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FATF Report on Terrorism Financing through Crowdfunding


The Financial Action Task Force (FATF) has published a report titled “Crowdfunding for Terrorism Financing,” revealing that violent extremist organizations utilize sophisticated networks for fundraising. The report specifically references the Popular Front of India (PFI), highlighting its solicitation for funds at mosques and public places. These funds are reported to be used for the acquisition of arms, ammunition, and training of cadres.


GS II: International Relations

Dimensions of the Article:

  1. Crowdfunding and its Potential for Exploitation
  2. Key Highlights of the Report
  3. Recommendations from the FATF Report on Crowdfunding for Terrorism Financing
  4. Popular Front of India (PFI)
  5. Approaches to Deal with Such Organizations while Preserving Civil Liberties and Ensuring National Security

Crowdfunding and its Potential for Exploitation

  • Crowdfunding is a dynamic fundraising method leveraging online platforms.
  • It involves gathering small contributions from a large pool of individuals for various purposes such as supporting causes, funding startups, or financing projects.
Legitimate Use and Recent Exploitation:
  • Predominantly used for legitimate purposes.
  • Recent events have exposed its potential exploitation, particularly by terrorists and terrorist groups.

Methods of Misuse for Terror Financing:

  • Abuse of Humanitarian Causes:
    • Use of humanitarian, charitable, and non-profit causes as fronts to raise funds for terrorism.
  • Dedicated Crowdfunding Platforms:
    • Utilization of specific platforms or websites, making illicit activity detection challenging.
  • Social Media Amplification:
    • Exploitation of social media platforms and messaging apps to amplify extremist messages and lead users to fundraising causes.
  • Interaction with Virtual Assets:
    • Involvement with virtual assets, including privacy coins and anonymity-enhancing services like tumblers and mixers.

Key Highlights of the Report:

  • PFI’s Fund Collection Methods:
    • The Popular Front of India (PFI) collected funds through solicitation at religious places and public spaces.
    • Utilized modern digital methods, including QR codes and bank account details, to encourage donations.
  • Domestic and Foreign Transactions:
    • Funds involved both domestic and foreign transactions.
    • Investigation complexity arises due to the multi-dimensional nature of financial flows.
  • Diversification of Fund Usage:
    • Funds raised were not limited to a single purpose.
    • A portion invested in businesses and real estate projects, aiming for regular income to support terrorist activities.
  • Global Context of Crowdfunding Abuse:
    • Places crowdfunding for terrorism financing in a global context.
    • Notes that while most crowdfunding is legitimate, terrorist organizations exploit platforms like ISIL and Al-Qaeda for fundraising.

Recommendations from the FATF Report on Crowdfunding for Terrorism Financing

  • Global AML/CFT Regulations:
    • Emphasizes the necessity for consistent Anti-Money Laundering and Counter-Terrorist Financing (AML/CFT) regulations globally.
  • Systematic Risk Assessment:
    • Urges countries to systematically assess the risks linked to crowdfunding activities.
    • Highlights the current lack of comprehensive data regarding the potential misuse of crowdfunding platforms.
  • Cross-Border Nature Awareness:
    • Points out the cross-border nature of crowdfunding campaigns and the associated financial transfers.
    • Stresses the importance of recognizing the global implications of crowdfunding activities.
  • Pass-Through Jurisdictions Acknowledgment:
    • Encourages countries to acknowledge that even if their jurisdiction does not witness significant domestic terrorism activity, it can still be exploited as a pass-through for financial flows.
    • Calls for heightened vigilance and regulatory measures regardless of the apparent absence of direct terrorism involvement.

Popular Front of India (PFI):

  • Formed in 2007 through the merger of three Muslim organizations in Tamil Nadu, southern India.
  • Emerged after the ban on the Students Islamic Movement of India (SIMI).
  • Engaged in various social and Islamic religious activities, presenting itself as an advocate for minority, Dalit, and marginalized community rights.
  • Faced allegations of involvement in extremist activities.
  • In 2022, the Ministry of Home Affairs declared PFI and its associates as an “unlawful association.”

Approaches to Deal with Such Organizations while Preserving Civil Liberties and Ensuring National Security:

  • Clear Legal Framework:
    • Establish a comprehensive legal framework outlining conditions for designating organizations as threats to national security.
    • Base the framework on constitutional principles, international Human Rights standards, and due process.
  • Judicial Oversight:
    • Ensure judicial oversight to assess the government’s actions in accordance with the law and protection of individual rights.
  • Transparency and Accountability:
    • Maintain transparency in the process of designating organizations as unlawful, disclosing reasons for such actions.
    • Establish mechanisms for accountability and oversight to prevent misuse of the legal framework.
  • Targeted Actions:
    • Focus on targeting individuals or entities directly involved in criminal or terrorist activities rather than broadly targeting entire organizations.
    • Minimize the impact on innocent members and supporters.
  • Enhanced Intelligence Gathering:
    • Strengthen intelligence gathering and surveillance capabilities to monitor potential threats.
    • Ensure these actions align with the law and are subject to oversight.
  • Public Awareness:
    • Promote public awareness about the dangers of extremist ideologies.
    • Encourage reporting of suspicious activities and active participation in safeguarding national security.

-Source: Down To Earth

December 2023