Paper: GS – II, Subject: International Relations, Topic: International Institutions, Issue: The FATF Report.
Context:
The Financial Action Task Force (FATF), in its report ‘Comprehensive Update on Terrorist Financing Risks’, revealed that the accused in two recent terror attacks in India used online payment services, e-commerce platforms, and Virtual Private Networks (VPNs) to carry out their activities.
Key Takeaways:
| About Financial Action Task Force:FATF is an intergovernmental policy-making and standard-setting body dedicated to combating money laundering and terrorist financing.Objective: To establish international standards and to develop and promote policies, both at national and international levels, to combat money laundering and the financing of terrorism.FATF develops and promotes policies across various countries and jurisdictions.Origin:It was established in 1989 during the G7 Summit in Paris in response to a growing concern about money laundering.In 2001, its mandate expanded to include terrorism financing.Headquarters: Paris, France.Members:FATF members include 39 countries, including the United States, India, China, Saudi Arabia, Britain, Germany, France, and the EU as such.In addition, more than 180 countries worldwide are affiliated with the FATF through a network of FATF-style regional bodies (FSRBs).India became a member of FATF in 2010. India is also a member of two FATF Style Regional Bodies (FSRBs)-Asia Pacific Group (APG) and Eurasian Group of Combating Money Laundering and Financing of Terrorism (EAG). |
 The FATF report, titled ‘Comprehensive Update on Terrorist Financing Risks,’ reveals the following concerning trends:
- Use of Online Payment Services: Terrorists are leveraging online payment services to transfer funds across borders, often using third-party transactions to obscure the origin and destination of the money.
- Example (Gorakhnath Temple Attack): The accused transferred ₹6,69,841 via PayPal to foreign countries to support ISIL, using international third-party transactions and VPN services to mask their IP address.
- They also received ₹10,323.35 from a foreign source.
- Exploitation of E-commerce Platforms: E-commerce platforms are being used to procure materials needed for terrorist attacks.
- Example (Pulwama Attack): Aluminium powder, a key component of the improvised explosive device (IED) used in the attack, was purchased on Amazon.
- Use of VPNs for Anonymity: Terrorists are using VPNs to mask their online activity, including communications, downloads, and financial transactions, to evade detection by law enforcement agencies.
- Example (Gorakhnath Temple Attack): A forensic report on the accused’s phone revealed the use of a VPN for calls, chatting, and downloads.
- Abuse of Digital Platforms: Social media, messaging applications, and crowdfunding sites are increasingly being exploited for terror financing.
- State Sponsorship of Terror Financing: The FATF report also acknowledges reports from its delegations about state sponsorship of terrorist financing, either as a fundraising technique or as part of the financial management strategy of certain organizations engaging in terrorist acts.
Implications and Recommendations on Terrorist Financing via Online Platforms:
Conclusion:
- The FATF report underscores the urgent need for governments and regulatory bodies to strengthen their frameworks against terrorist financing, particularly focusing on digital and e-commerce platforms, to safeguard against emerging threats.
- Enhanced cooperation and information sharing among countries are essential for mitigating risks associated with digital financing methods utilized by terrorists.
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