GS Paper III 2023 · Q20
15 marks · 250 words Cyber security, media & money-laundering X-Ray · Core #63Give out the major sources of terror funding in India and the efforts being made to curtail these sources. In the light of this, also discuss the aim and objective of the ‘No Money for Terror (NMFT)’ Conference recently held at New Delhi in November 2022.
Approach · directive: “give out / discuss”
What it asks · Identify the main sources of terror funding, the measures taken to cut them, and explain the aim and objectives of the November 2022 'No Money for Terror' conference in New Delhi.
It asks 3 things — answer each
- Identify the main sources of terror funding in India
- Set out the measures taken to curtail those sources
- Discuss the aim and objectives of the November 2022 'No Money for Terror' Conference in New Delhi
Open with · Terror groups need money as much as weapons; in June 2024 the FATF placed India in its 'regular follow-up' category, shared by only four other G20 countries, recognising a decade of work on choking terror funds.
Cover
- Sources: state sponsorship, hawala and cash couriers, fake currency, drug trafficking and narco-terror, extortion by insurgent and Maoist groups, misuse of charities; new channels in crowdfunding, virtual assets, online payments and shell companies.
- Legal steps: UAPA (amended 2004 and 2019; the 2019 Act passed on 2 August 2019) makes terror financing an offence; PMLA 2002, with virtual digital asset service providers brought in as reporting entities in March 2023.
- Agencies and policy: FIU-IND, the NIA's terror-funding and fake-currency cell, ED and NCB; KYC and reporting norms, hawala monitoring, demonetisation 2016, FATF membership since 2010.
- FATF 2024: Mutual Evaluation Report adopted at the June 2024 Singapore plenary placed India in 'regular follow-up', shared by only four other G20 countries.
- NMFT (18-19 November 2022): third ministerial conference after Paris 2018 and Melbourne 2019; 75 countries and bodies; sessions on global trends, formal and informal channels, emerging technologies, international cooperation.
- Permanence: India proposed a permanent NMFT secretariat.
- Way forward: faster prosecutions, pressure on state sponsors, cross-border regulation of virtual assets, intelligence and legal cooperation.
Close with · Denying terrorists their money needs strict domestic enforcement and sustained international cooperation; a permanent No Money for Terror secretariat, as India offered in New Delhi, would make that cooperation institutional rather than episodic.
Add value (verified)
- PIB records that the November 2022 conference built on the Paris (2018) and Melbourne (2019) meetings and aimed to strengthen global cooperation in denying finance to terrorists.PIB (Prime Minister's Office): PM attends third 'No Money for Terror' Ministerial Conference on Counter-Terrorism Financing in New Delhi ↗“The conference will build on gains and learnings of the previous two conferences (held in Paris in April 2018 and in Melbourne in November 2019) and will work towards enhancing global cooperation to deny finances to terrorists”
- FATF Mutual Evaluation of India (PIB, 28 June 2024): the report adopted at the Singapore plenary of 26-28 June 2024 placed India in the 'regular follow-up' category, shared by only four other G20 countries.PIB: FATF adopts Mutual Evaluation Report of India in its June 2024 Plenary held in Singapore (Ministry of Finance) ↗“The Mutual Evaluation Report of India, which was adopted in the FATF plenary held in Singapore between June 26 th and June 28 th , 2024, places India in the ‘regular follow-up’ category, a distinction shared by only four other G20 countries.”
- FIU-IND (PIB, December 2023): virtual digital asset service providers were brought under the AML-CFT framework of the Prevention of Money Laundering Act, 2002 in March 2023.PIB: FIU IND issues compliance Show Cause Notices to nine offshore Virtual Digital Assets Service Providers (Ministry of Finance) ↗“Virtual Digital Assets Service Providers (VDA SPs) were brought into the ambit of Anti Money Laundering/Counter Financing of Terrorism (AML-CFT) framework under the provisions of the Prevention of Money Laundering Act (PML) Act, 2002 in March 2023.”
- MHA (PIB, November 2022): the third NMFT conference's deliberations covered global trends in terrorism and terrorist financing, formal and informal channels of funds, emerging technologies and international cooperation, with representatives of 75 countries and international bodies.PIB: 3rd Ministerial Conference on Countering Financing of Terrorism, No Money for Terror, to be held in New Delhi on November 18 and 19 (curtain raiser) ↗“use of formal and informal channels of funds for terrorism, emerging technologies and terrorist financing and requisite international co-operation to address related challenges. The Conference intends to bring together representatives of 75 countries and international bodies for extended deliberations over two days.”
