ORGANISED CRIME AND TERRORISM

ORGANIZED CRIME

Organized crime is a continuing criminal enterprise that rationally works to profit from illicit activities that are often in great public demand. Its continuing existence is maintained through corruption of public officials and the use of intimidation, threats, or force to protect its operations.

Transnationally organized crime

As specified in Article 3 (2) of the Organized Crime Convention, an offense is transnational in nature if:

• It is committed in more than one State;
• It is committed in one State but a substantial part of its preparation, planning, direction, or control takes place in another State;
• It is committed in one State but involves an organized criminal group that engages in criminal activities in more than one State; or
• It is committed in one State but has substantial effects in another State.

Characteristics of Organized Crime

According to the Presidents Commission on Organized Crime 1986, organized crime is the collective result of the commitment, knowledge, and actions of three components: the protectors, organized crime support, and organized criminal group.

1. The Protectors: They are corrupt public officials, lawyers, and businessmen who individually or collectively protect the criminal group through abuses of status and/or privilege and violation of the law.
   • As a result, the group is insulated from both civil and criminal government actions.
   • The group relies on a network of corrupt officials to protect them from the criminal justice system.
2. Organized crime support:
   • Specialist support: Organized criminal groups and their protectors rely on skilled individuals or specialists to assist criminal groups on an ad-hoc basis. They are nonetheless considered part of organized crime and include pilots, chemists, shooters, etc.
   • Social Support: It includes public officials who solicit the support of organized crime figures; business leaders who do business with organized crime figures at social gatherings and thus portray the criminal group in a favorable or glamorous light.
3. Organized criminal group: The United Nations Convention Against Transnational Organized Crime, 2003 defines “an organized criminal group” using four criteria:
   • Structured group: A structured group of three or more persons. A structured group does not need a formal hierarchy or continuity of its membership. This includes loosely affiliated groups without any formally defined roles for its members or a developed structure.
   • Continuity: The group exists for a period of time and survives beyond the life of its leadership.
   • Serious crime: It acts in concert with the aim of committing at least one serious crime. Thus, criminal conspiracy is inherent in organized crime.
   • Purpose: To obtain, directly or indirectly, financial or other material benefit. It includes crimes in which the predominant motivation may be sexual gratification, such as receipt or trade of materials by members of child pornography rings, trading of children, etc.
4. Some other characteristics of organized criminal group:
   • Membership: The membership in the core criminal group is restricted and based on common traits such as ethnicity, criminal background, or common interests.
   • Violence: The violence or threat of it is used against the members of the group to keep them in line as well as against the outsiders to protect the economic interests of the group. Members are expected to commit, condone, or authorize violent acts.
   • Territorial versus non-territorial groups: While some groups focus on a local territory and attempt to maintain a monopoly in the area (street gangs, maritime piracy groups, etc.), others are non-territorial.

Types of Organized Crime

1. Drug trafficking: Of all the illicit products trafficked by organized crime, drug trafficking is the most (in)famous and has received systematic attention over the last decades. Although drugs continue to represent a major source of revenue for organized criminal groups, business models are changing.
   • New technologies: Criminals are exploiting new technologies and networks, such as the Darknet, that are altering the nature of the illicit drug trade and the types of players involved (UNODC).
   • Nature of groups: Organized criminal groups operating in virtual networks tend to have looser ties and are organized in horizontal structures (as opposed to vertical or hierarchical structures). Smaller groups have become more significant.
2. Firearms trafficking: Firearms are manufactured and traded both legally and illegally, making the identification and tracking of illegally manufactured and trafficked firearms very complex. Further complicating matters, most firearms are produced legally and then diverted into the illicit market.
   • Illicit arms: These are present in most forms of violent crimes and increase the power of organized criminal groups.
   • Example: In 1996, an aircraft dropped over 300 AK 47/56 rifles, ammunition, rocket launchers, and night vision devices in Purulia, West Bengal.
3. Smuggling: Smuggling consists of clandestine operations leading to unrecorded trade. It is another major economic offense. India, with its vast coastline of about 7,500 kilometers and open borders with Nepal and Bhutan, is prone to large-scale smuggling of contraband and other consumable items.
4. Money Laundering: Proceeds from drug-related crimes are an important source of money laundering. Tainted money is accumulated and integrated into the economy by organized racketeers, smugglers, economic offenders, and antisocial elements.
   • Threat due to money laundering: It poses a serious global threat, not only to criminal justice systems but also to the sovereignty of nations.
5. Terrorism & Narco-terrorism: Narcoterrorism refers to attempts by narcotics traffickers to influence the policies of a government or society through violence and intimidation, and to hinder the enforcement of anti-drug laws by threat or use of violence. It is directly connected to organized crime.
   • Example: In North-East India, terrorist groups partly finance their operations through kidnappings for ransom of tea garden executives and extortion from businessmen.
6. Contract killings: Contract killings involve engaging a professional gang for a monetary consideration. Part of the prefixed amount is paid in advance, often referred to as “supari,” while the rest is paid after the crime is committed.
   • Example: The Dawood Ibrahim gang has been responsible for contract killings of several rich businessmen, industrialists, and politicians, particularly in Maharashtra.
7. Kidnapping for ransom: This involves criminals leveraging hostages to receive a payment from their family, employer, or country in exchange for the hostage’s release. Kidnapping for ransom is a major source of income for criminal gangs that rely on this to finance their operations.
8. Illegal immigration: Large-scale migration is fostered due to high unemployment rates and higher wage levels in foreign lands.
   • Due to difficulty in obtaining valid travel documents and jobs abroad, people often fall into the trap of travel agents and employment agencies who promise them proper documents and jobs in exchange for large sums of money.
   • Often, these promises are not fulfilled, and migrants are dumped into foreign lands without the promised employment.
9. Prostitution: Trading in sex and girl-running is a very profitable business in which the underworld plays a significant part.
   • Criminal organizations frequently traffic women and children for forced prostitution. These organizations provide security, support, or liaison services to brothel owners and other mafia groups.

