Terrorism Financing Through Informal Networks And Prosecution
๐ WHAT IS TERRORISM FINANCING?
Terrorism financing refers to the act of providing funds or financial support, directly or indirectly, to individuals or groups engaged in terrorist activities. Unlike money laundering (which hides the origin of money), terrorism financing focuses on the purpose โ using money to support terrorism.
๐ผ MODES OF FINANCING TERRORISM THROUGH INFORMAL NETWORKS
Hawala Transactions (unregulated, parallel banking system).
Charitable Organizations acting as fronts.
Money Mules and small cash couriers.
Fake NGOs or trusts.
Cross-border smuggling of cash, gold, or drugs.
Use of virtual assets like cryptocurrencies (increasingly relevant).
๐งพ RELEVANT LAWS FOR PROSECUTION
Unlawful Activities (Prevention) Act, 1967 (UAPA) โ Sections 15, 16, 17, 18
(especially Section 17: Punishment for raising funds for terrorist acts)
Prevention of Money Laundering Act, 2002 (PMLA)
Foreign Exchange Management Act, 1999 (FEMA)
Indian Penal Code, 1860 โ Sections 121, 124A, 120B, 153A
NDPS Act, when linked with drug money used to fund terrorism.
โ๏ธ LANDMARK CASE LAWS โ DETAILED ANALYSIS
๐น CASE 1: Mohd. Ajmal Amir Kasab v. State of Maharashtra (2012) 9 SCC 1
Facts: Kasab was one of the perpetrators of the 26/11 Mumbai attacks. Investigation revealed foreign funding through informal hawala routes.
Judgment: Supreme Court upheld the death sentence, emphasizing that terrorist acts were funded using international informal networks, showing how seamlessly money flowed across borders to support violence.
Significance: Recognized the role of transnational informal financial channels in supporting terrorism.
๐น CASE 2: National Investigation Agency v. Zahoor Ahmad Shah Watali (2019) 5 SCC 1
Facts: Watali was accused of funding separatist and terrorist activities in Jammu & Kashmir via hawala networks from Pakistan.
Judgment: Supreme Court denied bail, stating that under UAPA Section 43D(5), courts must not grant bail if the case diary shows a prima facie case of terrorism financing.
Significance: Key ruling interpreting financing terrorism as an independent offense, even without direct involvement in violence.
๐น CASE 3: State v. Syed Salahuddin & Others (NIA Case, Delhi, 2011โ2017)
Facts: Syed Salahuddin, Hizbul Mujahideen chief, was accused of routing funds through fake NGOs and hawala to support terrorism in Kashmir.
Findings: Investigations found substantial financial flows through unregistered charities and shell companies.
Outcome: NIA filed charges under UAPA and PMLA. Case still pending, but seizures and arrests were made.
Significance: Showed how charity fronts are used to launder money and fund extremist activities.
๐น CASE 4: Mohammed Iqbal Memon alias Iqbal Mirchi Case (Enforcement Directorate, 2020)
Facts: Accused of laundering drug money through hawala for the D-Company (Dawood Ibrahimโs network), linked to 1993 Bombay blasts.
Investigation: PMLA and UAPA invoked for terror financing through real estate deals and shell companies in UAE and UK.
Significance: Highlighted nexus of drug trafficking, hawala, and terrorism, and use of global networks for funding.
๐น CASE 5: Peopleโs Liberation Front of India (PLFI) v. Union of India (Jharkhand High Court, 2019)
Facts: PLFI, a banned Maoist group, received funds through informal mining levy collections and funnelled them through local cooperatives and hawala channels.
Judgment: Court directed strict investigation under UAPA and PMLA, noting that even local extremist groups use informal financial systems to launder money and arm themselves.
Significance: Demonstrated how domestic terror outfits also exploit informal finance.
๐น CASE 6: Ariz Khan v. State (Batla House Encounter Case, 2021)
Facts: Ariz Khan, a member of Indian Mujahideen, was convicted of terrorist activities. Evidence showed he used anonymous cash drops and hawala couriers to fund logistics.
Judgment: Delhi Court convicted him under UAPA, confirming indirect participation through financial facilitation.
Significance: Court accepted that support via financing qualifies as active terrorism.
๐น CASE 7: M. Ponnusamy v. Directorate of Enforcement (Madras High Court, 2021)
Facts: Accused of routing illegal foreign remittances for LTTE through hawala during the Sri Lankan conflict.
Judgment: Bail denied under PMLA and UAPA. Court noted that โraising or moving funds for a terror organization, even without using them, is punishable.โ
Significance: Affirmed that intent or knowledge of destination of funds is sufficient for prosecution.
๐ KEY LEGAL PRINCIPLES FROM CASE LAW
| Principle | Explanation |
|---|---|
| Funding โ Direct Violence Needed | Financing alone is sufficient to be prosecuted under UAPA. |
| Hawala = Illicit Network | Use of hawala/informal transfer systems is a red flag in terrorism cases. |
| UAPA Section 17 | Punishes raising or collecting funds knowing they may be used for terrorism. |
| Burden of Proof in Bail | Under UAPA, bail can be denied if prima facie evidence exists (Section 43D(5)). |
| Terror + PMLA Convergence | Cases often prosecuted under both UAPA and PMLA for financial and terror aspects. |
โ CONCLUSION
Terrorism financing through informal networks is a significant challenge to national and international security. Indian courts have interpreted Section 17 of UAPA strictly, acknowledging the complexities of global finance and the danger posed by informal systems like hawala. Prosecution often involves coordination between multiple agencies like NIA, ED, and FIU.
India's judicial approach recognizes that stopping terrorism must include cutting off its financial lifelines, even when the money itself hasnโt yet been used in a violent act.
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