Context

• The FATF’s 2025 report highlights how accused in major terror incidents in India—including the Gorakhnath attack and Pulwama bombing—used online payment platforms, VPNs, and e-commerce sites to fund and execute terrorism.

About the Report

• The Financial Action Task Force (FATF), in a report, highlighted that digital platforms including online payments, VPNs, social media, and e-commerce were misused in the Pulwama (2019) and Gorakhnath Temple (2022) terror attacks.
• The report, titled ‘Comprehensive Update on Terrorist Financing Risks’, serves as a global alert on the evolving and increasingly complex methods of terrorist financing. 
• It warned that such platforms are increasingly being exploited for terror financing.

Other Trends in Report

• The report highlights terrorist abuse of E-Commerce sites like Amazon to purchase materials covertly.
• Growth in unregulated crypto markets and mixer services pose serious tracking challenges for investigation.
• Online intermediaries are used to route funds between foreign sources and terrorists complicating traceability.
• Radicalised individuals act independently, often funded via online storefronts to launder funds and move value undetected which leads to increase in threats of lone actor rise.
• South Asia, West Africa, Sahel, and Middle East remain high-risk regions; India sighted as a critical case studies.
• Many jurisdictions lack sufficient KYC,AML, and CTF frameworks for digital platforms.
• Crowdfunding Platforms: Terror-linked campaigns are launched under social causes to attract global donors without disclosing real intent. Funds raised this way are diverted to finance radicalisation and weapons procurement.
• Without naming countries, the report notes that some national governments continue to financially and materially support terrorist organisations. 
• This includes direct funding, logistical support, training, and sanctions circumvention via trade and smuggling.

Financial Action Task Force

• FATF is an intergovernmental policy-making body established in 1989 at the G7 Summit in Paris. 
• Its primary objective is to develop policies to combat money laundering (ML), terrorist financing (TF), and other related threats to the integrity of the international financial system.
• Headquarters – FATF is headquartered in Paris, France, and functions out of the Organisation for Economic Co-operation and Development (OECD) headquarters.
• FATF comprises 39 members, including 37 jurisdictions and 2 regional organizations (European Commission and Gulf Cooperation Council).
• India became a full member of the FATF in 2010, which enhanced its global financial credibility.

Key Functions and Roles

• Setting International Standards for combating Money Laundering and Terror Financing through its famous 40 Recommendations.
• Monitoring Compliance of member and non-member countries with those standards.
• Conducting Mutual Evaluations to assess effectiveness of anti-money laundering and counter-terrorist financing measures.
• Issuing Public Statements to identify high-risk and non-cooperative jurisdictions (also known as the FATF Grey List and Black List).
• Encouraging Legal, Regulatory, and Operational Reforms in financial systems globally.

Challenges in Countering Digital Terrorism

• Transactions often span over multiple nations which complicates legal access and Law enforcement cooperation like use of Dark web to buy arms communicate and move crypto. 
• Many fintech platforms fail to verify user identity allowing fake accounts to move funds across freely.
• Terror groups quickly adapt to new tech tools in this new age which helps is dodging existing regulations.

Measures to Counter this

• Mandate stringent verification procedures for all online transactions by strengthening Digital KYC.
• Deploy AL/ML based system to track abnormal spending patters and keyword linked purchases by ensuring real time monitoring.
• Create Mutual legal assistant treaties and date exchange protocols with tech hosting nations by strengthening Cross border data sharing.
• E-commerce platforms Must monitor and flag purchases of dual-use materials and verify seller legitimacy.

Conclusion

• The report underscores a growing trend of misusing digital tools—e-commerce, VPNs, and online payment systems—for planning, funding, and executing terrorist acts.
• This highlights the urgent need for regulatory oversight and monitoring.