FATF’s Comprehensive Update on Terrorist Financing Risks 2025
Kartavya Desk Staff
Syllabus: Terrorism
Source: TH
Context: The FATF’s 2025 report highlights how accused in major terror incidents in India—including the Gorakhnath attack and Pulwama bombing—used online payment platforms, VPNs, and e-commerce sites to fund and execute terrorism.
Summary of FATF’s Comprehensive Update on Terrorist Financing Risks 2025:
• Digital Tools in Terror Financing: Increasing use of e-commerce, crypto assets, VPNs, and fintech platforms to fund terrorist activities anonymously.
E.g.: Gorakhnath attacker used PayPal and VPNs to fund ISIL-linked operations.
• Terrorist Abuse of E-Commerce (EPOMs): Terrorists exploit e-commerce platforms (like Amazon) to purchase materials covertly.
E.g.: Pulwama bomber bought aluminium powder via Amazon.
• Crypto & Anonymity Tools: Growth in unregulated crypto markets and mixer services pose serious tracking challenges for investigators.
• Third-Party Payment Gateways: Online intermediaries are used to route funds between foreign sources and terrorists, complicating traceability.
• Lone Actor Threats Rising: Radicalised individuals act independently, often funded via online crowdfunding, social media, or gaming platforms.
• Trade-Based Terror Financing: Use of under/over-invoicing via online storefronts to launder funds and move value undetected.
• Geographic Spread: South Asia, West Africa, Sahel, and Middle East remain high-risk regions; India cited as a critical case study.
• Global Weak Oversight: Many jurisdictions lack sufficient KYC, AML, and CTF frameworks for digital platforms.
Role of Digital Technology in Terror Activities:
• E-commerce use: Terrorists procure explosives and raw materials through online marketplaces, bypassing regulatory oversight.
*E.g.* Aluminium powder for the Pulwama attack was bought via Amazon.
• Cryptocurrencies: Digital currencies offer anonymous, borderless transactions without reliance on formal banking, making detection difficult. This allows groups like ISIS to raise funds covertly via blockchain wallets.
• This allows groups like ISIS to raise funds covertly via blockchain wallets.
• VPNs & Encrypted Apps: Virtual Private Networks mask user locations and encrypted apps prevent interception of communications. Terror suspects use these tools to coordinate attacks while avoiding law enforcement detection.
• Terror suspects use these tools to coordinate attacks while avoiding law enforcement detection.
• Crowdfunding Platforms: Terror-linked campaigns are launched under social causes to attract global donors without disclosing real intent. Funds raised this way are diverted to finance radicalisation and weapons procurement.
Challenges in Countering Digital Terrorism
• Jurisdictional Gaps: Transactions often span multiple countries, complicating legal access and law enforcement cooperation.
• Dark Web Use: Terrorists use the dark web to buy arms, communicate, and move crypto, evading traditional surveillance.
• Weak KYC Norms: Many fintech platforms fail to verify user identity rigorously, allowing fake accounts to move funds freely.
• Evolving Modus Operandi: Terror groups quickly adapt to new tech tools and digital platforms, outpacing existing regulations.
• Data Localisation Loopholes: When service providers store data abroad, investigators face legal hurdles in retrieving crucial information.
Recommended Measures:
• Strengthen Digital KYC: Mandate stringent verification procedures for all online transactions, especially on wallets and marketplaces. Real-Time Monitoring: Deploy AI/ML-based systems to track abnormal spending patterns and keyword-linked purchases.
• Cross-Border Data Sharing: Create mutual legal assistance treaties (MLATs) and data exchange protocols with tech-hosting nations.
• Crypto Regulation: Introduce binding guidelines for crypto exchanges to report suspicious activity and maintain audit trails.
• Platform Accountability: E-commerce platforms must monitor and flag purchases of dual-use materials and verify seller legitimacy.
Conclusion:
The FATF’s findings underscore the urgent need for robust digital oversight, especially as technology becomes central to modern terror operations. India’s experiences reflect a global trend of tech-enabled terrorism. Strengthening institutional and legal responses is crucial for national and global security.
• Winning of Hearts and Minds in terrorism-affected areas is an essential step in restoring the trust of the population. Discuss the measures adopted by the Government in this respect as part of the conflict resolution in Jammu and Kashmir. (2023)