Concerned over an estimated $1 million a day funding received by Islamic State, the Financial Action Task Force (FTAF) has asked all countries, including India, to prevent the terror group from tapping their financial systems.
Financial sector regulators in India, including Sebi for capital markets and RBI for banking sector, are likely to soon issue similar warnings to caution institutions operating under their respective jurisdictions to put in place necessary safeguards.
Sanctions are already in place by the United Nations Security Council (UNSC) against entities linked to the Islamic State. However, it is for the first time that a public statement has been issued against this terror group by FATF, an inter-governmental grouping that sets global financial sector regulatory standards to tackle money laundering and terror financing activities.
In line with the UNSC sanctions, Sebi has asked market entities to stay cautious about any funds or entities linked to this terror group finding their way to Indian capital markets.
Following the FATF statement, Sebi and RBI among other regulatory agencies would now issue separate warnings to the entities regulated by them against dealing with ISIL—linked firms, individuals or funds.
While no instance of any IS-linked activities in the Indian markets has come to the fore so far, the regulator has informed stock exchanges about the updated al-Qaeda sanctions list of the UNSC.
Islamic State is estimated to be earning as much as $1 million every day from oil sales, as per the U.S. Treasury Department.
The warning from the FATF comes at a time when the terror group is spreading its reach in the Middle East and the UNSC raising red flag about the terror group’s funding activities.
In order to combat the threat posed by IS, the FATF on Friday reiterated “the need for all countries to fully implement the FATF standards to combat terrorist financing and calls on all countries to take steps to prevent ISIL from accessing their financial systems.”
According to FATF, the fight against IS urgently needs more insight into sources and methods of their funding. India, the United States and Japan are among the 34 member jurisdictions of the FATF.