Challenges in dealing with organized crime

1. Governance-related:
   • Inadequate Legal Structure: India does not have a special law to control/suppress organized crime. Conspiracies are hatched in darkness, and proving them in a court of law is a herculean task.
   • Lack of Coordination: India does not have a national-level agency to coordinate the efforts of the State/city police organizations as well as central enforcement agencies for combating organized crime.
   • Criminal, Political & Bureaucratic Nexus: Over the years, organized criminal groups have developed an extensive network of contacts with bureaucrats, government functionaries, politicians, and media at the local level who act as a shield protecting them.
   • Difficulties in obtaining proof: As organized criminal groups are structured in a hierarchical manner, it may be possible to have actual perpetrators of crime convicted, but it is difficult to go beyond them in the hierarchy because of rules of evidence, particularly the non-admissibility of confessions made by criminals before the police.
2. Economic reasons:
   • Weakness of financial system: Prevalence of a cash economy, parallel transactions through hawala, and money laundering.
   • Economic failure: Issues such as high unemployment, low standards of living, and reliance on underground markets stimulate criminal organizations to supply goods, services, and jobs. The more the State is absent or deficient, the more communities become susceptible to depending on and supporting criminal organizations.
   • Structural factors creating opportunities for organized crime:
     • Asymmetry of controls: Differences in the ability of States to implement border controls and enforce laws.
     • Asymmetry of resources: Disparities in the allocation of natural and human resources in the international system.
     • Asymmetry of prices: Disparities between States in terms of the distribution of economic assets and income.
     • Asymmetry of investments: Disparity between investments in domestic crime prevention and criminal justice versus reinforcing international legal, institutional, and operational capacities (the former being considerably higher than the latter).
     • Legal asymmetries: Disharmonization of legal systems and laws.
3. Other issues:
   • Lack of Resources & Training: Under the Constitution, police is a State subject. Most States face a resource crunch and are not in a position to spare adequate resources for criminal justice system agencies.
   • Lack of public participation: The public is unwilling to help police due to fear of police harassment or threats from criminals.
   • Globalization: It has led to the spanning of organized crime across borders, making it much more difficult to track and address.
   • Technological sophistication of organized crimes: New technologies open up many possibilities for criminals to carry out traditional financial crimes in new ways.

Measures taken:

1. Legislative measures:

• Indian Penal Code: Section 120A and 120B of the Indian Penal Code define and prescribe punishment for criminal conspiracy.
  • Dacoity: If five or more persons commit the offense of robbery, they commit “dacoity.” The IPC also criminalizes preparation to commit dacoity (Section 399) and assembly for the purpose of committing dacoity (Section 402).

• Gangsters: There is no central legislation to suppress “gang activity” having countrywide applicability. However, states like Uttar Pradesh have enacted such laws.
• Organized crime: Maharashtra (Maharashtra Control of Organized Crime Act) has a specific legislation on this issue.

• The National Security Act, 1980: Provides for preventive detention by the Central Government, the State Government, or officers designated by this Government.
• Prevention of Illicit Traffic in Narcotic Drugs and Psychotropic Substances Act, 1988: Provides for the detention of persons involved in illicit traffic in narcotic drugs and psychotropic substances.
• Prevention of Money Laundering Act, 2002: Detailed discussion under articles on money laundering.
• Unlawful Activities Prevention Act (UAPA): Provides for the effective prevention of certain unlawful activities of individuals and organizations. It also grants authorities the right to attach or forfeit property equivalent to counterfeit currency involved.
• The National Investigation Agency (NIA) Act, 2008: Besides terrorism, this Act addresses offenses such as counterfeit currency, human trafficking, narcotics, and organized crime.

2. Institutional Measures

• Anti-Trafficking Nodal Cell: Established by the Ministry of Home Affairs (MHA) as a focal point to communicate decisions and follow up on action taken by State governments to combat human trafficking.
• Ujjawala and Swadhar programs: Initiated by the Ministry of Women and Child Development to fund NGO-run shelters and rehabilitation services for women and children. The Ujjawala program focuses on female sex trafficking victims, while the Swadhar program supports women in difficult circumstances.

3. International Measures

1. Drug Trafficking: India is a signatory to three key UN Conventions:
   • Single Convention on Narcotic Drugs (1962)
   • UN Convention on Psychotropic Substances (1971)
   • UN Convention Against Illicit Traffic in Narcotics Drugs and Psychotropic Substances (1988).
2. United Nations Convention Against Transnational Organized Crime: Recognized by Member States as a major step in addressing the seriousness of transnational organized crime and enhancing international cooperation.
3. Firearms Protocol (2005): Supplements the Organized Crime Convention and serves as the only legally binding instrument to counter illicit manufacturing and trafficking in firearms, their parts, components, and ammunition globally.

Way Forward

1. UNODC Recommendations:

• Transnational Organized Crime Threat Assessment (TOCTA):
  • Outline the main transnational organized crimes, their scale, trends, and underlying mechanisms.
  • Identify knowledge, data, and resource gaps that hinder detection and monitoring of illegal markets impacting the South Asia region.
  • Formulate recommendations to enhance data quality, accuracy, and representation.
  • Improve the capacity of South Asian countries to detect, monitor, and prevent transnational organized crimes.
• Strengthening Criminal Intelligence Sharing: Establish South Asian Regional (Criminal) Intelligence and Coordination Centre on Transnational Organized Crime (SARICC-TOC) that is aimed at establishing a mechanism for regional information sharing and coordination.
• Border Management: Strengthening border control mechanisms to address and counter illicit trafficking, including human trafficking and drug trafficking, at the borders of India, Bangladesh, Bhutan, and Nepal. 
• Cybercrime: Leveraging the expertise and knowledge base of UNODC to conduct needs analysis, identify key national priorities, adopt adequate legislation, and build operational capacity of law enforcement and judicial bodies. This also involves mobilizing and raising awareness among communities and civil society.
• Anti-money Laundering and Countering the Financing of Terrorism: Discussed under separate articles.

2. Improving International Cooperation

• Speedy Extradition of Fugitive Criminals: An effective method to bring fugitive criminals to justice.
• Deportation: While extradition is time-consuming and lengthy, deportation of an undesirable alien is swift and efficient.
• Agreement on Mutual Legal Assistance: Assistance from foreign countries is often required for effective investigation and prosecution of transnational crimes.
• Money-Laundering: Strengthening international cooperation in preventing and countering money laundering reduces or eliminates potential negative economic and social consequences of illicit activities.

