FATF Bombshell On Pakistan, Names It As State Sponsor Of Terrorism, Validates India’s Stand On Pak

Islamabad: A recent report by global terror watchdog Financial Action Task Force (FATF) has exposed the modus operandi of Pakistan-based terror groups for generating funds, revealing that outfits such as Jaish-e-Mohammad (JeM) and Lashkar-e-Taiba (LeT) are misusing humanitarian aid donations to finance terrorism.

The report highlights the deliberate establishment or registration of sham non-profit organizations (NPOs) to raise, store, and move funds under false charitable pretences.

It further states that terror outfits exercise control in certain regions and utilise NPO funds in those areas to support operational activities, logistics, and recruitment efforts.

Fundraising campaigns are carried out via social media, direct messaging, crowdfunding platforms, and offline drives, often using unlicensed money transfer services to move funds discreetly.

In some jurisdictions, these NPOs have been identified as tools to set up front companies, effectively concealing the origin and intended use of the funds.

FATF noted that these tactics have remained consistent since 2017, with a rising trend in peer-to-peer payments and online crowdfunding mechanisms used for terror financing.

How terror outfits arranges funds? 

FATF report mentioned that sham NPOs are established or registered knowingly for the purpose of terror financing and used multifunctionally to raise, store, and move funds, commonly under false charitable pretexts. For example, in East Asia, JeM, and Lashkar-e-Tayyiba (LeT) both associated with AQ, were reported to abuse humanitarian assistance donation programs using sham NPOs to divert funds and finance operational activities, as it has been the case in the past with the Al-Rashid Trust and Al Furqan.

The NPOs involved in terror financing (with or without their knowledge) can be international NPOs (i.e. outside of the regional control of the terrorist group) as well as NPOs founded in the areas under the control of terrorist organisations.

The fundraising campaigns are conducted through social media, direct messaging, off- and online campaigns, and crowdfunding. Funds tend to flow through banks, other financial institutions.

In the end, funds are often converted to cash and logistical assets and services. One jurisdiction specifically mentions NPOs as being used to raise and move funds, that are then used to establish front companies, from which funds are managed.

Although individual terrorists, including FTFs, or small cells tend to fund themselves, they might use front NPOs as well. These NPOs are properly registered to solicit donations from unwitting donors, whose funds are then transferred in areas adjacent to conflict zones to NPOs with known affiliation to terrorist groups.

This pattern of downstream diversion has been observed in several jurisdictions in connection with the financing of FTFs. Donations take place through direct bank transfer, online payment service providers, cash. 

Finally, in the context of EoRMT financing, the use of NPOs can involve fraudulent campaigns from operators falsely claiming to be a local operational arm of overseas charities or NPOs, but not having a legal presence in the country.