2023 GS3 Answer

Q. Give 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.

Question from UPSC Mains 2023 GS3 Paper

Model Answer: 

Terrorism in India and Combating Terror Funding

Terrorism is a significant threat to peace, security, and development in India. The financing of terrorism, which encompasses the process of providing financial support to terrorist activities, is a critical aspect of this problem. Understanding the sources of terror funding and the strategies in place to combat them is crucial for the development of effective counter-terrorism measures. The No Money for Terror (NMFT) Conference aims to address this issue on an international platform.

Major Sources of Terror Funding in India:

1. Drug Trafficking: This is a significant source of funding for terrorist activities in India. The Golden Crescent region (Afghanistan, Iran, and Pakistan) and the Golden Triangle (Myanmar, Laos, and Thailand) are two major global opium-producing areas near India. Groups like the Taliban in Afghanistan and insurgent groups in Northeast India have been linked to drug trafficking.

2. Fake Currency Notes: Counterfeit currency has been used to finance terrorism in India. Fake Indian Currency Notes (FICN) are often printed outside India and smuggled into the country, destabilizing the economy and funding terror activities.

3. Hawala Transactions: This is an informal and illegal money transfer system that operates outside traditional banking channels. It is often used to fund terrorist activities due to its anonymity and difficulty to trace.

4. Cyber Crime: With the advent of technology, cybercrime has become a significant source of terror funding. Cybercrimes like hacking, online fraud, and ransomware attacks are increasingly being used to fund terrorism.

Efforts to Curtail Terror Funding:

1. Enforcement Directorate (ED): The ED is a law enforcement agency and economic intelligence agency responsible for enforcing economic laws and fighting economic crime in India. It has been active in investigating and prosecuting terror funding cases.

2. Financial Action Task Force (FATF): India is a member of the FATF, an inter-governmental body that sets standards and promotes effective implementation of legal, regulatory, and operational measures for combating money laundering, terrorist financing, and other related threats.

3. Anti-Money Laundering (AML) Measures: Indian financial institutions are required to follow AML guidelines, which include identifying and reporting suspicious transactions, to prevent the misuse of the financial system for terror funding.

No Money for Terror (NMFT) Conference:

The NMFT Conference is an international conference that brings together countries to discuss and coordinate their efforts to cut off funding for terrorist activities. The conference aims to enhance international standards on combating terror financing, improve information sharing, and develop best practices among participating countries.

The main objective of the NMFT conference is to strengthen the global commitment to combat financing of terrorism. It provides a platform for countries to share their experiences, challenges, and strategies in combating terror financing.


Terror funding is a complex issue that requires a comprehensive and coordinated response. While India has taken significant steps to combat terror funding, the problem persists. International cooperation, as seen in initiatives like the NMFT conference, is crucial for effectively addressing this issue. It is important to continue strengthening legal frameworks, enhancing surveillance and intelligence capabilities, and promoting international cooperation to ensure that no funds are available for terror activities.

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