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 countries in preventing terror funding. (250 words)

Terror finance exploits both illegal proceeds and apparently legitimate channels. Counterfeit currency erodes monetary trust, while laundering conceals the origin and movement of funds.

Fake notes can finance procurement and destabilise border economies; laundering uses cash-intensive businesses, shell entities, trade misinvoicing, hawala, digital assets and non-profit abuse. India responds through the UAPA, PMLA, FIU-IND, NIA, customs and currency-security measures, KYC/AML controls, reporting of suspicious transactions and demonetisation-linked detection—while ensuring due process and financial inclusion.

UN Security Council sanctions, conventions against organised crime and corruption, bilateral MLATs, Egmont information exchange, asset freezing, beneficial-ownership transparency and cooperation among customs, police and financial intelligence agencies target cross-border finance. International standards increasingly address virtual assets and proliferation finance.

FATF sets risk-based 40 Recommendations, evaluates jurisdictions through mutual evaluations, typologies and follow-up, and identifies jurisdictions requiring enhanced monitoring. Members conduct national risk assessments; criminalise ML/TF, supervise banks and designated non-financial businesses, apply customer due diligence and beneficial-owner checks, file STRs, freeze assets, investigate/prosecute and pursue confiscation and international cooperation. Grey/black-list pressure encourages remediation but must be evidence-based.

Effective counter-terror finance combines intelligence and technology with privacy, proportionality, speedy prosecution and international cooperation against safe havens.

internal security; national security; governance; India