3. Strengthening of Criminal Laws

• Substantive Law: India does not currently have a special law to control/suppress organized crime. The draft Suppression of Organized Crime Bill is pending, emphasizing the need for a separate law.
• Procedural Law: Amendments are needed in the Code of Criminal Procedure.
  • For example, increasing the 15-day limit for police custody from the date of arrest is essential for investigating organized crime effectively.
• Witness Protection Programme: In organized crime cases, witnesses are often reluctant to testify in open court due to fear of reprisals. Thus, a proper witness protection scheme needs to be implemented.

4. Other Measures

• Following the Money Trail: Drug trafficking is profit-driven. Identifying flows related to these profits, along with investment and laundering channels, can effectively counter organized crime.
• Improving Coordination and Setting Up Specialized Units:
  • National-Level Coordinating Bodies.
  • Organized Crime Wings in City Police Organizations.
  • Organized Crime Cells at the District Level.

Definition of Terrorism: Terrorism is defined as criminal acts intended to provoke a state of terror in the general public, a group of persons, or particular persons for political purposes, invoking political, philosophical, ideological, racial, ethnic, or religious justifications. [UNGA]

Differences Between Criminal Organizations and Terrorist Organizations

Similarities Between Terrorism and Organized Crime

1. Outside the Law: Both terrorists and criminals operate outside the law, often using similar methods such as false identification, shipping documents, and countersurveillance techniques.
2. Same Network Structures: Both operate on similar network structures in regions with weak governmental controls, lax law enforcement, and open borders.
3. Similar Recruitment Patterns: Both recruit members from marginalized social groups burdened by social or political frustrations, rejecting socially accepted norms.
4. Funding: Many fundamentalist terrorist groups engage in criminal enterprises that their ideology seems to permit.
   • Example: Terrorists and non-state armed groups profit from drug trade, with estimates stating that up to 85% of opium poppy cultivation in Afghanistan occurs in Taliban-controlled areas (UNODC).
5. Propaganda: Terrorist groups produce high-quality multimedia to recruit supporters, train members, and inspire fear in their enemies.
   • Example: The film Black Hawk Down, depicting the 1993 defeat of U.S. military forces in Somalia, was exploited by al-Qaeda’s Iraq branch for propaganda under Abu Musab al-Zarqawi.
6. Technological Advancements: Both exploit cutting-edge technologies and high-tech means to carry out their illegal activities.
7. Similarity in Internal Functioning:
   • Both display a respect for strict discipline, with rigorous rules of behavior and internal punishment for any disobedience.
   • Both organized crime and terrorism are characterized by secrecy and confidentiality in their operations.
8. Similarity in Working: Both terrorism and organized crime use violence for the purpose of accomplishing certain goals or interests and intimidating the surroundings.

Linkage Between Terrorism and Various Organized Crimes

Makarenko states that the crime-terror nexus occurs in four different forms:

1. Alliances: The alliance between criminal groups and terrorists can be one-off, short-term, or long-term.
   • It could involve seeking expertise (e.g., bomb-making), operational support (e.g., accessing smuggling routes), etc.
2. Operational Motivations: An alliance could be formed to trade in traditional operations. For example, criminal groups might engage in political activities while terrorist groups engage in criminal activity.
3. Convergence: A form of merger where each side displays characteristics of the other.
4. Black Holes: Safe havens where the thin line separating the activities of terrorist and criminal groups disappears, often in a permissive “failed state” environment.

Linkages Between Terrorism and Various Organized Crimes

1. Terrorism and Human Trafficking: Terrorists systematically carry out acts of violence associated with human trafficking to achieve strategic objectives. Examples:
   • Boko Haram (Nigeria) and Al-Shabaab (Somalia) have been documented trafficking children into soldier or fighter roles, as well as using them for suicide bombings.
   • ISIL has created markets that both terrorize women and generate lucrative profits for the group.
2. Terrorism and Drug Trafficking:
   • Data: The annual value of the illicit drug trade is estimated to be between $426 and $652 billion, generating between one-fifth and one-third of the global revenues of transnational organized criminal groups (UNODC, 2017).
   • Examples: In 2013, cocaine worth $1.25 billion was trafficked through West Africa to Europe. Concerns have risen over the involvement of Al-Qaida in the Islamic Maghreb (AQIM) in the drug trade (UNODC).
3. Terrorism and Trafficking in Weapons: Some individuals linked to terrorist offenses are brought up in a criminal environment and retain long-term links and associations with criminal contacts following radicalization. Examples:
   • Tunisian authorities have seized arms and ammunition caches trafficked from Libya by organized commercial smugglers and financed by terrorist groups linked to Al-Qaida.
   • Investigations into the Paris attacks of November 2015 suggest that some attackers might have actively participated in criminal networks rather than just being clients.

1. Terrorism, Crime, and Trafficking in Cultural Property/Antiquities: Antiquities serve as a source of revenue for terrorists and hold symbolic value. By destroying or removing cultural symbols, terrorist groups undermine the State and attack the morale of local populations, engaging in a type of “cultural cleansing.”
2. Terrorism and Intellectual Property Crime (IPC): IPC includes the manufacturing, transporting, storage, and sale of counterfeit or pirated goods without the consent of rights holders. Examples: 
   • In 2016, terrorist organizations in North Africa were allegedly responsible for a contraband tobacco trade valued at $1 billion (Institute for Economics and Peace).
3. Terrorism and Kidnapping for Ransom: Examples:

• Between 2008 and 2014, Al-Qaida and its affiliates generated at least $125 million in revenue from kidnappings.
• Boko Haram has a specialized task force for abducting politicians, businesspeople, foreigners, rulers, and civil servants, often exchanging them for large sums of money or the return of militants (Institute for Economics and Peace, 2017).

1. Terrorism and Exploitation of Natural Resources: Examples:

• ISIL is thought to be the wealthiest terrorist group, with a turnover of roughly $2 billion in 2015, derived significantly from oil trafficking (Institute for Economics and Peace, 2017).
• In 2011, 9–11 million sacks of charcoal were exported from Somalia, generating annual revenues for Al-Shabaab exceeding $25 million (UN Security Council Monitoring Group on Somalia and Eritrea).

