Context:
The Financial Action Task Force (FATF) released its 2025 comprehensive update on Terrorist Financing Risks, highlighting how emerging digital platforms are increasingly misused to fund terrorism. India features prominently in case studies involving digital tools in the Pulwama and Gorakhnath attacks.
Key Highlights from FATF 2025 Report:
- Digital Terror Financing Tools:
- Use of e-commerce platforms, cryptocurrencies, VPNs, and third-party payment gateways to anonymously fund and execute terror operations.
- Example: The Pulwama bomber procured aluminium powder via Amazon; the Gorakhnath attacker used PayPal and VPNs to finance ISIL-linked operations.
- Exploitation of E-Commerce Platforms (EPOMs):
- Terrorists are using online marketplaces to purchase dual-use goods covertly.
- Lack of monitoring and due diligence enables misuse.
- Crypto and Anonymous Tools:
- Unregulated cryptocurrency markets, mixing services, and blockchain wallets aid in untraceable fundraising.
- Encrypted apps and VPNs help avoid detection and surveillance.
- Lone-Actor Radicalisation:
- Rise in self-radicalised individuals using crowdfunding, gaming platforms, and social media to mobilise funds and coordinate attacks independently.
- Trade-Based Terror Financing:
- Use of under- and over-invoicing on digital storefronts to launder and transfer terror funds without raising red flags.
- Geographic Focus:
- High-risk zones: India, South Asia, West Africa, Sahel, and Middle East.
- India cited for both domestic radicalisation and cross-border financial threats.
- Regulatory Gaps Identified:
- Weak KYC norms on digital wallets and fintech platforms.
- Poor data localisation policies hinder law enforcement’s ability to retrieve digital evidence.
Challenges in Combating Digital Terror Financing:
- Cross-border legal complexity and lack of cooperation.
- Dark web usage and real-time tech adaptability by terror groups.
- Inadequate oversight in jurisdictions with lax AML/CTF frameworks.
FATF Recommendations:
- Strengthen Digital KYC: Mandatory identity verification for e-wallets, fintech apps, and e-commerce platforms.
- Real-Time AI Surveillance: Deploy systems to detect suspicious financial behavior and keyword-triggered purchases.
- Global Data Sharing: Establish treaties and digital evidence exchange protocols with tech-hosting nations.
- Crypto Oversight: Enforce disclosure, monitoring, and suspicious transaction reporting by crypto exchanges.
- Platform Responsibility: Online marketplaces to flag high-risk items, ensure seller verification, and comply with reporting standards.
