Discuss counterfeit currency and money laundering as major sources of terror funding in India. State the actions being taken at International level to check these menaces. Highlight the role of Financial Action Task Force (FATF) and methods of compliance by its member states in preventing terror funding. (Answer in 250 words)

- Discuss counterfeit currency and money laundering as major sources of terror funding in India. State the actions being taken at International level to check these menaces. Highlight the role of Financial Action Task Force (FATF) and methods of compliance by its member states in preventing terror funding. (Answer in 250 words)
Introduction
Terrorist organisations require sustained financial resources for recruitment, weapons, logistics and propaganda. In India, counterfeit currency and money laundering have therefore emerged as important channels of terror financing.
Body
Counterfeit Currency and Money Laundering:
1. Fake Indian Currency Notes (FICN) can be smuggled through cross-border networks and used to finance terrorist operations while simultaneously undermining monetary stability.
2. Money laundering disguises proceeds from narcotics, extortion, illegal trade, hawala or other crimes and redirects apparently legitimate funds towards terrorist organisations.
3. Complex shell companies, cryptocurrencies and informal transfer systems make detection and tracing difficult.
International Measures:
1. UN conventions and Security Council resolutions require countries to criminalise terror financing and freeze terrorist assets.
2. International cooperation through INTERPOL, Egmont Group and Financial Intelligence Units (FIUs) facilitates intelligence-sharing and tracing of illicit financial flows.
3. Stronger cross-border KYC, beneficial-ownership disclosure and suspicious-transaction reporting restrict anonymous movement of funds.
Role of FATF:
The Financial Action Task Force (FATF) sets 40 global standards against money laundering and terrorist financing covering preventive measures, asset confiscation, beneficial ownership, institutional capacity and international cooperation.
Compliance by Members:
- Conduct national risk assessments and adopt risk-based regulation.
- Criminalise terror financing and freeze designated assets.
- Enforce KYC, record-keeping and suspicious-transaction reporting.
- Undergo mutual evaluations assessing technical compliance and actual effectiveness.
- Jurisdictions with strategic deficiencies face enhanced FATF monitoring.
Conclusion
Thus, disrupting terror financing requires coordinated financial intelligence, stringent regulation and international cooperation, with FATF providing the central global framework for accountability.