Linkage Between Terrorism and Organized Crime in India

1. North-East India: The crime-terrorism nexus in the Northeast constitutes a symbiotic relationship, often as a by-product of poor governance. Examples:
   • Government officials in conflict zones are threatened or bribed to award contracts to groups patronized by militants.
   • Essential commodities like rice and kerosene are diverted to militants and sold at inflated prices.
   • Terrorist organizations in the region mobilize funds through illegal drug courier networks or human trafficking.
2. Jammu and Kashmir:
   • Terrorist organizations in Jammu and Kashmir rely on hawala systems for funding, along with money laundering, drug money, and counterfeit currency.
   • Reliance on extortion and related means is minimal, unlike in the Northeast.
   • Government resources in Kashmir often do not reach militant hands.

• In 1989, the daughter of the Home Minister of India, Rubiya Sayeed, was kidnapped by militants. She was released in exchange for the release of five Kashmiri militants.
• In 1999, an Indian Airlines flight to Kandahar, Afghanistan, was hijacked (then under Taliban control), where over 155 passengers were held hostage for more than eight days. They were freed in exchange for the release of five Pakistan-based militants.

1. Western India (Maharashtra and Gujarat): Mumbai serves as the nerve center of India’s underworld criminal activities and is a hub for the crime-terrorism nexus in Maharashtra.
   • D-Company:
     • Engaged in criminal activities like smuggling, weapons and drug trafficking, extortion, protection rackets, and illegal hawala transactions.
     • It also funded and carried out ideological and political causes, such as financing and perpetrating the March 1993 Mumbai terrorist attacks.

1. Maoists:
   • Funding sources include: Extortion, parallel governments, taxation in rural areas, and smuggling of small arms, homemade explosives, and landmines. Indulging in bank robberies to fund their movement.
   • Reports also indicate that the Maoists enforced cuts on drug-yielding crops in the region.

TERRORISM

Terrorism is any act meant to injure or kill civilians, intimidate a population, government, or organization, and incite them to act against the perpetrators or prevent them from succeeding.

Types of Terrorism

1. Ethno-Nationalist Terrorism: Defined as deliberate violence by a sub-national ethnic group to promote its cause, such as creating a separate State or elevating the status of one ethnic group over others. Example:
   • Tamil nationalist groups in Sri Lanka.
   • Insurgent groups in Northeast India.
2. Religious Terrorism: Practitioners are motivated wholly or partly by religious beliefs, considering violence a divine duty or sacramental act. This type is often more destructive than other forms of terrorism.
3. Ideology Oriented Terrorism: The left wing and the right-wing terrorism consists of an ideology that can be used to support the use of violence and terrorism.
   • Left-wing terrorism: Leftist ideologies believe that all the existing social relations and state structures in the capitalist society are exploitative in character and a revolutionary change through violent means is essential. 
     • Example: Red Army Factions in  former west Germany, Red Bridges in Italy, Peoples Revolutions Army in Argentina, etc. 
   • Right-wing terrorism: Right-wing groups generally seek to maintain the status quo or to return to some past situations. They have reactionary tendencies and their jingoist ideology ensures them restore violence to meet their demands. Sometimes they might assume ethnic/racist character too.
     • Example: Nazism in Germany, Fascists in Italy, white supremacy movements in the US known as Ku Klux Klan (KKK).
4. State-Sponsored Terrorism Initiated to achieve specific foreign policy objectives, instead of targeting media attention or the audience directly. Operates under fewer constraints, causing higher casualties on the target. 
   • Examples: Countries like Iran, Iraq, Sudan, Libya, and North Korea sponsor political violence in enemy countries. India has faced such problems from Pakistan since Independence.
5. Narco-Terrorism: Combines two criminal activities: drug trafficking and terrorist violence. Narcotics traffickers influence government policies through systematic threats or violence.

Meaning of Terrorism

1. Conventional Means of Terrorism: Tactics include attacks on persons or property using weapons, bombs, IEDs, grenades, and landmines. Other methods: hostage-taking, hijacking, and forcible takeover of buildings.
2. Environmental Terrorism: Protests against the destruction of the natural environment, such as deliberate damage to ecosystems.
   • Example: During the Gulf War of 1991, Saddam Hussein ordered the detonation of over 1,000 oil wells, engulfing Kuwait in smoke.
3. Weapons of Mass Destruction (WMD): Inflict heavy and indiscriminate damage, including nuclear, chemical, and biological weapons.
4. Chemical Weapons: Release of toxic gases caused by attacks on industrial facilities or theft from legitimate users.
   • Examples: Ricin, botulinum toxin, nerve agents, sarin.
5. Nuclear weapons: Use of highly engineered bombs made with enriched uranium (HEU).
6. Bioterrorism: Deliberate release of viruses, bacteria, or other agents to cause illness or death in humans, animals, or plants. Difficult to detect; effects can take hours or days to manifest.
7. Cyber Terrorism: Unlawful attacks on computers, networks, and stored information to intimidate governments or people, furthering political or social objectives.
8. Suicide Terrorism: Frequently seen in Jammu & Kashmir. Many Fedayeen involved are Pakistani nationals, some of whom fought in Afghanistan against the Soviets during the 1980s.

Factors Perpetuating Terrorism

1. Socio-Economic Reasons:
   • Perceptions of deprivation and inequality: Especially among minorities, targeting symbols of central government or superior communities.
   • Skewed gender balance: A high proportion of unmarried males increases intra-societal violence and instability.
   • Weak state structures in poor societies: Countries with weak systems are more vulnerable to civil wars and terrorism risks.

• Notion of Injustice: Perceptions of unfairness due to disappointment with democratic processes, corruption, police violence, or discrimination, whether real or perceived.
• Lack of Education and Employment Opportunities: These drive individuals to seek opportunities in terrorist groups.
• Revenge and Indirect Identification with Victims of Violence: Graphic depictions of violence may trigger anger and foster psychological identification with victims, motivating individuals to retaliate against perceived enemies.
• Poverty: Terrorism is often linked to poverty. Those deprived of resources may engage in terrorism for monetary benefits.
  • Example: The Naxalite movement in India is more prevalent in poorer states.

