Terrorist Financing in the Digital Age: Emerging Threats and Global Countermeasures

Relevance: GS III Internal Security

The most recent report emphasizes how terrorist groups continue to be able to finance extremist activities and plan attacks by taking advantage of the global financial system, changing digital platforms, and regulatory gaps. Newer techniques like cryptocurrency-based fundraising, social media crowdfunding, and the abuse of non-profit organizations have broadened the scope of terrorist financing, even though more established strategies like state-sponsored terrorism, hawala networks, and cash couriers are still in use. 

Terrorist Financing Trends

Hawala, cash transactions, and other unofficial, difficult-to-trace tactics employed by organizations like Hamas and Al-Shabaab, among others New techniques

• Digital platforms include virtual assets like BitCoin, online gaming platforms for money transfers, social networking, crowdfunding, and online markets used for fundraising, etc.
• Lone actors and tiny groups that need little cash, shaky borders in South Asia and Africa, state sponsorship of terrorism, free trade zones with lax rules, and other elements are important factors that impact the dangers of terrorist financing (TF).
• Illicit activities include drug trafficking, kidnapping for ransom (KFR), extortion, and the illegal trade in natural resources (such as lumber and gold) by organizations like Boko Haram.

Use of legal and non-profit entities: Funds from non-profit organizations are diverted, and front and shell firms are utilized to hide TF activities.

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Important Guidelines for Counterterrorism Financing (CTF) Techniques

• Recognize danger indications, such as frequent transfers to high-risk jurisdictions and the use of technologies that increase anonymity, such as prepaid cards and VAs.
• Coordinated multilateral response: This entails the multilateral identification of terrorist groups under UNSC sanctions in order to address the transnational dimension of TF.

Reaching out to industries not included in FATF standards: Create focused PPPs to better comprehend and handle social media and messaging platform threats.

Mains:

Question: While hawala networks and cash-based systems remain integral, the use of social media crowdfunding and cryptocurrencies has added complexity to terrorist financing. Discuss the evolving trends in terrorist financing and their implications for India’s internal security. (Answer in 250 words)

MCQs

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Question: Consider the following statements regarding emerging trends in terrorist financing (TF):

1. Terrorist groups increasingly exploit social media and crowdfunding platforms for raising funds.
2. Virtual assets like cryptocurrencies are traceable and regulated uniformly across all countries.
3. Non-profit organizations can be misused to divert funds for terrorist activities.

Which of the statements given above is/are correct?

1. a) 1 and 2 only
2. b) 2 and 3 only
3. c) 1 and 3 only
4. d) 1, 2, and 3

Answer: c) 1 and 3 only

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