Terror financing and money laundering have blossomed in the last one year as countries and governments across the world directed their focus only on battling the Covid 19 pandemic. The new age digital asset in the form of crypto-currency has also boosted terror financing.
Crypto currencies are witnessing a surge in their market value despite the sharp contraction in economic activities worldwide due to the pandemic.
The sudden change in the pattern and scale of financial transactions in the wake of the pandemic has provided an opportunity to criminals and terrorists, sources told India Narrative.
“Unlawful activities and terror financing may have shot up significantly as countries continue to battle Covid 19. Pattern and sources of financing have undergone a massive shift due to pandemic related stress. This has made it very difficult for authorities to track the quantum or the source of inflow of money,” BK Singh, Retired Joint Commissioner Crime, Delhi Police told India Narrative.
Though terror financing and money laundering are different activities, both are interlinked as they unlawfully leverage the weaknesses and lacunae of the financial system to carry out criminal activities.
Singh added that crypto currencies which typically are not regulated by governments and authorities are also being extensively used by the non-state actors.
“Why should the value of bitcoins surge? One of the reasons could be the extensive use of this asset form for illegal and criminal activities. The crypto currency space must be watched out. At present it is not regulated and this provides an opportunity to terror groups,” Singh said.
Meanwhile, the global money laundering and terrorist financing watchdog Financial Action Task Force (FATF) retained Pakistan in its ‘grey list’ for failing to weed out terror financing and money laundering. FATF noted that while Pakistan completed all but 1 of 27 items, but in its Counter Terror Financing (CTF) and Anti Money Laundering (AML) effort, it has failed to adequately investigate and prosecute senior leaders and commanders of UN-designated terrorist groups.
“The FATF has retained Pakistan in the grey list and this is a clear indication that even closer home terror financing has continued despite Covid,” another analyst who did not wish to be identified said.
While the ghastly terror attacks in Mozambique Palma on March 24 did not attract global attention, he source said that it is a wake-up call for the world.
The pandemic and its fallout on financial dealings have provided an opportunity to several terror groups such as the Islamic State (IS) to re-organise and re-boot with a new hub, sources said.
FATF in a report noted that the near 360 degree change in behaviour due to the pandemic- “whether the behaviour of individuals, companies or governments – have in turn presented criminals with new opportunities to commit crimes and launder the proceeds.”
The International Monetary Fund (IMF) has pointed out that money laundering and terrorism financing activity in one country can have serious cross-border and even global adverse effects. “Jurisdictions with weak or ineffective controls are especially attractive for money launderers and financiers of terrorism,” it said.