Challenges galore in preventing terror funding

THE ‘No Money for Terrorism’ conference, scheduled to be held in New Delhi on November 18 and 19, is an important event with the potential to sharpen the focus of the international community on fighting terrorism and its funding. 9/11 was a watershed moment for galvanising world opinion against not only terrorism but also the financing of terror in a concerted and organised way.

For a country like India, which has been a victim of terrorism for decades, the ominous words of the then Prime Minister Atal Bihari Vajpayee during a visit to the US in 2000 came true. He had said: “Indeed, in our neighbourhood, in this, the 21st century, religious war has been proclaimed to be an instrument of State policy. Distance offers no insulation. It should not cause complacence.” Almost exactly one year after this address to a joint session of the US Congress, the US suffered its worst terrorist attack. Since then, several major capitals of the world that had thus far remained isolated from terrorism fell victim to its expanding horizons. Distance and the oceans, indeed, could not shield the people from death and destruction.

The United Nations Security Council (UNSC), on behalf of the international community, swung into action and a series of resolutions were adopted, aimed at blunting the wider impact of terrorism. More specifically, and in a major shift from the past, there was special emphasis on stopping the flow of finance for terrorism.

The initial steps created the framework for placing constraints on countries, organisations, terrorist groups and individuals to raise and transfer funds.

The first and, perhaps, the most important was Resolution 1373. It required all member states to criminalise terrorism, including actions associated with the “financing, planning, preparation or perpetration of such acts.” Further, Resolutions 1624 in 2005, 2178 in 2014 and 2396 in 2017 strengthened the counter-terrorist financing efforts of the international community.

Simultaneously, the focus of the Financial Action Task Force (FATF), was broadened beyond money-laundering to include countering the finance of terrorism through its 40 recommendations, which, through successive amendments, remain the fundamental guideline in this regard.

Several significant measures have been taken by the international community to prevent terror funding. These have helped place significant curbs on terrorist activities. However, despite the progressive tightening of the existing loopholes, curbing funding of terrorism remains a challenge.

Often, terrorism and its finance get associated with terrorist groups and their leadership. Think of terrorism finance and names like Lashkar-e-Taiba (LeT), Jaish-e-Mohammad (JeM), Daesh, Al-Qaeda, Taliban and Boko Haram come to mind. There is little denying their involvement in terrorism and its funding. In fact, each of these groups is proscribed by the UNSC.

However, we tend to forget the role of a State in the control, recruitment and funding of some of these groups. It is unimaginable to think of the LeT and JeM without linking them to the ISI and the Pakistan Army. They have raised, nurtured and employed these tools of modern warfare, often referred to as hybrid warfare, in pursuit of their strategic ends.

Should the international community and its representative organisations then look at these groups in isolation? Can the role of a state be divested from such groups that have come to represent a threat to humanity across borders and boundaries? The evidence against turning a blind eye towards terrorist groups, irrespective of their immediate target, is clear.

As history indicates, strategic assets of today can become a national embarrassment of tomorrow. The idea of ‘No Money for Terror’ should not place conditionalities. Nor should it eliminate the role of individual states involved in such activities. Quite to the contrary, constraining easy funding of a country like Pakistan is more likely to pressure it to curb terrorism rather than of a terrorist group, which is merely an instrument of the state.

Technology has revolutionised the modern world in every conceivable way. The financial system is not an exception to this change. Terrorism finance is peculiar by virtue of the source of funds that support terrorism. Most funding comes from legal, rather than illegal sources, making its identification that much more of a challenge. In addition, the world of terror funding includes medieval forms of moving value as well as ultra-modern transfer mechanisms.

Usually, money for terror funding has been transferred by four primary means, especially in the Indian context. These include ‘hawala’, cash, formal channels and trade. Recent years have complicated this by the inclusion of cryptocurrency. While informal channels have been prevalent for centuries, including ‘hawala’ or ‘hundi’, cryptocurrency has created ripples in the existing framework by straddling both formal and informal money transfer options. It remains on the cusp of the legal and illegal frameworks of the financial world, making its regulation that much bigger a challenge.

Terrorist groups have traditionally exploited these very lacunae within the financial system to follow the path of least resistance, very much like the logic that governs the flow of water under natural conditions.

The role of technology is also coming to the fore in conjunction with more traditional areas of terror funding. As an illustration, narcotics and fake currency have been used by states and terrorist groups for long. However, their transportation followed a predictable pattern of employing couriers, transferring them by road, rail, or air. This has been challenged by the employment of drones. The advantage of plausible deniability remains a major attraction for countries like Pakistan, which have repeatedly exploited this opening across the borders.

This raises an important question regarding the evaluation of countries for compliance within the existing regulatory norms. Is a country like Pakistan, which has recently done “enough” to get off the FATF grey list, actually compliant? Does the implementation record of such a country, which suffers from questionable compliance, indicate that it is no longer involved in supporting and sustaining terrorism funding? The answer to these questions is quite clear to anyone willing to look beyond choreographed presentations that have become the hallmark of Pakistani subterfuge.