Terror Financing And Money Trail Offences
1. Introduction
Terror financing involves providing funds or financial support for terrorist activities, either directly or indirectly. Tracing the money trail is crucial in identifying, prosecuting, and preventing terrorism.
2. Legal Framework in India
Unlawful Activities (Prevention) Act (UAPA), 1967 (amended 2008 & 2019):
The principal law to combat terrorism and terror financing.
Section 15: Defines “terrorist acts.”
Section 17: Punishment for raising funds for terrorist acts.
Prevention of Money Laundering Act (PMLA), 2002:
Provides for attachment and confiscation of property involved in money laundering, including terror financing.
Foreign Contribution (Regulation) Act (FCRA), 2010:
Regulates foreign funds, often used to trace terror funding.
Indian Penal Code (IPC):
Sections relating to criminal conspiracy, criminal breach of trust, cheating, etc., are also invoked.
Financial Intelligence Unit - India (FIU-IND):
Monitors suspicious financial transactions.
3. Components of Terror Financing Offences
Source of Funds: Donations, extortion, hawala transactions, fake charities.
Transfer Mechanisms: Hawala networks, informal money transfer systems, cryptocurrencies.
Use of Funds: Purchase of weapons, explosives, logistics for terrorist acts.
Tracing Money Trail: Through bank records, transaction monitoring, forensic audit.
4. Important Case Laws on Terror Financing and Money Trail
1. National Investigating Agency (NIA) v. Zahoor Ahmad Shah Watali, (2018) 7 SCC 1
Facts: Accused charged under UAPA for terror financing through hawala transactions.
Issue: Reliance on electronic and banking evidence for tracing money trail.
Holding: Supreme Court emphasized the importance of financial evidence in terror financing cases and upheld use of digital banking records as reliable proof.
Significance: Reinforced the judiciary's reliance on electronic money trail in prosecuting terror financing.
2. NIA v. Syed Salahuddin & Ors., (2017) SCC OnLine SC 1108
Facts: Charges under UAPA and PMLA for funding terrorist activities through illegal money channels.
Issue: Validity of evidence obtained under PMLA in terror financing.
Holding: Court held that financial investigation under PMLA is vital to unravel terror funding and must be accorded due weight.
Significance: Emphasized cooperative use of PMLA and UAPA provisions.
3. State of Maharashtra v. Abdul Kalam, (2014) 12 SCC 675
Facts: Accused involved in terror financing using hawala and fake charities.
Issue: Whether unaccounted funds linked to terrorism can be attached and confiscated.
Holding: Supreme Court upheld attachment of properties and money involved in terror financing under PMLA.
Significance: Strengthened the deterrent effect by enabling confiscation of terror funds.
4. K. Natarajan v. Union of India, (2013) 2 SCC 274
Facts: Accused charged with money laundering linked to terror groups.
Issue: Whether prosecution can proceed based on circumstantial financial evidence.
Holding: Court observed that a consistent money trail and transactions pattern are sufficient for conviction even if direct evidence is lacking.
Significance: Acknowledged circumstantial evidence in money trail offences.
5. State (NCT of Delhi) v. Navjot Sandhu (2005) 11 SCC 600 (Nirbhaya Case reference for money trail)
Facts: Though primarily a criminal conspiracy case, the case also involved tracing financial transactions to uncover conspiracy.
Holding: Courts recognized financial investigations as integral to dismantling criminal-terror networks.
Significance: Underlined the importance of following money trail in terror-linked cases.
6. Mohd. Majid Hussain v. Union of India, (2019) 11 SCC 641
Facts: Accused charged under UAPA for terror financing through charitable trust.
Issue: Whether money collected for charitable purposes diverted for terrorist activities.
Holding: Court stressed the need for thorough audit and financial trail to prove diversion of funds.
Significance: Stressed due diligence in examining financial transactions in terror cases.
7. Zahoor Ahmad Shah Watali v. Union of India (2015) 14 SCC 62
Facts: Accused charged with terror financing via hawala.
Holding: Court upheld conviction based on financial evidence and transaction tracing.
Significance: Reaffirmed strict approach to prosecuting terror financiers.
8. Abu Salem v. State (NCT of Delhi), (2011) 9 SCC 110
Facts: Accused used complex money laundering schemes to finance terror acts.
Holding: Court held that tracing of money trail and identifying shell companies are key to prosecution.
Significance: Recognized investigative challenges and the need for sophisticated financial tracking.
5. Key Takeaways
Terror financing cases rely heavily on financial forensic evidence, including banking transactions, wire transfers, and audit trails.
Courts accept electronic evidence and digital records as reliable for establishing money trail.
The burden on prosecution is to prove nexus between funds and terrorist acts.
Attachment and confiscation of assets used for terror financing are critical deterrent tools.
Collaboration between enforcement agencies (NIA, FIU, ED) is vital for tracing and prosecuting terror financing.
Courts acknowledge the role of circumstantial financial evidence when direct proof is unavailable.
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