Context

• As the world shrinks with technological and communication changes, terrorists, criminals, weapons and funds are also able to move across national boundaries easily. 
• International co-operation between law enforcement authorities in this area is essential for combating such cross border challenges.

Sources of Terror Funds

• Terrorist organisations raise money through several sources like travel agencies, money changers, real estate, retail outlets, NGOs, charitable trusts and even from state sponsors. 
• They also derive funding from a variety of criminal activities ranging from low-level crime to organized fraud or narcotics smuggling.

Channels for Flow of Fund

• The global flow of funds for nefarious purposes has three traditional channels. 
  • First, direct smuggling of cash through international borders. 
  • Second, the use of hawala networks. 
  • Third, banking networks including SWIFT and other international channels. 
• Recent technological developments in areas of blockchain or cryptocurrencies which transcend national boundaries and international currency systems have emerged as a new channel for financing terrorist and other illegal activities.

International Efforts to Tackle the Menace of Terror Financing 

• The Financial Action Task Force (FATF) was formed in 1989 as a means of bringing order and implementing standards to the monetary system in the world with regard to terror finance and money laundering.
• The UNSC resolution 1267 in 1999 and UNSC resolution 1373 in 2001 formed the bedrock of the financial sanctions regime for terrorist organisations and individuals. UN Security Council has sought to increase efforts against terror financing through UNSC resolution 2462 of 2019.
• Recently, the UNSC adopted the Delhi Declaration on countering the use of new and emerging technologies for terrorist purposes. The declaration aims to cover the main concerns surrounding the abuse of drones, social media platforms, and crowdfunding, and create guidelines that will help to tackle the growing issue.

Role of Financial Intelligence 

• The first step in identifying and forestalling the flow of funds to terrorists is to understand the funding requirements of modern terrorist groups. The costs associated not only with conducting terrorist attacks, but also with developing and maintaining a terrorist organisation and its ideology are significant.
• Terrorists use a wide variety of methods to move money within and between organisations, including the financial sector, physical movement of cash by couriers, and movement of goods through the trade system. 
• Charities and alternative remittance systems have also been used to disguise terrorist movement of funds. 
• Only accurate and well linked financial intelligence can reveal the structure of terrorist groups and also the activities of individual terrorists. Of late, such financial intelligence from the private sector has also given significant clues to foil terrorist acts.

Conclusion

• Unless global terrorist networks and financing are uprooted, it would be difficult to subdue terrorism across the globe.

reference:

https://indianexpress.com/article/opinion/columns/how-we-can-further-our-efforts-in-curbing-terror-financing-8270564/