1. Political Reasons:
   • Lack of Political Stability: Political instability and lack of legitimacy encourage ideological terrorism, often worsened by ethnic or religious diversity.
   • States in Transition: Countries undergoing democratic transitions, especially semi-authoritarian states, experience higher levels of transnational terrorism.
   • Weak and Collapsed States: Past or ongoing wars can root motivations for terrorism, with armed conflicts fostering transnational terrorism.
2. Other Reasons:
   • Spill-Over Effect: Terrorism in one country can extend to neighboring regions.
   • Modernization: Societal changes due to modernization can create new conditions for terrorism through increased mobility, communication, and wider targets.

Impact of Terrorism

1. Political Impact:
   • Instability: Terrorist acts destabilize governments and governance systems.
     • Example: The assassination of Rajiv Gandhi disrupted India’s political landscape.
   • Loss of Trust in Government: Frequent terrorist attacks can erode trust in leadership.
2. Economic Impact:
   • Monetary Loss: The global economic cost of terrorism in 2019 was estimated at $26.4 billion.
   • Physical Destruction: Terrorist attacks destroy infrastructure, such as plants, machines, transportation systems, and workers.
     • Example: The 9/11 World Trade Center attack in 2001.
   • Less Focus on Development: Governments divert significant funds to defense at the expense of developmental projects.
   • Other Impacts: Decreased investor confidence and tourism, leading to loss of foreign exchange.
3. Social Impact:
   • Loss of Lives: Globally, over 13,000 deaths were attributed to terrorism in 2019, including 277 in India (GTI 2020).
   • Hampers Social Fabric: Terrorism creates divisions, reducing trust among citizens and weakening communal bonds.

Challenges in Dealing with Terrorism

1. Role of States and Technology:

• Transnational Issue: Terrorism transcends borders, requiring international cooperation for effective countermeasures.
• State-Sponsored Terrorism: Terror finance and equipment support from nations like Pakistan, along with terrorist cells operating from its soil, make it challenging to combat terrorism in regions like India.
• Technological Development: Due to advancements in ICT, terrorist activities can now be conducted remotely, creating anonymity and jurisdictional challenges.

2. Governance-Related Challenges

• Inadequate Legal Structure: India does not have a dedicated law specifically for suppressing terrorism.
• Lack of Coordination: There is no national-level agency to coordinate efforts between state and city police organizations and central enforcement agencies to combat terrorism.
• Lack of Clear Definition: The definition of terrorism remains unclear on a global level.

3. Others

• Changed Nature of Terrorism: Terrorism now involves dispersed “maximum violence” attacks, like those in Mumbai and Paris, requiring rapid intervention.

Indian Initiatives for Tackling Terrorism

1. Legislative Measures:

• National Security Act (NSA), 1980: Empowers Union or State Governments to detain individuals whose actions threaten India’s defense, foreign relations, or security.
• The Terrorist and Disruptive Activities (Prevention) Act (TADA), 1985 and 1987: Enacted to curb terrorism with a restricted tenure of two years. Reintroduced as a continuing act due to persistent threats. Granted powers for detention, witness protection, and expedited trials.
• Prevention of Terrorism Act (POTA), 2002: Defined “terrorist acts.” Allowed seizure of proceeds from terrorism, unauthorized possession of firearms, extended police custody, and establishment of special courts. The act was later repealed.
• Unlawful Activities (Prevention) Act (UAPA), 1967: Introduced to combat unlawful activities by individuals and associations. Empowered authorities to declare any group as “unlawful.” Amended in 2019 to include the designation of individuals as terrorists.

2. Steps to Combat Terror Financing

• Strengthening UAPA Provisions: Criminalizes production or smuggling of high-quality counterfeit Indian currency. Enlarges the scope to include any property intended to finance terrorism.
• Terror Funding and Fake Currency (TFFC) Cell: Established within the National Investigation Agency (NIA) to focus investigations on terror funding and counterfeit currency cases.
• Advisory on Terror Financing: Issued in 2018–2019 to states and union territories for investigating high-quality counterfeit Indian currency cases. Regular training programs conducted for state police personnel.
• Fake Indian Currency Notes (FICN) Network: Identified as a major terror financing channel. Coordination groups formed to share intelligence and counter fake currency circulation.
• Intelligence and Security Agencies: Center and states collaborate to monitor terror financing activities and act accordingly under legal provisions.

3. Steps takes to check smuggling, and circulation of Fake Indian Currency Notes (FICN)

• Security at International Borders: Deployment of new surveillance technology. Increased manpower for round-the-clock surveillance. Establishment of observation posts, border fencing, and intensive patrolling.
• Bilateral Cooperation: India and Bangladesh signed a Memorandum of Understanding (MoU) to counter smuggling and circulation of counterfeit currency.
•  Training programs: They are conducted for police officials from Nepal and Bangladesh to address smuggling and currency counterfeiting.
• Institutional Measures

• NATGRID: Discussed under the related article.
• National Cyber Coordination Centre: Discussed under the Cybersecurity article.

• Other Measures

• Border Security Management: Discussed under the related article.
• Cybersecurity: Discussed under the Cybersecurity article.
• Border Area Development Program (BADP): Focuses on developmental needs and welfare of people living near the International Boundary (IB).

Global Initiatives for Tackling Terrorism

• United Nations Global Counter-Terrorism Strategy: Focuses on four pillars:
  1. Tackling terrorism-spreading conditions.
  2. Increasing state capability.
  3. Ensuring respect for human rights.
  4. Guaranteeing rule of law in counterterrorism.
• Global Counter-Terrorism Forum (GCTF): Informal, apolitical, multilateral platform with 29 countries and the European Union.
• Comprehensive Convention on International Terrorism (CCIT): Proposed by India in 1996. Provides a legal framework denying funds and safe havens to terrorist groups. Aims to create a universal definition of terrorism.
• Counter-Terrorism Implementation Task Force (CTITF): Enhances coordination of UN activities in counterterrorism.
• Resolution 1267 Committee: Maintains sanctions lists for individuals and groups linked to Al Qaeda, the Taliban, and other terrorist organizations.

