According to the most recent report by the Financial Action Task Force (FATF), a “violent extremist organisation under investigation” in India raised money through “well-structured networks” that included offline and online fundraising techniques like sharing QR codes and account details. The Popular Front of India (PFI), although not identified by name in the FATF report, is mentioned as having turned to fundraising in mosques and public areas to raise money for arms and ammunition as well as cadre training.
According to Indian officials, money was amassed by a violent extremist group that was the subject of an investigation via sophisticated nationwide networks. The organisation used offline and online fundraising strategies, such as distributing QR codes and account details through which donors were asked to send money, in addition to soliciting at mosques and public locations. “More than 3,000 bank accounts and unofficial value transfer mechanisms were employed,” the FATF stated in its most recent report, “Crowdfunding for Terrorism Financing,” citing the PFI case study.
The FATF is the international watchdog on money laundering and financing of terrorism. FATF’s on-site assessment of India is scheduled for November, and the assessment will probably be discussed during the plenary session in June 2024. The mutual evaluation of India, which was last completed in 2010, was delayed until 2023 due to the COVID-19 pandemic and the FATF’s assessment process halt.
According to the FATF report on “Crowdfunding for Terrorism Financing,” it would be very challenging to investigate this case because the PFI accounts involved both domestic and foreign transactions. “In the end, among other things, the funds were utilised to train the leaders of the violent extremist organisation and to purchase weapons and ammunition. In order to provide consistent revenue for terrorist operations, a portion of the money raised through crowdfunding was also invested in and kept in real estate and business ventures, according to the statement.
The report also stated that prosecution complaints had been filed and that “eight individuals in leadership roles within the violent organisation have been arrested” on charges of terrorist financing (TF). It stated that assets worth Rs 3.5 crore are being sought for confiscation as a result of the investigation.
The PFI and its “associates or affiliates or fronts including Rehab India Foundation (RIF), Campus Front of India (CFI), All India Imams Council (AIIC), National Confederation of Human Rights Organisation (NCHRO), National Women’s Front, Junior Front, Empower India Foundation, and Rehab Foundation, Kerala” were deemed to be a “unlawful association” by the Ministry of Home Affairs in September of last year. This notification followed nationwide search, detain, and arrest operations against the PFI, its offices, and its members by the National Investigation Agency (NIA) and the Directorate of Enforcement Directorate (ED). The NIA conducted searches at 20 sites in six states last month as part of an investigation against the PFI, which was outlawed, for allegedly trying to disrupt the prime minister’s rally in Bihar.
Three Muslim organisations in southern India came together to form the PFI in 2007: the Manitha Neethi Pasarai in Tamil Nadu, the National Democratic Front in Kerala, and the Karnataka Forum for Dignity. After the Students Islamic Movement of India (SIMI) was banned, the PFI was founded and has positioned itself as a group that defends the rights of marginalised communities, Dalits, and minorities.
The FATF included a case study that mirrored the Enforcement Directorate’s case against former Yes Bank CMD Rana Kapoor in a report titled “Money Laundering and Terrorist Financing In The Arts And The Antiques Market” earlier in March of this year. The FATF had alluded to money laundering through paintings, including one that was purchased for USD 264,000 from “the close relative of a member of the ruling political party at that time,” even though it did not identify the accused by name, referring to him as “Mr A.”
Citing the report, Union Minister of Information and Broadcasting Anurag Thakur said that it was a “great shame” that the FATF report included the “story of the Gandhi family’s corruption.”
According to the FATF report, there are four main ways that crowdfunding platforms can be used to finance terrorism: through the exploitation of non-profit, humanitarian, or charitable causes; through the use of specific websites or platforms; through the use of social media and messaging apps; and through the interaction of crowdfunding with virtual assets.
Violent extremists and terrorists may use a variety of strategies to raise money. For instance, a terrorist may create a campaign on a crowdfunding website, publicise it on social media, and ask for payment in virtual assets, according to the report.
According to some estimates, the global crowdfunding market was worth $17.2 billion in 2020 and is predicted to grow to $34.6 billion by 2026. The report also stated that there were more than 6 million crowdfunding campaigns active globally in 2022.
The FATF added that while most crowdfunding activity is lawful, its investigation has revealed that individuals and groups with an ethnic or racial motive for terrorism (EoRMT), Al-Qaeda, and the Islamic State of Iraq and the Levant (ISIL) have taken advantage of it to raise funds for terrorist financing. According to the report, “TF may find crowdfunding to be an appealing means of fundraising due to the potential for swift and simple global audience outreach.”
According to the FATF, there are regional variations in anti-money laundering and counter-terrorist financing (AML/CFT) regulations, even though some countries and industry players take proactive steps to reduce these risks.
According to the report, extensive data regarding the misuse of crowdfunding is still largely lacking since many nations do not systematically evaluate the risks associated with such activity. According to the report, nations should evaluate the nature, scope, and risks connected to all forms and techniques of crowdfunding in their specific legal jurisdiction, whether they pertain to businesses, individuals, or any other kind of organisation.
Given the cross-border nature of crowdfunding campaigns and the associated financial transfers, the report further recommended that countries take note of the sector’s risk analysis on a global scale. It also stated that countries should acknowledge that, even in the absence of significant domestic terrorist activity, their jurisdiction can still be used as a pass-through for financial flows.
