The Financial Action Task Force (FATF) has released two major reports offering new insights into complex threats posed by proliferation financing, sanctions evasion, and terrorist funding. The reports highlight evolving global risks and recommend stronger international cooperation to counter these threats.
The report on “Complex Proliferation Financing and Sanctions Evasion Schemes” details how states and non-state actors exploit gaps to fund the development of weapons of mass destruction. Tactics include manipulating beneficial ownership data, misusing cryptocurrencies, and leveraging maritime routes to bypass sanctions. The FATF cites the Democratic People’s Republic of Korea’s cyber theft of $1.5 billion from ByBit as a major case, illustrating the growing nexus between cybercrime and proliferation financing.
India provided a case study on Pakistan’s National Development Complex, which remains under sanctions in several jurisdictions for its role in proliferation financing. The FATF report underscores that India has demonstrated strong coordination in tackling such threats.
The second report, “Comprehensive Update on Terrorist Financing Risks,” highlights how terrorist networks are increasingly decentralized and blend traditional funding methods with emerging digital tools. These include crypto transactions, online crowdfunding, and abuse of e-commerce and gaming platforms. Lone actors and small cells are harder to detect due to the microfinancing of operations through legitimate-looking income streams and informal channels like hawala.
India’s national risk assessment has identified Pakistan’s state-sponsored terrorism as a high-risk factor for regional security. The FATF report underscores the need for tighter regulation of virtual assets, improved cross-border cooperation, and stronger controls over social media and encrypted apps that enable anonymous fundraising and recruitment.
The reports call for enhanced public-private partnerships, frequent risk assessments, and stricter frameworks to keep pace with rapidly changing tactics used by criminal and terrorist entities.
India continues to play an active role in this collective effort, aligning domestic policy with global recommendations and sharing expertise to help protect the world’s financial systems from abuse.