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Terrorists are manipulating stock exchanges to raise funds: NSA

NEW DELHI: Manip­u­la­tion of stock exchanges is the new modus operan­di used by ter­ror­ist groups to raise funds for their oper­a­tions and fic­ti­tious com­pa­nies have oper­at­ed in the Mum­bai and Chen­nai stock exchanges.

Reveal­ing this, Nation­al Secu­ri­ty Advi­sor M K Narayanan has said some of these com­pa­nies were lat­er traced to ter­ror­ist groups.

“Iso­lat­ed instances of ter­ror­ist out­fits manip­u­lat­ing the stock mar­kets to raise funds for their oper­a­tions have been report­ed. Stock exchanges in Mum­bai and Chen­nai have, on occa­sions, report­ed that fic­ti­tious or notion­al com­pa­nies were engag­ing in stock mar­ket oper­a­tions,” he said while address­ing the 43rd Con­fer­ence on Secu­ri­ty Pol­i­cy in Munich last week.

Call­ing for the lift­ing of bank­ing secre­cy and the cor­po­rate veil in ter­ror­ist-relat­ed cas­es, he said secu­ri­ty agen­cies had detect­ed many instances of funds received via bank­ing chan­nels from so-called safe loca­tions like Dubai and UAE that were intend­ed for ter­ror­ist groups.

Square­ly blam­ing cer­tain “offi­cial agen­cies” in Pak­istan for pump­ing mil­lions of dol­lars for mil­i­tan­cy in India, he said jeha­di groups had start­ed to estab­lish a net­work of legit­i­mate busi­ness­es to fund their activ­i­ties.

The ter­ror­ist groups are involved in legit­i­mate busi­ness enter­pris­es like restau­rants, real estate agen­cies and ship­ping and use part of their pro­ceeds to siphon off funds for their ter­ror­ist activ­i­ties, he said.

“Among ter­ror­ist out­fits, the LTTE has a very well- estab­lished net­work of legit­i­mate busi­ness, which pro­vides both funds as well as logis­tics for their activ­i­ties. Jeha­di ter­ror­ist organ­i­sa­tions have begun to fol­low suit,” Narayanan said.

He said a com­bi­na­tion of con­ven­tion­al mon­ey laun­der­ing tech­niques, with place­ment of funds by using the “under­ground and par­al­lel bank­ing sys­tem” (hawala) has made it extreme­ly dif­fi­cult to track funds utilised for ter­ror­ist pur­pos­es since no audit or paper trail is avail­able.

Refer­ring to 11 com­mon ways of ter­ror­ist fund­ing, the NSA said among them were vol­un­tary con­tri­bu­tions on which ter­ror­ist groups like Al Qae­da and LTTE thrive, forced and com­pul­so­ry dona­tions includ­ing forcible sub­scrip­tion of their pub­li­ca­tions, extor­tion and use of coer­cive meth­ods.

“The Lashk­er-e-Tai­ba, the Hizbul Mujahideen and the Al- Badr (mil­i­tant out­fits which oper­ate in India) are well patro­n­ised, includ­ing through pro­vi­sions of funds, by cer­tain offi­cial agen­cies across the bor­der,” he said.

Shared objec­tives such as involve­ment in “low inten­si­ty con­flict” pro­vide the excuse for such offi­cial sup­port. “A ten­ta­tive esti­mate of funds made avail­able to such ter­ror­ist out­fits annu­al­ly is in the region of a few mil­lion dol­lars,” he said.

The unholy nexus between jeha­di groups and non-jeha­di ter­ror­ist groups seek, and enter into, part­ner­ships with organ­ised crim­i­nal syn­di­cates for fund-rais­ing by indulging in kid­nap­ping for ran­som and bank rob­beries, Narayanan said.

Coun­ter­feit­ing of cur­ren­cy is cur­rent­ly a favourite method adopt­ed (by agen­cies across the bor­der) to fund ter­ror­ist activ­i­ties direct­ed against India, he said.

The NSA said large amounts of “high qual­i­ty” coun­ter­feit Indi­an cur­ren­cy were detect­ed each year and the “nor­mal route” for bring­ing the forged notes into India was through Nepal and Bangladesh.

Elab­o­rat­ing on the mis­use of legit­i­mate bank­ing chan­nels, Narayanan said ter­ror­ist groups gen­er­al­ly make small trans­ac­tions so as not to attract atten­tion and to avoid detec­tion. “Use of both real, and fraud­u­lent, ATM cards has also been resort­ed to at times,” he said.

Char­i­ties and pro­ceeds from nar­cotics were among oth­er fund­ing chan­nels for ter­ror­ist groups, Narayanan said.

“India believes that there is a need for greater vig­i­lance and stricter pro­vi­sions so as to make off-shore juris­dic­tion more trans­par­ent. In addi­tion, lift­ing bank­ing secre­cy and the cor­po­rate veil in ter­ror­ist-relat­ed cas­es would help,” he said.

Seek­ing fur­ther inter­na­tion­al coop­er­a­tion to tack­le the men­ace of ter­ror­ism, he said, “...pool­ing of strengths by all con­cerned states is crit­i­cal to defeat ter­ror­ism world­wide.”

The con­fer­ence was attend­ed, among oth­ers, by Russ­ian Pres­i­dent Vlad­mir Putin, Iran’s Nation­al Secu­ri­ty Advi­sor Ali Lar­i­jani and Ger­man Chan­cel­lor Angela Merkel.