Hurriyat, hawala raids are a body blow to terror funding network in Kashmir

Funds for sustaining terrorism and mob violence in the Valley emanate primarily from Pakistan.

 |  5-minute read |   06-06-2017
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Kashmir has been in the eye of the storm since July last year. The focus since then has been on stone-throwing mobs, increasing levels of violence, especially in three districts of south Kashmir, rise in local recruitment by the Hizbul Mujahideen (HM), burning of schools and rising temperatures along the line of control (LoC).

To a casual onlooker, this is merely a reflection of growing dissatisfaction and disenchantment among certain segments of the population. However, the registration of cases by the National Investigation Agency (NIA) against members of the Hurriyat Conference and raids against hawala dealers is a significant development.

It is likely to have an adverse impact on the flow of funds for the ongoing terrorist and disruption activities in Kashmir. The sequence of events further provides important pointers to the process of fuelling terrorism, how it is funded and the means to hit at its transit and distribution network.

Funds for sustaining terrorism and mob violence in Kashmir emanate primarily from Pakistan or Pakistan-initiated collection mechanisms. This includes direct funding from the Inter Services Intelligence (ISI).

The Pakistan Army’s intelligence wing accesses sources within its budget for such state-sanctioned initiatives and through the drug networks it exploits for raising money. Fake Indian currency notes (FICN) that are printed at government presses in Pakistan are further employed to generate funds for terrorism.

In addition, groups like the Lashkar-e-Tayyeba (LeT) and Jaish-e-Mohammad (JeM) have established a large network for collecting donations through charities that have become their public face in Pakistan. While these groups do conduct humanitarian support activities through allied charities, a large proportion of the funds collected by them help run madrasas that churn out terrorists.

Similarly, humanitarian aid among the poorer segments of the population and venom-spewing religious institutions help attract recruits for the so-called jihad against India and Afghanistan. And finally, the rest is directly used to fund terror activities in Kashmir.

The funds that are collected thus are used for training and supporting recruits who are brainwashed to undertake a so-called religious war in Kashmir. In addition, a large percentage is also pumped into India through a variety of means to sustain terrorism and create conditions of unrest through mob violence.

In the past, cases have come to light wherein money or its value has been transferred through barter trade, legal channels like banks, cash couriers and cross-border smuggling chains. However, the largest percentage finds its way into India and particularly into Kashmir through hawala.

terror1_060617040028.jpgThe funds are used for training and supporting recruits who are brainwashed to undertake a so-called religious war in Kashmir. Photo: Reuters

This is where the ongoing raids and arrests gain special significance. Hawala is illegal in India. It is used by Indians settled or working abroad to send remittances back into India. However, this channel, which is ironically cheaper, faster and often more efficient than existing legal networks, also provides an opportunity for criminals, money launderers and terrorist handlers to transfer value across international borders as well as within the country.

Since this does not involve physical movement of cash, except to provide last mile receipt or delivery, the system is difficult to intercept and stop. It is for this reason that it has remained the most exploited funds transfer mechanism by terror groups in India.

The ongoing investigations, raids and arrests do not suggest an end to terror funding in J&K. The unearthing of a crore or two perhaps indicates the tip of the iceberg when related to terror-funding. However, the impact of the ongoing actions goes much deeper.

The last 20 years of Pakistan’s terrorism in Kashmir and at times in other parts of the country has witnessed a number of significant cases of neutralisation of terrorists. However, there have been a few cases of a well orchestrated attempt at hitting at the life blood of terrorism that its funding has come to represent.

The incidents of looting of cash vans and banks in Kashmir suggest that there has been a funding squeeze on terror and disruption activities. Had this not been the case, terrorists would not undertake low-return, high-risk actions like looting of banks.

When this existing squeeze on funding, partly contributed by the process of demonetisation, is further supplemented by registration of cases against distributors of terror funds and hawala dealers who create critical links in the funding chain, we are likely to witness both a psychological and substantive impact on availability of funds for terrorism.

This does not imply that the sources of funds for terrorism are likely to dry up immediately. Instead, it is more likely that desperate measures like looting will be resorted to, which will make terrorists and their supporters more vulnerable.

Further, the easy flow of money for stone-pelters, which witnessed a squeeze after demonetisation, could again dwindle, if the pressure that has been created is further reinforced by hits against all potential sources and transfer mechanisms that have been outlined earlier.

The actions of the NIA and Enforcement Directorate are also likely to have an appreciable impact since the primary counter-terror funding, as well as the anti-money laundering laws, have been given stringent powers against such activities in line with international guidelines recommended by the Financial Action Task Force.

Therefore, irrational accusations that are likely to emerge from the Hurriyat accusing the state of witch-hunt are actually irrational since the actions initiated are in line with international norms that attempt to prevent terrorism and terrorist funding.

Hawala dealers who have since long made a fortune through illegal exchanges in the past, are also in for some tough legal actions. They are liable to be prosecuted under the counter-terrorism law, the Unlawful Activities Prevention Act, which allows life imprisonment for actions that directly aid, abet and support terrorism.

The counter-terrorism finance activities in Kashmir and elsewhere in India are thus part of a larger strategy to make terrorism and related disruption activities economically unsustainable in the long run.

While the ongoing actions will not end terrorism, it is nonetheless a substantive blow to the well oiled financial network that had been sustaining violence and reprehensible actions like burning of schools for long.  

Also read: How Modi government can avoid Kashmir slipping from India's hands


Colonel Vivek Chadha Colonel Vivek Chadha @vivek_chadha

Colonel Vivek Chadha (Retd), is a Research Fellow at the Institute for Defence Studies and Analyses, New Delhi. He has authored the books, Even if It Ain’t Broke Yet, Do Fix It: Enhancing Effectiveness Through Military Change and Lifeblood of Terrorism: Countering Terrorism Finance.

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