Why in news?
The Financial Action Task Force (FATF) released its 2025 report on emerging trends in terrorist financing. It highlighted the growing use of digital platforms and complex financial channels to fund extremist activities.
Emerging threats
- Digital tools: Terror groups increasingly use e‑commerce platforms, online crowdfunding, cryptocurrencies and payment gateways to raise and transfer funds. The anonymity of cryptocurrencies and online payment systems helps obscure transactions.
- VPNs and dark web: Encrypted networks and hidden marketplaces enable the sale of illicit goods and transfer of funds away from law‑enforcement oversight.
- Third‑party facilitators: Individuals and small businesses unwittingly act as pass‑through accounts. Shared wallets and payment processors blur the origin of funds.
Case studies
- Investigations found that individuals involved in attacks such as those in Pulwama and at the Gorakhnath temple used mainstream payment platforms to buy materials and receive funds.
- Crowdfunding campaigns on social media were used to solicit donations for extremist causes under the guise of humanitarian aid.
Challenges faced by regulators
- Jurisdictional gaps: Transactions often cross borders, and legal cooperation between countries is slow.
- Weak know‑your‑customer (KYC) norms: Some platforms do not adequately verify users’ identities, allowing bad actors to exploit loopholes.
- Evolving modus operandi: Terrorists adapt quickly, shifting to new technologies faster than regulations can keep up.
- Data localisation debates: Differing national rules on data storage impede information sharing.
Recommendations
- Strengthen digital KYC requirements and monitor suspicious online transactions using advanced analytics and artificial intelligence.
- Enhance international cooperation, including timely sharing of financial intelligence between jurisdictions.
- Regulate and supervise crypto‑asset service providers, requiring them to report suspicious transactions.
- Hold online platforms accountable for detecting and removing extremist crowdfunding campaigns.