Global Terror Infrastructure and Implications for India continues...

The Hawala system is known to be exploited by militants all over the world for financing their activities, to purchase arms, to send funds (ISI, Mohhamed Atta, Dawood Ibrahim, Mohammed Ansari, etc. are a few well-known names who have exploited this system for overt or covert funding of terrorist activities), and to finance films.

Narcotics dealers also use the Hawala system for siphoning off their illegally earned for financing the terrorist activities and underground deals.

An official US report shows that tax havens harbour deposits around US dollars five trillion and the US Government itself loses about US $70 billion by way of tax. According to one estimate, in 1990, drug traffickers earned a staggering profit of Rs. 20,000 crores in foreign exchange. A part of the proceeds returned to India through the Hawala route to influence such businesses.

Pakistan Prime Minister Shaukat Aziz, a former executive vice-president of the World Bank, said $2 billion to $5 billion is moved through the “Hawala system annually in Pakistan,” more than the amount of foreign transfers through the country’s banking system.

Many countries, including India, have already in place a legal framework for tackling the funding of terrorism. Several—India included—have specific legislations to prevent financing of terrorism. India has the (a) Foreign Exchange Management Act, 1999; (b) Narcotic Drugs and Psychotropic Substances Act, 2003; and (c) Prevention of Money Laundering Act, 2003 (which entered into force in July, 2005); apart from provisions in other Acts such as the Unlawful Activities (Prevention) Act of 1967 as amended in 2004, to deal specifically with the threat of terrorism.

Adoption by the UN General Assembly of the UN Global Counter-Terrorism Strategy has enabled a global consensus to emerge on measures that States must undertake to prevent and combat terrorism. India is committed to fully implementing the UN Global Counter-Terrorism Strategy, including measures against the financing of terrorism. India has also joined the International Convention for the Suppression of Financing of Terrorism. We have established the necessary legal, regulatory and administrative framework for combating money laundering and financing of terrorism.

to be continued....