FATF Report Highlights Crowdfunding Risks for Terrorism Financing

The Financial Action Task Force (FATF) recently released a report shedding light on the exploitation of crowdfunding platforms by a violent extremist organization in India. This blog delves into the key findings of the report, emphasizing the challenges posed by crowdfunding to counter-terrorism financing efforts.

Understanding the FATF Report:

1. Funding Mechanisms:
   • Violent extremist organizations in India utilized well-structured networks to collect funds.
   • Funds were earmarked for procuring arms, ammunition, and training cadres.
2. Crowdfunding Abuse for Terrorism Financing:
   • The report identifies four primary ways in which crowdfunding platforms can be misused for terrorism financing:
     • Abuse of humanitarian, charitable, or non-profit causes.
     • Utilization of dedicated crowdfunding platforms or websites.
     • Exploitation of social media platforms and messaging apps.
     • Interaction of crowdfunding with virtual assets.

Financial Action Task Force (FATF):

1. Establishment:
   • Founded in 1989 by the G7 to combat money laundering, later expanded to address terrorist financing in 2001.
   • Comprises 40 members, including India, with Indonesia joining recently.
2. Mandate:
   • Leads global efforts against money laundering, terrorist financing, and proliferation financing.
   • Empowered to issue warnings and sanctions against non-compliant countries.

FATF 'Grey List' and 'Blacklist':

1. Blacklist:
   • Includes Non-Cooperative Countries or Territories (NCCTs) supporting terror funding and money laundering.
   • As of October 2023, North Korea, Iran, and Myanmar are on the blacklist.
2. Grey List:
   • Countries considered havens for supporting terror funding and money laundering.
   • Serves as a warning; inclusion signals a risk of entering the blacklist.
   • As of October 2023, 23 countries are on the grey list, including Turkey, the United Arab Emirates, and South Africa.

Conclusion: The FATF report underscores the evolving nature of terrorism financing, with violent extremist organizations leveraging crowdfunding platforms. As countries, including India, grapple with these challenges, international collaboration becomes imperative to develop robust mechanisms for identifying and thwarting such illicit financial activities.