An entirely new breed of terrorists has emerged. Terrorist outfits today have a transnational reach. New support structures and financing mechanisms are being created…
Reducing the flow of funds to terrorist outfits is perhaps most vital after penetration of these outfits. (This) would limit terrorist capability to acquire weapons, recruit cadres, establish training facilities and state-of-the-art secure communications.
(Some of) the more common methods terrorist outfits use to generate funds—in the context of South Asia—are: One, utilization of legitimate business enterprise—LTTE has a very well-established network and Jehadi terrorist outfits have begun to follow suit. Two, stock markets— stock exchanges in Mumbai and Chennai have, on occasions, reported that fictitious or notional companies were engaging in stock-market operations. Some of these were later traced to terrorist outfits. Three, legitimate banking channels are being used. Many instances of funds received via banking channels from so-called safe locations, such as Dubai and UAE, intended for terrorist organizations have been detected. Each transaction tends to be small so as not to attract attention. Use of both real and fraudulent ATM cards has also been resorted to.
An important source for jehadi outfits are religious charities. Sincere believers are perhaps unaware that a sizeable portion of funds go to terrorist activities. Many charities already designated as “Terrorist Front Organizations’ continue to operate under new labels. The Al Rashid Trust went through several changes in nomenclature, while the banned International Islamic Relief morphed into the Sanabil Al Khir Foundation. Conduits through which funds find their way to terrorists include established banking channels such as the Habib Bank in Pakistan.
A combination of conventional money-laundering techniques, with placement of funds utilizing the ‘underground and parallel banking system’ has made it extremely difficult to track fund uses for terrorist purposes, since no audit or paper trail is available. The globalization of terror and exploitation of state-of-the-art technology enhance terrorists’ capability to move ‘hot money’ across global borders.
India is committed to fully implementing the UN Global Counter-Terrorism Strategy, including measures against the financing of terrorism. India has also joined the International Convention for the Suppression of Financing of Terrorism. We have established the legal, regulatory and administrative framework for combating money laundering and financing of terrorism. A Financial Intelligence Unit—India is the nodal agency responsible for receiving, analysing and disseminating information on suspect transactions to intelligence and enforcement agencies.
Edited excerpts from Indian national security advisor M.K. Narayanan’s speech at the 43rd Munich Conference on Security. Full t ext is available at www.securityconference.de