Way Forward

1. Legislative and Executive Measures (II ARC Recommendations)

• Comprehensive Anti-Terrorism Legislation: Enact a legal framework to address terrorism with safeguards to prevent misuse.
• Definition of Terrorism: Clearly define criminal acts considered terrorist in nature, such as damaging military establishments or assassinating public officials.
• Bail Provisions: Accused individuals should generally not be granted bail. A Review Committee should periodically assess cases and provide binding advice.
• Confession Before a Police Officer: Confessions should be admissible in court, but only after comprehensive police reforms are implemented.
• Presumptions Under the Law: Courts may infer guilt if arms, explosives, or financial support for terror activities are proven.
• Review Committee: A statutory committee should examine all registered cases within 30 days.
• Special Fast-Track Courts: Dedicated courts for terrorism-related trials.
• Specialized Division in the CBI: Investigate terror offenses with integrity and professionalism.

2. Measures Against Financing of Terrorism – Anti-Money Laundering Measures [II ARC]

• Amendment to PMLA:
  • Inclusion of Offenses: The Prevention of Money Laundering Act (PMLA) may be amended to expand the list of predicate offenses to widen its scope.
  • Advancing Search and Seizure: Strengthen the stage at which search and seizure actions can be taken under PMLA, particularly for cases involving broader ramifications.
• Strengthening Institutional Coordination: Foster better coordination between the Directorate of Enforcement and other intelligence-collecting and investigating agencies.
• Extending Financial Reporting Regime: Extend the financial transaction reporting regime under FIU-IND to cover high-risk sectors, such as real estate. Strengthen FIU-IND’s capacity to meet future challenges.
• Utilizing Regional Economic Intelligence Councils (REICs): Increase coordination among investigation agencies using REIC platforms to tackle suspected money-laundering cases.
• Information Dissemination: Apart from sharing agency-specific intelligence, FIU-IND should provide region-centric information to the Central Economic Intelligence Bureau (CEIB) for wider dissemination.

3. Measures Against Financing of Terrorism – Blocking the Flow of Funds for Terrorist Activities [II ARC]

• Freezing of Assets: The legal framework should include provisions for freezing assets, bank accounts, deposits, and cash if they are suspected of being used for terrorism.
• Specialized Cell: Establish a specialized cell within the National Counterterrorism Centre to act on financial intelligence gathered from various sources.
• Dedicated Teams: Create teams within agencies to investigate financial aspects of specific terrorism-related cases more effectively.

4. Other Recommendations

• Role of Citizens, Civil Society, and Media: Media should follow a self-regulating code of conduct to ensure terrorist attacks do not aid anti-national propaganda.
• Recommendations from the National Workshop on Public Order (SVPNPA, Hyderabad):
  • National Forum: Set up a policy and strategy forum for counterterrorism.
  • Addressing Grievances: Resolve genuine or perceived grievances quickly to avoid exploitation.
  • Amending Outdated Laws: Modernize laws such as the Explosive Act to reduce delays in investigations and prosecutions.
  • Developmental Activities: Plan activities with due regard to displacement issues to prevent violent conflicts.
  • Training: Sensitize security forces to prevent alienation of citizens and secure their cooperation.
• Countering Terrorism Online:
  • Removing Content: Remove terrorist content from the internet as a critical measure.
  • Government and Technology Companies: Build cooperative relationships to counter online terrorism.
  • Developing Machine-Learning Tools: Invest in AI-driven tools to filter and block terrorist content before it is posted.
  • Judicial Approval Mechanisms: Instead of demanding backdoor access to encryption systems used by messaging apps, states should devise stronger judicial approval mechanisms to access devices and accounts of suspected terrorists with the help of ethical hackers.

Best Practice

CONTEST, UK: The UK’s counter-terrorism strategy is built around the “Four Ps”:

• Prevent: Stop people from being radicalized.
• Pursue: Legally and operationally target suspects.
• Protect: Strengthen public security measures.
• Prepare: Mitigate the impact of inevitable attacks by improving response readiness.

MONEY LAUNDERING

Money laundering involves concealing or disguising the identity of illegally obtained proceeds to make them appear to come from legitimate sources (INTERPOL).

Stages of Money Laundering

1. Placement: The initial step where “dirty money” is introduced into financial systems. Funds acquired through theft, bribery, and corruption are moved from their original source.
2. Layering: Involves a complex series of transactions to obscure the source and ownership of illicit funds. The objective is to create multiple layers of financial transactions.
3. Integration: The final stage where “dirty money” is absorbed into the legitimate economy, such as through real estate investments. The laundered funds re-enter the financial system as “legal” tender.

Techniques of Money Laundering

1. Structuring: This is a method of placement where cash deposits are divided into smaller amounts and used to purchase bearer instruments, such as DDs, and then deposited again in smaller amounts of money.
2. Bulk Cash Smuggling: Involves physical transportation of cash to another jurisdiction and depositing it in a financial institution. A sub-component is the transport of fake currency to enemies.
3. Cash-Intensive Businesses: Businesses that receive a large proportion of revenue as cash are targeted by money launderers. Criminals use bank accounts of cash-intensive businesses to deposit proceeds of crime.
4. Trade-Based Money Laundering: These methods involve the under- or over-valuation of invoices to disguise the movement of funds. For example, the art market is an ideal vehicle for money laundering.
5. Shell Companies and Trusts: Trusts and corporate vehicles, depending on the jurisdiction, do not need to disclose their true owner.

1. Credit Card Laundering: Often used during layering or integration stages.
   • Example: Overpaying a credit card balance and then requesting a refund.
2. Round-Tripping: Money leaves the country through various channels and returns as foreign investment.
3. Bank Capture: Launderers or criminals buy controlling interests in banks (preferably in jurisdictions with weak AML controls) and move dirty funds through them without scrutiny.
4. Casinos: Individuals buy casino chips with illicit cash, then cash them out and claim the funds as gambling winnings.
5. Agricultural Income: Governments often exempt agricultural income from taxes. Criminal organizations mix illegal earnings with agricultural income to exploit these exemptions.
6. Hawala: A system of transferring money and property outside the traditional banking system. It is banned in India but remains a common method for money laundering.
7. Cryptocurrency: Cryptocurrencies pose challenges for financial institutions and anti-money laundering programs due to evolving regulations.
   • Example: Enforcement Directorate (ED) sent a notice to WazirX under FEMA during investigations into illegal online betting linked to Chinese companies.

