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The Financial Action Task Force (FATF), the global watchdog on money laundering and terror financing, has issued a strong condemnation of the April 22nd terror attack in Pahalgam, Jammu and Kashmir, which resulted in the tragic deaths of 26 individuals. This statement from the FATF carries significant weight, particularly in the context of India's ongoing efforts to combat cross-border terrorism and to hold Pakistan accountable for its role in supporting terrorist organizations operating within and from its territory. The FATF explicitly stated that the Pahalgam attack could not have occurred without substantial financial backing and the ability of terrorist networks to move funds across borders. This highlights a critical understanding of the interconnectedness between financial resources and terrorist activities – the ability to raise, transfer, and utilize funds is fundamental to the planning, execution, and sustainment of terrorist operations. Without the necessary financial infrastructure, terrorist groups would be significantly hampered in their ability to recruit members, procure weapons and equipment, conduct training, and ultimately, carry out attacks. The FATF's focus on "money movement" as a central component of terrorism underscores the importance of disrupting and dismantling terrorist financing networks as a key strategy in counter-terrorism efforts. This involves not only targeting the individuals and entities directly involved in raising and transferring funds, but also addressing the underlying vulnerabilities in the financial system that allow these networks to operate undetected. This includes strengthening anti-money laundering and counter-terrorism financing (AML/CFT) regulations, enhancing international cooperation in the sharing of financial intelligence, and improving the capacity of law enforcement agencies to investigate and prosecute terror financing cases. The mention of the Pahalgam attack by the FATF is noteworthy due to its relative rarity. The FATF typically focuses on broader systemic issues related to money laundering and terror financing, rather than commenting on specific terrorist attacks. The fact that the FATF chose to address the Pahalgam attack specifically lends significant credibility to India's long-standing assertion that Pakistan-backed terror groups are responsible for numerous terror attacks within India. This recognition by a global body like the FATF reinforces the international community's growing awareness of the threat posed by cross-border terrorism emanating from Pakistan and the critical role that financial flows play in sustaining these terror operations. Furthermore, the FATF's condemnation of the Pahalgam attack could provide India with a valuable opportunity to advocate for Pakistan's re-inclusion on the FATF's grey list. The grey list is a designation that indicates a country is under increased monitoring due to weaknesses in its anti-money laundering and counter-terrorism financing systems. Pakistan was previously on the grey list from 2018 to 2022 and was removed after ostensibly demonstrating progress in addressing these deficiencies. However, India has consistently argued that Pakistan has failed to fully implement the necessary anti-terror laws and to effectively dismantle terrorist infrastructure operating within its borders. By presenting evidence and arguments to the FATF demonstrating that Pakistan has not taken sufficient action against terror networks since its removal from the grey list in 2022, India can make a compelling case for its re-inclusion. This would subject Pakistan to increased international scrutiny and pressure to address its shortcomings in combating terror financing.
The FATF's statement also implicitly highlighted the persistence of Pakistan-based terror financing routes. India has consistently raised concerns about the use of various methods, including hawala (an informal system of money transfer), non-governmental organizations (NGOs), and digital tools such as cryptocurrency, by terror groups operating from across the border. These methods are often used to bypass traditional banking systems and regulatory controls, making it more difficult for law enforcement agencies to detect and track the flow of funds. The use of hawala, in particular, presents a significant challenge, as it relies on a network of trusted individuals and businesses to facilitate money transfers outside of formal financial channels. This system is often opaque and difficult to monitor, making it an attractive option for terrorist groups seeking to move funds discreetly. Similarly, NGOs can be exploited to divert funds intended for charitable purposes towards terrorist activities. By establishing or infiltrating legitimate NGOs, terrorist groups can raise funds from unsuspecting donors and then channel those funds to support their operations. The rise of digital tools such as cryptocurrency has further complicated the fight against terror financing. Cryptocurrency offers a degree of anonymity and can be easily transferred across borders, making it difficult for law enforcement agencies to track and seize illicit funds. Terrorist groups have increasingly embraced cryptocurrency as a means of raising funds, transferring money, and evading detection. The FATF has recognized the growing threat posed by these new-age risks and has emphasized the need for enhanced international cooperation to address them. In its statement, the FATF specifically flagged the abuse of social media, crowdfunding, and virtual assets as tools increasingly being used to bypass traditional surveillance systems. Social media platforms can be used to spread propaganda, recruit new members, and solicit donations for terrorist groups. Crowdfunding platforms can be used to raise funds for terrorist activities under the guise of legitimate charitable causes. And virtual assets, as mentioned earlier, can be used to transfer funds anonymously and across borders. Addressing these new-age risks requires a multi-faceted approach involving collaboration between governments, law enforcement agencies, financial institutions, and technology companies. Governments need to develop and implement comprehensive regulatory frameworks to address the use of virtual assets for illicit purposes. Law enforcement agencies need to enhance their capacity to investigate and prosecute cases involving the use of social media, crowdfunding, and virtual assets for terror financing. Financial institutions need to strengthen their AML/CFT controls to detect and prevent the use of their platforms for terrorist financing. And technology companies need to work to identify and remove terrorist content from their platforms and to prevent their services from being used to facilitate terrorist activities.
The FATF's statement may also help India push for tighter international scrutiny of Pakistan's commitments under its grey list exit. While Pakistan has been removed from the grey list, it is still subject to ongoing monitoring to ensure that it continues to implement the necessary reforms to address its AML/CFT deficiencies. India can leverage the FATF's condemnation of the Pahalgam attack to argue that Pakistan has not fully implemented its commitments and that further scrutiny is warranted. This could involve requesting the FATF to conduct a follow-up assessment of Pakistan's progress in implementing its action plan and to provide recommendations for further improvements. It could also involve working with other countries to raise concerns about Pakistan's compliance with FATF standards and to push for stricter enforcement of these standards. In addition to its efforts within the FATF, India can also work with other international organizations and forums to raise awareness of the threat of cross-border terrorism emanating from Pakistan and to advocate for stronger measures to combat terror financing. This could involve working with the United Nations, the G20, and other multilateral organizations to promote the adoption of international standards on AML/CFT and to share intelligence and best practices on counter-terrorism. Ultimately, the fight against terror financing requires a concerted global effort. No single country can effectively combat this threat alone. International cooperation is essential to share intelligence, coordinate investigations, and implement effective regulatory frameworks. By working together, countries can disrupt and dismantle terrorist financing networks and prevent terrorist groups from accessing the resources they need to carry out attacks. The FATF plays a critical role in this effort by setting international standards on AML/CFT, monitoring countries' compliance with these standards, and providing technical assistance to help countries strengthen their AML/CFT systems. The FATF's condemnation of the Pahalgam attack serves as a reminder of the importance of its work and the need for continued vigilance in the fight against terror financing. The upcoming comprehensive report on terror financing patterns, to be released by the FATF, will further contribute to the global understanding of the evolving nature of terror financing and provide valuable insights for policymakers and practitioners. The webinar that will also be held to alert public and private players to emerging threats will play a crucial role in raising awareness and promoting best practices in the fight against terror financing. Earlier comments from FATF President Elisa de Anda Madrazo stressed the critical need for global unity in combating terrorism, underlining that terrorists require just one success, while nations must thwart every attempt. This emphasizes the high stakes and the continuous requirement for vigilance and collaboration in the fight against terrorism and its financial underpinnings.
Source: FATF condemns Pahalgam attack, says it couldn't have occurred without money