Crowdfunding for Terrorism Financing – FATF

Crowdfunding for Terrorism Financing – FATF

News: The Financial Action Task Force (FATF) report titled ‘Crowdfunding for Terrorism Financing’ provides an in-depth analysis of how terrorists misuse crowdfunding platforms.

What is Crowdfunding?
• Crowdfunding is a practice of soliciting contributions from a large number of people, especially from the online community, to support an idea, project, or business venture.

Key findings:
• In 2022, there were over 6 million crowdfunding campaigns around the world.
• Misuse by Terrorists: The vast majority of crowdfunding activity is legitimate, but it can also be exploited for illegal purposes. This includes terrorists and terrorist groups who can exploit fundraising platforms and crowdfunding activities on social media to seek funding for their terrorist cause from a global audience.
• Main Methods of Misuse: There are four main methods that terrorists and violent extremists use to raise funds through crowdfunding.
o Abuse of humanitarian, charitable, and non-profit causes which can act as a front to raise funds for terrorism.
o Dedicated crowdfunding platforms or websites which, given the volume and variety of activity, makes it difficult to detect illicit activity.
o Social media platforms and messaging apps to allow extremists to amplify their messages and lead users to specific fundraising causes.
o For example, The PFI (in India) collected funds through solicitation at religious places, such as mosques, and public spaces. Additionally, the group used modern digital methods, including the circulation of QR codes and bank account details to encourage donations.
• The report places the issue of crowdfunding for terrorism financing in a global context. It highlights that while most crowdfunding activities are legitimate, terrorist organizations like ISIL (Islamic State of Iraq and the Levant) and Al-Qaeda have exploited these platforms to raise money for their activities.

Key recommendations:
• The report highlights good practices, starting with the inclusion of crowdfunding in national terrorist financing risk assessments, outreach to the crowdfunding sector, and strong domestic and international information sharing mechanisms.
• The report also stresses the need for consistent Anti-Money Laundering and Counter-Terrorist Financing (AML/CFT) regulations on a global scale.
• It points out that many countries do not systematically assess the risks associated with crowdfunding activities, leading to a lack of comprehensive data about its misuse.
• FATF highlights the cross-border nature of crowdfunding campaigns and the associated financial transfers.
• Countries are urged to recognize that even if their jurisdiction does not have significant domestic terrorism activity, it can still be used as a pass-through for financial flows.

About FATF:
• The Financial Action Task Force (FATF) is an intergovernmental organisation founded in 1989 on the initiative of the G7. It is the global money laundering and terrorist financing watchdog. The FATF sets   international standards that aim to prevent these illegal activities and the harm they cause to society.
• HQ – Paris, France
• Since 2000, FATF has maintained the FATF blacklist (formally called the “Call for action”) and the FATF greylist (formally called the “Other monitored jurisdictions”)
• Countries in FATF blacklist (October 2023) – Iran, North Korea, Myanmar
• Important Countries in FATF greylist (October 2023) – UAE, Turkiye, Syria, South Sudan, Cameroon, Croatia etc