- Union Home Minister's concluding remarks at NMFT (19 November 2022): India sensed the need for permanency of the NMFT initiative and proposed a permanent secretariat.PIB: Union Home Minister delivered concluding remarks at the closing session of the 3rd No Money For Terror Conference, New Delhi ↗“India has sensed the need for permanency of this unique initiative of NMFT, in order to sustain the continued global focus on countering the financing of terrorism and now the time is ripe for a permanent Secretariat to be established.”
- MHA backgrounder (2026): the Unlawful Activities (Prevention) Amendment Act, 2019, passed by Parliament on 2 August 2019, expanded the powers of the Central Government and investigative agencies.PIB press note: 12 Years of India's Zero Tolerance Against Terror (Ministry of Home Affairs), section on UAPA Amendment 2019 ↗“The Unlawful Activities (Prevention) Amendment Act, 2019 UAPA Amendment strengthened India’s anti-terror legal framework by expanding the powers of the Central Government and investigative agencies. It is the most significant legislative reform of this decade, passed by Parliament on 2 August 2019”
Question: UPSC's CS (Main) 2023, GS Paper III — paper ↗. Approach: Minimalist IAS, checked 3 Oct 2026 (how we verify) — UPSC publishes no model answers. ·
Model answer· 378words · Minimalist IAS
Terror groups need money as much as weapons, for recruits, arms, safe houses and propaganda. In June 2024 the FATF placed India in its 'regular follow-up' category, a distinction shared by only four other G20 countries, recognising a decade of work on exactly this front.
Major sources of terror funding in India
- State sponsorship: cross-border support routed through handlers.
- Hawala and cash: informal value-transfer networks and couriers.
- Fake currency: counterfeit notes pushed across the border.
- Narcotics: drug trafficking and narco-terror through Punjab and Jammu and Kashmir.
- Extortion and charities: levies by insurgent and Maoist groups; misuse of non-profits.
- New channels: crowdfunding, virtual assets, online payment platforms and shell companies.
| Channel | Example | Counter-step |
|---|---|---|
| Informal | Hawala, cash couriers | PMLA reporting, FIU-IND analysis |
| Physical | Fake currency, drugs | Demonetisation 2016, NIA cell, NCB |
| Digital | Crypto, crowdfunding | Virtual-asset providers under PMLA, 2023 |
Efforts to curtail these sources
- Law: UAPA, amended in 2004 and 2019, criminalises terror financing; the 2019 amendment, passed on 2 August 2019, widened the powers of the Centre and investigators; PMLA 2002 targets laundering, and virtual digital asset service providers became reporting entities under it in March 2023.
- Agencies: FIU-IND tracks suspicious transactions; the NIA's terror-funding and fake-currency cell investigates; ED and NCB act on laundering and narcotics.
- Policy: KYC and reporting norms for banks and payment firms, hawala monitoring, demonetisation (2016) against fake currency, and FATF membership since 2010, whose 2024 mutual evaluation endorsed the regime.
Aim and objectives of the 'No Money for Terror' Conference, November 2022
- Aim: the third ministerial conference (18-19 November 2022, New Delhi), after Paris 2018 and Melbourne 2019, brought 75 countries and international bodies together to review the global regime against terror financing and agree coordinated action.
- Objectives: four sessions on global trends in terrorism and its financing; formal and informal channels of funds; emerging technologies; and international cooperation.
- Permanence: India proposed a permanent NMFT secretariat so that the global focus does not lapse between conferences.
Way forward
- Close the gaps: faster prosecutions, FATF-style peer pressure on state sponsors, cross-border regulation of virtual assets, and real-time intelligence and legal cooperation.
Denying terrorists their money needs strict domestic enforcement and sustained international cooperation; a permanent No Money for Terror secretariat, as India offered in New Delhi, would make that cooperation institutional rather than episodic.
Prepared by Minimalist IAS to the answer standard of Shivam Singh (mentor, 7 years) · facts checked against official sources (how we verify) · updated 3 Oct 2026. UPSC publishes no model answers: compare your structure and coverage with this, then write your own.