Effects of Money Laundering

1. Economic Effects:

• Undermines Integrity of Financial Markets: Leads to reputational damage for financial institutions and forces investors to favor economies perceived as less risky.
• Impact on FDI: Money laundering affects the inflow and outflow of funds, often targeting developing economies to avoid detection (IMF).
• Volatility in Market: Misrepresentation of capital flows destabilizes the global economy.
• Loss of Revenue: Taxable funds are reduced, impacting government revenues.
• Macroeconomic Effects: Volatility in exchange rates and interest rates. Commodity price fluctuations disproportionately affect underprivileged groups.
• Increased Domination: Criminal elements dominate financial institutions, outcompeting legitimate players.
• Other Impacts: Lack of fair competition, increased business costs, and misallocation of resources.

2. Societal Impacts:

• Increased Criminality: Money laundering creates a disconnect between launderers and criminal activities, increasing the prevalence of crime.
• Decreased Human Development: High unemployment rates and dissatisfaction lead to more criminality and insecurity.
• Trust Deficit: Citizens lose trust in domestic financial institutions that fail to curb money laundering.
• Erosion of Social Morality: Declines societal values by exposing communities to drug trafficking, smuggling, and corruption.
• Misallocation of Economic Resources: Wealth shifts from rightful individuals to criminals, weakening governance.
• Reduced Spending on Productive Sectors: Governments must redirect resources away from productive enterprises to address the impacts of money laundering.

• Large Number of Victims: Economic crimes disrupt national economies, impacting a large number of potential victims.
• Other Effects: Weakening of the social fabric. Decline in collective ethical standards.

3. Security-Related Impacts

• Organized Crime: Facilitates operations for drug dealers, terrorists, illegal arms dealers, corrupt officials, and other criminals.
• Terrorism Financing: Involves funding terrorist acts and organizations, often linked to money laundering.

Initiatives to Combat Money Laundering

1. Legislative Measures

• Smugglers and Foreign Exchange Manipulators (Forfeiture of Property) Act, 1976: Penalizes illegal properties of smugglers and foreign exchange manipulators. Applicable only to individuals convicted under relevant acts (e.g., Customs Act, 1962).
• Narcotic Drugs and Psychotropic Substances Act, 1985: Provides penalties for property derived from or used in illegal narcotics trafficking.
• Prevention of Money Laundering Act, 2002 (PMLA): Enacted to prevent money laundering and confiscate proceeds from such activities.
  • Key Provisions:
    • Wider Ambit: Covers offenses under IPC, NDPS Act, Arms Act, Wildlife (Protection) Act, Immoral Traffic (Prevention) Act, and Prevention of Corruption Act.
    • Cross-Border Money Laundering: Allows agreements with other countries to enforce PMLA provisions and exchange information.
    • Special Courts: Established across States/UTs for trying money laundering cases.
• Fugitive Economic Offenders Act, 2018: Confiscates properties and assets of economic offenders who evade prosecution by staying outside India’s jurisdiction.

2. Institutional Measures

• Financial Intelligence Unit-IND (FIU-IND): Independent body reporting to the Economic Intelligence Council (EIC).
• Enforcement Directorate (ED): Investigates and prosecutes economic crimes under PMLA.
• Combating Financing of Terrorism (CFT) Cell: Coordinates with central and state enforcement agencies to address terror funding.
• Terror Funding and Fake Currency Cell: Established under the NIA to investigate terror funding cases.
• National Risk Assessment (NRA): Identifies vulnerable sectors and addresses loopholes.

3. Global Mechanisms

• Vienna Convention (1988): Obligates member states to criminalize money laundering linked to drug trafficking.
• Council of Europe Convention (1990): Establishes policies on money laundering and promotes international cooperation.
• Basel Committee’s Statement of Principles: Encourages banks to prevent money laundering.
• Financial Action Task Force (FATF): Promotes effective implementation of measures to combat money laundering and terror financing.
• UN Global Program Against Money Laundering: Aims to increase the effectiveness of international actions against money laundering through technical cooperation services offered to governments.
• International Organization of Securities Commissions (IOSCO): Encourages members to take necessary steps to combat money laundering in securities and futures markets.

4. Anti-Money Laundering Guidelines

• Security and Exchange Board of India (SEBI): Mandates SEBI-registered intermediaries to enact policies and procedures to combat money laundering effectively.
• Reserve Bank of India (RBI): Prevents individuals and companies from misusing banks and NBFCs for money laundering by mandating KYC (Know Your Customer) compliance.

Challenges in Preventing Money Laundering

• Flouting of KYC Norms: Financial institutions sometimes lower their guards, allowing money laundering.
• Tax Haven Countries: Enable anonymous accounts and prohibit disclosure of financial information to foreign tax authorities.
• Technological Development: Cyber technologies and the internet provide new ways for launderers to hide the origins of illicit proceeds.
• Lack of Awareness: Limited knowledge about hawala transactions and money laundering drives continued use of informal systems.
• Widespread Smuggling: Black-market channels sell consumer goods such as electronics and food items, contributing to money laundering.
• Lack of Comprehensive Enforcement Agencies: Separate wings address specific offenses (e.g., money laundering, cybercrimes, terrorism), leading to weak coordination.
• Multiple Agency Issues: Overlap in responsibilities among enforcement agencies affects coordination in tackling money laundering.
• Other Issues: Secrecy clauses in international treaties (DTAA). Lack of trained manpower for addressing dynamic challenges like cybercrimes and money laundering.

Way Forward

1. Financial Measures

• Rationalizing Income Tax Rates: High income tax rates encourage money laundering. Rationalizing rates can reduce illicit activities.
• “No Tax” Terrorism Measures: General Anti-Avoidance Rules empower authorities to track suspicious entries in bank accounts and enforce accountability.

2. FATF Recommendations

• Targeted Financial Sanctions: Implement sanctions as per UN Security Council resolutions to suppress terrorist financing.
• Anti-Money Laundering Policy: Countries must adopt comprehensive policies led by responsible authorities.
• Criminalizing Money Laundering: Enforce international standards (e.g., Vienna and Palermo Conventions).
• Transparency: Enhance transparency regarding beneficial ownership of legal entities.

3. Other Suggestions

• Specialized Cells: Dedicated cells under Economic Intelligence Councils to liaise with stakeholders like SEBI and INTERPOL.
• International Cooperation: Strengthen global law enforcement partnerships to combat transnational laundering activities.

