Q.Give out the major sources of terror funding in India and the efforts being made to curtail these sources. In the light of this, also discuss the aim and objective of the No Money for Terror (NMFT)’ Conference recently held at New Delhi in November 2022.

Body Analysis

Major Sources of Terror Funding in India

• Hawala Transactions (Unregulated Financial Networks): Hawala channels bypass formal banking systems, making them highly difficult to track. The Financial Intelligence Unit-India (FIU-IND) estimates that these informal networks, often originating from Pakistan and the Middle East, account for over 30% of terror funding in India.
• Narcotics Trafficking (Narco-Terrorism): The drug trade is a primary funding source, particularly in border regions like Jammu & Kashmir. The Narcotics Control Bureau (NCB) highlights the role of the "Golden Crescent" (specifically Afghanistan, which produces over 80% of the world's opium) in trafficking illicit drugs into India to finance terror operations.
• Fake Indian Currency Notes (FICN): Counterfeit currency is smuggled into India through porous borders with Pakistan, Bangladesh, and Nepal to destabilize the economy and fund local terror modules. According to the National Crime Records Bureau (NCRB), counterfeit notes worth over ₹50 crore were seized in 2021 alone.
• Misuse of Charitable Organizations and NGOs: Some non-governmental organizations receive foreign contributions under the guise of humanitarian aid but divert these funds to radicalization and terror activities. This trend was notably observed in J&K following the revocation of Article 370.
• Extortion and Kidnapping: In Naxal-affected areas and the Northeast, insurgent groups generate substantial revenue through extortion. The Union Ministry of Home Affairs reports that the Maoist insurgency extracts over ₹1,500 crore annually from local businesses, contractors, and mining industries.
• State-Sponsored Terrorism: India has consistently raised concerns over Pakistan providing financial, logistical, and military support to outfits like Lashkar-e-Taiba (LeT) and Jaish-e-Mohammed (JeM), as corroborated by UN reports in 2021.

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Efforts to Curtail Terror Funding

• Strengthening Financial Intelligence: The Financial Intelligence Unit-India (FIU-IND), operating under the Prevention of Money Laundering Act (PMLA) 2002, monitors suspicious financial transactions. It has successfully frozen over ₹800 crore linked to terror financing since 2017.
• Regulation of NGOs: The Indian government canceled the Foreign Contribution (Regulation) Act (FCRA) licenses of more than 1,000 NGOs in 2021 due to non-compliance and suspected links to terror financing.
• Crackdown on Hawala: The Enforcement Directorate (ED) has intensified operations against hawala networks, seizing assets worth over ₹100 crore in 2021, particularly disrupting operations in Kerala and Maharashtra.
• Combating Narco-Terrorism: The NCB has scaled up border surveillance and intelligence sharing with international agencies like the UNODC, leading to drug seizures worth over ₹1,200 crore in 2021.
• Targeting Fake Currency: The 2016 demonetization of ₹500 and ₹1,000 notes, combined with advanced security features in new currency notes, led to a 33% decline in counterfeit currency detection, as reported by the Reserve Bank of India (RBI).
• Diplomatic and Strategic Measures: India has leveraged the Financial Action Task Force (FATF) to pressure state sponsors of terrorism. Consequently, Pakistan was retained on the FATF "grey list" until late 2022, restricting its access to international finance.

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No Money for Terror (NMFT) Conference 2022: Aim and Objectives

The third NMFT Conference held in New Delhi brought together 75 nations and international bodies to build a unified front against terror financing.

• Global Collaboration: To foster international cooperation and align global legal frameworks to prevent the misuse of formal and informal financial channels.
• Sharing Best Practices: To exchange strategies on tracking terror networks using modern technologies like blockchain, artificial intelligence, and big data analytics.
• Addressing Emerging Threats: To focus on new-age challenges, such as the rising use of cryptocurrencies, crowd-funding platforms, and darknet marketplaces by terrorist organizations.
• Strengthening Legal Frameworks: To advocate for swift prosecution, extradition, and asset recovery across jurisdictions.
• Commitment to Global Action: To build consensus on improving financial transparency and executing decisive, coordinated actions against terror-funding sanctuaries.

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