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Financial Terrorism And Counter-operations by Arjun Singh

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Author: Arjun Singh
The recent developments in Iraq and Syria bring in a new but yet related perspective. A matter of even graver concern is the hostage crisis involving 40 Indians said to be held by the ISIS. Going by media reports in the public domain, negotiations could be based on ransom money or the release of terrorists.


The ability to freeze financial assets of banned terrorist organisations, enforce economic and financial sanctions against countries and high net worth individuals known to deviate from international norms can be largely attributed to global actions. For example, joint coordination and information sharing (especially across various member countries that are part of the Financial Action Task Force (FATF) as well as all UN member countries that ratified protocols to counter money laundering, hawala transactions etc and to a great extent because much of global trade is dealt in dollars and the US banking system drives the global economy. The most recent economic sanctions imposed against Russia is a case in point, which is said to have had a major impact on the economy of Russia, as a consequence of which Russia is now in recession. Agreeably, when it comes to dealing with financial terrorism there is no ‘one’ definite solution to this problem and therefore a multilateral approach involving the range of ‘all’ possible options. As we’ve seen in the past, foreign governments have paid ransom money either to terrorist organisations or pirates to secure the release of their citizens. However, this situation is further compounded by the fact that the money exchanged between the parties is more than likely to re-enter the global financial system either through legitimate or illegal ways and possibly be used directly or indirectly against the same country involved in the transaction or against others in order to maximise the impact globally.

 

BRICS Initiative

In recent times, the BRICS countries have concluded various rounds of summits to set up a central bank for the developing economies. There have been statements leading to the fact that this is an attempt to not just boost economic activity through financing of infrastructure projects, but is a break-away from its Western counterparts (particularly its financial system), given the less confidence and trust in the US dollar value. From a risk-reward model perspective, it appears so that each participating country will not benefit uniformly (given the size of its economy and contribution, while the risks would be spread across all the members. Iran and Venezuela are also likely to be part of this model, both of which had made headlines until recently, be it the ongoing sanctions imposed on Iran and Venezuela now featuring among three other countries the lowest in its ranking as far as human trafficking (reference to the TIP 3-tier compliance report released recently by the US State Department and subsequently may be denied US humanitarian aid) is concerned. While we still are a long way before the US$ 100 billion central bank is established and a new currency such as the BRICSO may come into effect. The proposed setup will redefine the existing landscape and therefore should not be perceived as a solution to counter financial terrorism but instead information sharing resources between countries will have to keep pace with this change.

Indian Interests

The recent developments in Iraq and Syria bring in a new but yet related perspective. It clearly appears that the ISIS which is reported to be financially strong considering that its fight in Syria is said to be funded by neighbouring Sunni based countries and now as it gains ground is said to be within 40 miles of the Iraqi capital, Baghdad has amassed huge assets (both military and financial) post taking over Mosul (the second largest city). It is estimated that approximately half a billion dollars’ worth of assets (currency notes and gold) have been seized by the ISIS as a result of widespread looting of banks in Mosul. A matter of even graver concern is the hostage crisis involving 40 Indians said to be held by the ISIS.

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