PREVENTION OF MONEY LAUNDERING ACT

The Prevention of Money Laundering Act (PMLA) was enacted in 2002 and came into force in 2005 as a response to India’s global commitments, including the Vienna Convention, to curb money laundering. Its primary goal is to prevent and control money laundering, combat illegal activities financed by it, and provide for the seizure of properties derived from such crimes.

Objectives of PMLA

1. Prevent and control money laundering.
2. Combat the use of money for illegal activities and economic crimes.
3. Confiscate and seize properties obtained through laundered money.
4. Address other issues connected with money laundering in India.

Salient Features

1. Proceeds of Crime: Assets obtained from “proceeds of crime” are subject to PMLA. These are defined as properties derived from crimes listed as “scheduled offenses.”
2. Scheduled Offenses:
   • Part A: Includes offenses under acts such as the Indian Penal Code, Prevention of Corruption Act, Narcotics Drugs and Psychotropic Substances Act, Antiquities and Art Treasures Act, Trademark Act, Wildlife Protection Act, Copyright Act, and Information Technology Act.
   • Part B: Includes offenses listed in Part A but involving amounts of ₹1 crore or more.
   • Part C: Includes trans-border crimes.
3. Adjudicating Authority: Central government-appointed authority to determine whether property is linked to money laundering.
4. Presumption in Inter-Connected Transactions: If multiple transactions are connected, it is presumed that all are part of money laundering activities.
5. Burden of Proof: The accused must prove that proceeds of crime are lawful.
6. Powers to Attach Tainted Property: Authorized officers can provisionally attach properties believed to be proceeds of crime.
7. Appellate Tribunal: Provides an avenue to appeal decisions by the Adjudicating Authority.
8. Punishment and Jail Term: Rigorous imprisonment from 3 to 7 years, with a maximum of 10 years for specific cases.
9. Special Courts: Established to ensure speedy trials.

Amendments

1. PMLA (Amendment) Act, 2012

• Introduced the concept of “reporting entities,” including banks and financial institutions.
• Removed the ₹5 lakh upper limit on fines.
• Allowed for provisional attachment and confiscation of properties linked to money laundering.

2. PMLA Amendment 2019

• Deletion of Provisions: Removed the requirement for an FIR or charge sheet before initiating search and seizure.
• Insertion of Section: Established that Special Courts can handle offenses under this Act independently of orders passed for scheduled offenses.

• Expansion of Section: Expanded the scope of “proceeds of crime” to include properties obtained directly or indirectly from criminal activities related to scheduled offenses.
• Added Explanation: Section 45 clarifies that all PMLA offenses are cognizable and non-bailable. Enforcement Directorate (ED) officers can arrest accused individuals without warrants under certain conditions.

Major Issues with the Act

1. Misuse of Central Agencies: ED has been criticized for bringing ordinary crimes under PMLA investigations.
   • Example: Supreme Court slammed ED for “indiscriminate use” of PMLA.
2. Seizing Assets: Assets of genuine victims have also been attached, raising concerns about overreach.
3. Blanket Powers: ED’s authority for search, seizure, and asset attachment has been termed excessive. Critics argue that the process itself becomes the punishment.
4. Politically Motivated Raids: Allegations of using PMLA for political gains, diverting from its fundamental purpose of combating money laundering.
5. Lack of Transparency: Enforcement Case Information Report (ECIR) is treated as an “internal document” and not provided to the accused.
6. Vagueness of Evidence: Accused individuals must make statements treated as admissible evidence.
7. Harassment: ED reportedly harasses individuals by summoning them repeatedly for financial information.
8. Violation of Individual Liberty: Initiating investigations under PMLA curtails the liberty of individuals.
9. Burden of Proof: Accused must prove that they are innocent to secure bail.
10. Delayed Remedy: Since 2019, the PMLA tribunal is understaffed, delaying appeals against unjustified attachments.

1. Lack of Clarity in Case Selection: ED’s criteria for selecting cases remain unclear, raising questions about impartiality.

1. Misuse of Discretionary Powers: Certain offenses under PMLA are unrelated to narcotics or organized crime, expanding the act’s scope unnecessarily.

Recent SC Direction [Vijay Madanlal Choudhary vs Union of India]

Recently, the Supreme Court upheld the core amendments made to the Prevention of Money Laundering Act (PMLA). Over 240 petitions were filed against the amendments, claiming violations of personal liberty, legal procedures, and constitutional mandates. The verdict addressed challenges to amendments introduced in the 2002 Act via Finance Acts.

Key Observations by the Supreme Court

• Possessions of Proceeds: Mere possession of proceeds of crime (without integration or layering) suffices to allege money laundering.
• Predicate Offense: Section 3 [Money Laundering] depends on the illegal acquisition of property from a criminal activity related to a scheduled offense. It concerns processes or activities connected to the property constituting money laundering.
• Preventing Crucial Crimes: PMLA impacts the social and economic fabric of a nation and addresses offenses like terrorism and drug trafficking.
• Curbing Illicit Financing: The law meets urgent needs for comprehensive legislation to prosecute those involved in laundering crime proceeds.
• Power of Arrests Are Legible: The Supreme Court upheld the ED’s power to arrest, attach property, and conduct search and seizure under PMLA.
• Money Laundering as a Severe Offense: The court declared money laundering a unique class of offenses, requiring stringent measures to combat its menace.
• Enforcement Case Information Report (ECIR): ECIR cannot be equated with FIR and is considered an internal ED document. Providing ECIR to the accused is not mandatory; disclosing reasons during arrest suffices.
• Twin Bail Conditions: The stringent bail provisions under PMLA were deemed legal and non-arbitrary.
• Quantum of Punishment: The court ruled punishment under PMLA appropriate for the offense’s severity, countering claims of its disproportionality.

Way Forward

• Corruption vs Investigation: Reducing corruption requires reforms in government agencies and investigation processes.
• Cooperation: Adjudicating authorities should ensure transparency and fairness through collaboration.
• Independence of Agency: ED must be independent of political influence to investigate cases impartially.
• Shift of Burden of Proof: Agencies should bear the burden of proof to facilitate lenient bail provisions for the accused.
• Curb on Blanket Powers: Guidelines should be implemented for attaching properties, ensuring that actions do not lead to undue harassment.