Why in News?
The Financial Action Task Force (FATF), in a report, highlighted that digital platforms—including online payments, VPNs, social media, and e-commerce—were misused in the Pulwama (2019) and Gorakhnath Temple (2022) terror attacks.
The report, titled ‘Comprehensive Update on Terrorist Financing Risks’, serves as a global alert on the evolving and increasingly complex methods of terrorist financing. It warned that such platforms are increasingly being exploited for terror financing.
What’s in Today’s Article?
- Financial Action Task Force
- FATF Flags Rising Misuse of Digital Platforms for Terror Financing
- Pulwama Attack: E-Commerce Misuse
- Gorakhnath Attack: VPNs and Online Payments
Financial Action Task Force (FATF)
- FATF is an intergovernmental policy-making body established in 1989 at the G7 Summit in Paris.
- Its primary objective is to develop policies to combat money laundering (ML), terrorist financing (TF), and other related threats to the integrity of the international financial system.
- Headquarters
- FATF is headquartered in Paris, France, and functions out of the Organisation for Economic Co-operation and Development (OECD) headquarters.
- Members
- FATF comprises 39 members, including 37 jurisdictions and 2 regional organizations (European Commission and Gulf Cooperation Council).
- India became a full member of the FATF in 2010, which enhanced its global financial credibility.
- Key Functions & Roles
- Setting International Standards for combating Money Laundering and Terror Financing through its famous 40 Recommendations.
- Monitoring Compliance of member and non-member countries with those standards.
- Conducting Mutual Evaluations to assess effectiveness of anti-money laundering and counter-terrorist financing measures.
- Issuing Public Statements to identify high-risk and non-cooperative jurisdictions (also known as the FATF Grey List and Black List).
- Encouraging Legal, Regulatory, and Operational Reforms in financial systems globally.
FATF Flags Rising Misuse of Digital Platforms for Terror Financing
- The FATF report highlights how terrorists involved in the Pulwama (2019) and Gorakhnath Temple (2022) attacks used online payment services, VPNs, and e-commerce platforms.
- It warns that social media, messaging apps, and crowdfunding sites are increasingly being exploited for financing terrorism.
- State-Sponsored Terror Financing
- Without naming countries, the report notes that some national governments continue to financially and materially support terrorist organisations.
- This includes direct funding, logistical support, training, and sanctions circumvention via trade and smuggling.
- Complex Financial Schemes
- The FATF also points to commodity-based schemes, such as oil-to-gold-to-cash transactions involving multiple jurisdictions, used to move terror funds while evading detection.
- Decentralisation of Terror Networks
- The FATF report flags a global shift in terror operations towards decentralised structures, with regional financial hubs and self-financed cells adapting to local contexts.
- These cells use criminal proceeds, business investments, and local resources to sustain activities.
- Pahalgam Attack and FATF's Prior Warning
- The FATF condemned the April 22 Pahalgam attack, stating that such terror acts are not possible without financial support and money transfer mechanisms.
- It had announced plans for a detailed analysis on terrorist financing.
- Storage and Trade-Based Terror Financing
- FATF also noted gold and jewellery being used for storing small funds by ISIL or Al-Qaeda-inspired individuals in India.
- Trade-based financing schemes and decentralised decision-making—like Al-Qaeda in the Indian subcontinent (AQIS) managing operations independently—reflect an evolving strategy in terror financing globally.
- Other Channels of Terror Financing
- The report identified various other funding methods:
- Human trafficking, wildlife smuggling, drugs, and virtual assets.
- Donations, shell entities, shell accounts, and mobile apps.
- Hawala routes, crowdfunding, extortion, and ransom collection.
- Misuse of non-profit organisations.
Pulwama Attack: E-Commerce Misuse
- In the 2019 Pulwama attack, aluminum powder—a key component of the IED—was procured via Amazon, revealing how e-commerce platforms can be exploited for acquiring materials used in terror attacks.
- Authorities attributed the attack to Jaish-i-Mohammed, with evidence of cross-border movement of explosives.
Gorakhnath Attack: VPNs and Online Payments
- The 2022 Gorakhnath Temple attacker, influenced by ISIL ideology, used VPNs to hide his identity and PayPal to transfer ₹6.69 lakh ($7,736) internationally.
- He also received foreign funds and sent money to ISIL-linked individuals abroad. PayPal later suspended the account due to suspicious activity.
Conclusion: Exploitation of Digital Infrastructure
- The report underscores a growing trend of misusing digital tools—e-commerce, VPNs, and online payment systems—for planning, funding, and executing terrorist acts.
- This highlights the urgent need for regulatory oversight and monitoring.