, especially in tracking cryptocurrency, securing vulnerabilities in digital financial systems, and policing the use of the dark web. The focus of intelligence and law enforcement agencies worldwide should, therefore, rightly centre on promoting cooperation and capacity-building in tackling new technologies for terror financing. The collapse last week of FTX, one of the largest cryptocurrency exchanges, could reduce the use of cryptocurrencies for terror financing. However, there could be a spike in the use of alternative formal and informal networks.

The Delhi Declaration urged all member States to adopt zero tolerance towards terrorism. With the FATF drifting towards new areas, such as environmental crime and illegal wildlife trade, it is time to bring the focus back to the core issue of terror financing. To tighten the noose around terrorism at the regional level, India could perhaps take the lead in proposing the establishment of a regional FATF-style regional body (FSRB) headquartered in India, similar to the Eurasian Group (EAG) on combating money laundering and financing of terrorism set up by Russia in 2004.

Sujan Chinoy is director general of the Manohar Parrikar Institute for Defence Studies and Analyses

The views expressed are personal

An upcoming conference on No Money For Terrorism in India on November 18-19 will be a major milestone in the global fight against terror financing. On October 18, Prime Minister Narendra Modi called for concerted action against terror financing in his address to 195 representatives of countries and organisations attending the 90th general assembly of Interpol in New Delhi.

The forthcoming conference is taking place against the backdrop of India assuming the role as the chair of the Shanghai Cooperation Organisation (SCO), president of the G20 from December 1, and president of the United Nations Security Council (UNSC) for the second time in December. More than 90 countries are expected to participate in the event, of which 25 will be represented at the ministerial level.

Terrorist incidents in the opening decade of this century – including the 9/11 attacks on the United States (US) mainland and the 26/11 assault on Mumbai – demonstrated that geography is no longer an impediment for international terrorists. They often receive the financial support of deep States and terrorist networks, and act with impunity around the world. The illegal narcotics trade in the Afghanistan-Pakistan region also financed terrorism for several decades.

The UNSC was galvanised into action in the aftermath of 9/11. It adopted several resolutions to cut off the financial flows that are the lifeblood of terrorism. The results were laudable, but gaps remained to be plugged. The UNSC established the Counter Terrorism Committee (CTC) in 2001 to oversee the implementation of resolutions related to counter-terrorism, and, more specifically, funding. As its current chair, India recently hosted the first overseas meeting of the committee. The Delhi Declaration, issued on October 29, drew attention to the mala fide use of financial technologies, products and services, including crowdfunding platforms, for terror financing.

The Financial Action Task Force (FATF), created in 1989 by the G7 to combat money laundering, was mandated in 2001 to curb terror financing through a norm-setting and evaluation process. Over the years, individual countries established Financial Intelligence Units (FIUs) to collect financial intelligence. The Egmont Group (an international body that facilitates cooperation and intelligence-sharing between nations) provides a coordinating mechanism. There is no denying that these measures helped curb terrorist activities. The FATF evaluation led to Pakistan being placed on its grey list in June 2018. The FATF sets the standards for global anti-money laundering (AML) and counter-terrorist financing (CFT). Global financial institutions take cues from the FATF in denying financial services to listed countries.

But progress is hindered by the failure of the international community to arrive at a common definition of terrorism. Home minister Amit Shah highlighted this aspect at the concluding session of the Interpol Conference in New Delhi. Pakistan and some other nations have a history of describing terrorist networks as “freedom movements” and hailing global terrorists as freedom fighters. The turmoil in Afghanistan in the past two decades gave Pakistan the perfect opportunity to hunt with the hounds and run with the hares. Islamabad drew a distinction between good terrorists and bad terrorists, favouring those who carried out its bidding in waging a proxy war against India, especially in Kashmir.

Terror financing is a hydra-headed monster. Its roots run deep but nowhere quite as deep as in Pakistan. Unless global terrorist networks and financing are uprooted in Pakistan, it would be difficult to subdue terrorism. With high stakes in Pakistan, China is loath to cooperate with the international community in cracking down on Pakistan-based global terrorists. A combination of Chinese expediency and the removal of Pakistan from the FATF grey list gravely undermine global efforts to eliminate terrorism. Pakistan’s assurances are often naively accepted at face value by the international community, its dubious track record notwithstanding.

Today, technology assists law enforcement in myriad ways in the financial sector, especially in tracking cryptocurrency, securing vulnerabilities in digital financial systems, and policing the use of the dark web. The focus of intelligence and law enforcement agencies worldwide should, therefore, rightly centre on promoting cooperation and capacity-building in tackling new technologies for terror financing. The collapse last week of FTX, one of the largest cryptocurrency exchanges, could reduce the use of cryptocurrencies for terror financing. However, there could be a spike in the use of alternative formal and informal networks.

The Delhi Declaration urged all member States to adopt zero tolerance towards terrorism. With the FATF drifting towards new areas, such as environmental crime and illegal wildlife trade, it is time to bring the focus back to the core issue of terror financing. To tighten the noose around terrorism at the regional level, India could perhaps take the lead in proposing the establishment of a regional FATF-style regional body (FSRB) headquartered in India, similar to the Eurasian Group (EAG) on combating money laundering and financing of terrorism set up by Russia in 2004.

Sujan Chinoy is director general of the Manohar Parrikar Institute for Defence Studies and Analyses

The views expressed are personal

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