Daily Answer Writing
03 July 2021

Q) Discuss the role importance of terror financing in sustaining various insurgencies in India for a long time. (150 Words)

Source <https://www.thehindu.com/news/national/other-states/voices-against-nscn-taxes-grow-stronger/article35097896.ece>

GS 3: Internal Security

Approach Answer:

Introduction: The terror financing is the main pillar upon which the whole terrorist movement sustain itself. It is more important than the ideology or weapons or other basis of terrorism. All other means and basis can be sustained if there is adequate financing.


Role of terror financing in sustaining terrorism:

              Propagating the Ideology: to increase no. of Followers money is needed to spread the propaganda through various means. For example there has been a great role of pamphlets in spreading maoist ideology in tribal areas.

              Buying Arms/explosives: Sophisticated weapons needs money. This can be used to setup a cottage production unit or buying arms from foreign sources and black market.

              Planning & Execution: money is needed to arrange logistic support for the terrorists in terms of setting up communication channels renting safe houses and arranging vehicles.

              Organized Crime runs parallel economy to reduce traceability.

              Symbiotic relationship: There is a symbiotic relationship between terrorism and organized crime. For example, Extortion/kidnapping rackets in North east  by Dimasa National Liberation Army (DNLA) - It might have links with NSCN-IM.

              Sustaining under ground terrorists: For example, In J&K, counterfeit currency and Hawala (money laundering) transactions which takes place swiftly and effectively in Kashmir are main sources of sustaining insurgents.

              Money extortion itself is a means of terrorism: Maoist have also indulged in extortion, bank robberies, kidnapping etc. to fund their movement.

              Terrorism creates opportunity for growth of organized crime in new areas due to its transnational nature.


Sources of Money:

              1. Can be lawfully available:

                  supporters of ideology can make contributions from known sources.

                  Non-profit/charitable  institutions: acting as front for terrorists; knowingly or unknowingly;

              2. Illegal operations: i.e. by laundering the proceeds of crime

                  By either resorting to or working in concert with cartels involved in drug trafficking, smuggling etc. and not having to resort to money laundering per se.

                             Through counterfeiting  currency;

                             International organized crime makes use of a wide range of methods & networking to transfer funds.

                             Informal channels of money transits such as Hawala.

                             Using the facilities provided by the international trade.


Conclusion: Given the intimate relationship between money laundering and terrorism, internationally, there's been a tendency to merge anti-money laundering & courter-terrorist finance(AML/CTF) regimes. India should also try to conclude a comprehensive legislation which deals with all such aspects of terrorism. India also needs to upgrade its financial intelligence Unit(FIU) and create a mechanism of information sharing between various investigative agencies, market regulators, banks and Income tax department .

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