Comprehensive Update on Terrorist Financing Risks
Source: PIB
GS II: Important International institutions, agencies and fora- their structure, mandate
Overview
- News in Brief
- Detailed Report on Comprehensive Update on Terrorist Financing Risks
Why in the News?
Financial Action Task Force (FATF) has undertaken a project to compile the Comprehensive Update on Terrorist Financing Risks report, which was recently released.
News in Brief
- The global money laundering and terrorist financing watchdog, the Financial Action Task Force (FATF), has for the first time introduced the concept of state-sponsored terrorism in its latest report titled Comprehensive Update on Terrorist Financing Risks.
- The report highlights that such funding constitutes a longstanding threat to international peace and security, as well as to the stability of regional financial and political systems.
- This continued abuse of the financial system poses a serious threat to global security and undermines international peace.
- The Fourth Round of Mutual Evaluations, covering over 194 jurisdictions, revealed that 69% of assessed jurisdictions exhibited major or structural deficiencies in effectively investigating, prosecuting, and convicting terrorism financing cases.
Detailed Report on Comprehensive Update on Terrorist Financing Risks
- The report was co-led by the UN Security Council Counter-Terrorism Committee and France, with India making a significant contribution.
- For the first time, state sponsorship of terrorism was officially acknowledged in an FATF report.
- India’s 2022 National Risk Assessment (NRA) flagged Pakistan as a primary source of state-sponsored terrorism.
- Based on NRA findings, Indian financial institutions are required to conduct enhanced due diligence on transactions involving Pakistan.
- It is also expected that the report may also reflect the findings of the NRA’s of all other countries.
- It is indicated that certain terror outfits had been and continued to receive financial and other forms of support from several national governments.
- The FATF report used data from delegations and open sources, showing ongoing support for terror outfits by some governments.
- FATF explicitly stated that state funding of terrorism contradicts its standards, international conventions, UNSC Resolution 1373 (2001).
- State-sponsored terrorism is described as a long-standing threat to international peace and regional financial stability.
- One tactic includes oil smuggling from Iran to Pakistan, suspected of funding terrorism.
- Terror outfits like Jaish-e-Mohammed and Lashkar-e-Taiba use fake charities to raise and move funds.
- These organizations are disrupting aid operations and causing Humanitarian Abuse.
- The FATF report, having higher precedence than national assessments, will pressure countries to recognize and respond to state-linked threats.
- Due to international scrutiny, Pakistan’s transactions face increased costs, making it less attractive for global banking.
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