New Delhi, July 10: India played a pivotal role in the Financial Action Task Force’s (FATF) latest report on global terrorist financing risks, which, for the first time, formally acknowledged state sponsorship as a key enabler of terrorism, government officials said on Thursday.
The FATF’s “Comprehensive Update on Terrorist Financing Risks” was released on July 9 and co-led by the United Nations Security Council’s Counter-Terrorism Committee Executive Directorate and France. India was one of the principal contributors to the report, which aims to guide member nations on identifying and mitigating emerging terror financing threats.
“This is a significant milestone. For the first time, the FATF has recognised that state funding or support for terrorist groups is incompatible with its standards and obligations under international law,” said a senior Indian official involved in the project.
India’s 2022 National Risk Assessment (NRA) on money laundering and terror financing had identified state-sponsored terrorism from Pakistan as a major concern. As a result, Indian banks and financial institutions are required to conduct enhanced due diligence on transactions linked to Pakistan, the official said.
The FATF report incorporates inputs from national delegations and public sources. It cited several national governments as having either directly or indirectly supported terrorist outfits, thereby undermining global counter-terrorism efforts.
While the watchdog stopped short of naming specific countries, officials noted that the report strengthens India’s longstanding position on Pakistan’s role in financing cross-border terrorism. The report describes such state support as a “long-standing threat to international peace and security, and to the stability of financial and political systems.”
The United States, in its 2024 NRA, had also flagged threats from Pakistan-based groups, alongside those in Afghanistan, Southeast Asia, and East Africa. With the FATF’s findings carrying higher global precedence than NRAs, officials believe countries may now be compelled to formally reflect state-sponsored threats in their own assessments.
“Being recognised by the FATF means greater international scrutiny and cost for governments and businesses operating in environments that facilitate terror financing,” the Indian official said.
Among the mechanisms identified in the report is the smuggling of oil from Iran to Pakistan, which may be generating funds for terrorist networks. It also highlights the abuse of sham non-profit organisations by groups such as Jaish-e-Mohammed and Lashkar-e-Taiba, both linked to Al Qaeda, to raise and move money under the guise of humanitarian work.
The report stresses that state-backed terrorism financing violates obligations under UN Security Council Resolution 1373 (2001) and the International Convention for the Suppression of the Financing of Terrorism, undermining global standards intended to detect and disrupt terror-related financial activity.
FATF is an intergovernmental body that sets global standards to combat money laundering, terrorist financing, and proliferation financing.
