After the Pahalgam Attack, all the agencies of India are making efforts on a war footing to root out terrorism. In this sequence, recently, the Indian Financial Intelligence Unit (FIU) has made shocking revelations about the connection between crypto and terror funding in its report submitted to the Government of India. The report has identified many suspicious transactions related to virtual digital assets and crypto exchanges. According to the report, these transactions have been used for terror funding, promoting separatist activities, cybercrime, drug trafficking, illegal betting, and gambling.
What does the report say?
FIU-IND has prepared this report by doing “operational analysis” of suspicious transaction reports, which has revealed serious issues related to financial and national security. This report has been shared with agencies like ED, CBI and Income Tax Department so that further action can be taken. The report states that cryptocurrency is being used in terror funding, child sexual abuse material, drug smuggling, betting and cyber crime.
A huge amount of money was transferred from foreign and unhosted exchanges by creating fake accounts on Indian crypto exchanges through a VPN. Terror funding and money laundering of cybercrime money were done through this. In such a situation, when Pakistan, the sponsor of terrorism in India, is taking new steps to increase the use of cryptocurrency, the significance of this report increases even more. However, after the Pahalgam Attack, Pakistan’s dream of becoming a crypto hub seems to be shattered.
What does the FIU report indicate?
After the Pahalgam Attack, all the investigative agencies of India are engaged in finding and cutting the roots of terrorism. At such a time, this report of FIU can be a part of this investigation. The revelations in the report are clearly bringing out the relationship between cryptocurrency and terror funding. The already ongoing demand for crypto regulation in India has become stronger due to this. In such a situation, it will be interesting to see how India breaks this nexus between cryptocurrency and terror funding.
RBI also warned
The Reserve Bank of India (RBI) has also described the misuse of private crypto assets as a major threat to the country’s macroeconomic and financial stability. RBI says that the growing scope of this sector without regulation can harm the country’s economy. After this report, the RBI needs to revise its policy regarding cryptocurrency in India. However, former RBI governor Shaktikanta Das has consistently been in favor of banning crypto in India.
Suspicious activities in ‘sensitive’ areas
The FIU-IND report also states that people living in some ‘sensitive’ areas are involved in suspicious activities through cryptocurrency, hawala and online gaming. The report also talks about the operation of many illegal and unregistered online Virtual Digital Asset Service Providers or crypto exchanges.
Pump and dump schemes and fake tokens
According to the report, ‘pump and dump’ schemes are also being run through fake coins and tokens, where people are trapped and huge losses are being suffered. Also, attempts have been made to run illegal forex apps and connect suspicious people involved in illegal activities.
Which cryptocurrencies are targeted?
FIU-IND has described Bitcoin, Tron and Stablecoins (such as USDT/TRC-20) as the most widely used tokens. They are being used because they have high international acceptance and their value remains stable.
The Pahalgam Attack has shaken not only India but the entire world. At a time when India has geared up to put an end to this fight against terrorism. This report gives rise to new concerns regarding the illegal use of cryptocurrency. The Central Economic Intelligence Bureau also submitted a report to the government last year, in which it was recommended to create a regulator for the crypto sector in the country. Now it will be interesting to see what steps the government and financial agencies take to deal with this growing threat.