India’s major terror threats come from ISIL, Al-Qaeda-linked groups in J&K: FATF report

PARIS — The most frequent and significant source of Terror Financing (TF) in four of the six theatres of conflicts of India comes from outside the borders of country, the latest Mutual Evaluation Report released by global Financial Action Task Force (FATF) revealed on Thursday which also detailed that the most significant terrorism threats, appear to relate to ISIL or Al-Qaeda (AQ) linked groups active in and around Jammu and Kashmir.

The FATF, which develops and promotes policies to protect the global financial system against money laundering, terrorist financing and the financing of proliferation of weapons of mass destruction, acknowledged that India has suffered from the effects of terrorism consistently since its independence in 1947 and still faces a “disparate range of terrorism threats”, categorised into six different theatres.

“These can be summarised as theatres associated with ISIL or Al-Qaeda (AQ) linked extremist groups active in and around Jammu and Kashmir, whether directly or via proxies or affiliates, as well as other separatist movements in the region; other ISIL and AQ cells, their affiliates, or radicalised individuals in India; regional insurgencies in the Northeast and North of India; and left-wing extremist groups seeking to overthrow the government,” the report, which praised the Indian agencies for having demonstrated a “good understanding” of both current and emerging Terror Financing (TF) threats and risks in different theatres of risk, mentioned.

According to the report, extortion is a major source of funds for terrorist groups in the Northeast and areas affected by left wing terrorism.

Quite significantly, the report noted instances of abuse of Non-Profit Organisations (NPOs) with links to terrorist organisations and radicalisation, having received funding from foreign countries disguised as funds for charitable activities.

“Terrorist financing risks are generally closely linked with terrorism risks, with flows of funds or provision of other assets constrained to within India or surrounding countries… The TF risk assessment identified various modes of terrorist funding, including through sources outside India, organised criminal gangs, extortion, NPOs, fake Indian currency notes, narcotics financing, virtual assets, and illicit arms trafficking, with each demonstrating differing magnitude depending on the theatre,” it said.

Competent authorities, the report mentioned, noted the use of virtual assets to be an emerging trend for TF more generally due to the difficulties faced tracking the funding.

At the same time, the FATF lauded the Indian government’s prevention strategies, including counter-radicalisation initiatives like the ‘Sahi Raasta’ initiative launched in 2022 that is aimed at preventing young people from being radicalised in Jammu and Kashmir where groups affiliated to ISIL and AQ operate.

It noted that Maharashtra has also implemented a campaign to prevent terrorism allowing terror financing offenders to surrender so that they can be rehabilitated.

In its report, FATF has praised the Indian authorities for having demonstrated a “good understanding” of both current and emerging Terror Financing (TF) threats and risks in different theatres of risk in the country, conducting investigations in line with the risks identified.

“Case studies provided reflect India’s ability, in particular the National Investigative Agency (NIA) and ED, to conduct complex financial investigation and identify money trails to support the investigation and prosecution of terrorist activity and TF,” the independent inter-governmental body said on Thursday while releasing its Mutual Evaluation Report.

The Mutual Evaluation Report also gave a thumbs-up to India for achieving a “high-level of technical compliance” across its recommendations and taking “significant steps” to implement measures to tackle illicit finance.

“A joint FATF-APG-EAG assessment of the country’s measures to tackle illicit finance concludes that India has implemented an Anti-Money Laundering and Counter-Terrorist Financing (AML/CFT) framework that is achieving good results, including on risk understanding, access to beneficial ownership information and depriving criminals of their assets. Authorities make good use of financial intelligence and co-operate effectively, both domestically and internationally,” it stated.

The report summarises the AML/CFT measures in place in India and analyses the level of compliance with the 40 FATF recommendations and the level of effectiveness of India’s AML/CFT system. It also provides recommendations on how the system could be strengthened.