Since its inception, the use of cryptocurrency[i] in terror attacks as major as the 2015 Paris attacks has taken the governments across the world by surprise. The recommendations of the Financial Action Task Force (an international anti-money laundering and terror financing task force) in this regard were released in June this year. With the FATF Recommendations[ii] in place, the Virtual Asset Service Providers are required to keep a record of its customers and share them with other VASPs (following the traditionally followed ‘travel rule’ for all other similar financial transactions). But, most experts fear that these recommendations would only push the transactions to go underground, thus worsening the impending threat. India, geographically being a part of one of the worst terror-affected regions globally, shares this concern.
The Case of India
Bitcoins started gaining prominence in India post-demonetisation. The price of Bitcoins reached from $757 to $1,020 within 18 days of demonetisation, in November 2016. Currently, its value rests at approximately $10,950, or approximately INR 7 lakhs.[iii] While the RBI had previously banned all entities regulated by it from dealing in cryptocurrencies, and the government too has been working on a regulating its use given its terror-sponsoring capabilities, possibilities of the Bitcoin creeping into India’s Red Corridor have been mostly put out of focus. In the event of the continued crunch for funds that has been forced on the Indian Maoists following government crackdown, newer ways of gathering and retaining funds have been put in place. Along with their will for a possible re-emergence in the face of their expanding urban networks and violent incidents that have followed since the recent Lok Sabha polls, whether this de-emphasis on the Red Corridor regarding the debate linking cryptocurrencies and financing of terror acceptable, deserves a reconsideration.
The Crackdown: A Source-by-Source Analysis
A source-by-source analysis of the Maoist financing channels, each of which can be immunised from their traceable nature, by the anonymity that crytpocurrencies characteristically offer, must strengthen such concerns.
Extortion money from private contractors of infrastructure projects, Tendu Patta contractors, mining contractors, and transporters, owners of Medium and Small Scale Enterprises, etc., forms a big chunk of their annual finances. Of late, according to reports from the MHA, many of such transactions between the ultras and the contractors were traced during the financial year 2016-17, over 20 bank accounts of suspected individuals/companies were investigated, and a sum of approximately INR 14 crore was seized.[iv]
Seizure of large amounts of illegal drugs being trafficked from states falling under the Red Belt has significantly put the estimated finance generation through this route under threat. Of over 2 lakh kilogram of seized cannabis nationally, in 2017, more than 70% was seized from within the Red Corridor (Andhra Pradesh, Odisha, West Bangal).[v] Moreover In, it was reported that the Sashastra Seema Bal (SSB) managed to destroy illegal poppy cultivation of a mammoth 550 acres in Naxal affected areas of Bihar and Jharkhand in 2018, thus inflicting a loss of approximately INR 55 crores on the naxals[vi].
Urban Networks: Sympathisers and NGOs
The expanding net of Urban linkages in form of Urban sympathisers and deceptive Non-Government Organisations (NGOs), has also lately been put under strict checks by the pan-India jurisdiction of the NIA, which was otherwise benefitted through inter-state transactions. In 2007, arrests of Maoists from Gaya (in the state of Bihar) revealed the existence of certain NGOs like the Vajra Bodhi Society which was accused of having collected funds on humanitarian grounds and dispersed them to the Maoists. These links play a significant role in either aiding in funding the ultras, or routing those funds through safer channels, by distributing them into smaller amounts, and transferring them to the Maoists as per requirement.
As for urban sympathisers, the arrest of a State Committee Secretary of the CPI (Maoist) in 2011 confirmed of the growing urban networks of the party in metropolitan cities like Kolkata and Delhi. Moreover, the recent arrests of sympathisers and fundraisers in simultaneous raids in Pune last year, further strengthened this claim. Over 128 front organisations have been identified by the government agencies, including the Mehnatkash Mazdoor Morcha, the Democratic Students’ Union, the People’s Democratic Front of India and the Committee for Release of Political Prisoners, among others, across the country, and have been put under scanner[vii]. All of these collectively, have managed to challenge and control the geometrically growing urban network of the Maoists, thus acting as a major setback.
The Maoists in India have external linkages ranging from fraternal to non-fraternal, with a significant number of those even extending beyond the national borders. While the United Communist Party of Nepal (Maoist), Coordination Committee of Maoist Party and Organisation of South Asia (CCOMPOSA) and Friends of the Indian Revolution (FOIR) form the most prominent fraternal linkages, among the non-fraternal linkages, a part of finances are pumped into the Maoist coffers through the Pakistani ISI, as well as the Chinese channels. The links with the insurgents in the Northeast, that in turn route their funds through the porous borders through Southeast Asian countries, further add to their strong external linkages.[viii] The hawala channels are actively put into operation for such illicit transfer, especially, through the porous borders of Nepal and Bangladesh, along with a part of it through the Kerala coast.
The establishment of a separate unit in the NIA exclusively looking into the flow of funds for Left-wing Extremism has, to a certain extent, tightened the situation among these channels.[ix]
Bitcoins: Immunisation from Traceability?
Each of these, on close analysis, reveal that most of the Maoist financing has come under threat due to its traceable character, be it transfers through bank accounts (Urban linkages, NGOs, etc.), that through on-ground movement (extortion, trafficking, etc.), or those through hawala. The use of Bitcoins would successfully eradicate that risk, until a decrypting technology is put into place. Besides, the use of this means to transfer funds through external Maoist linkages, would be made comparatively much faster, as well as secure, provided that such transfers take place on crimeware market places on the Dark Web.
A major point of contention that obstructs the general perception regarding the possibility of Maoist financing adopting crypto-transactions lies in its highly tech-savvy nature. This becomes a highly fallacious perception owing to the highly active urban networks of the Maoists, the simultaneous increased internet and telecommunication penetration in India’s obscure pockets, as well as the availability of mechanisms like ‘Crimesware-as-a-Service’[x] to cater to the needs of non-technology savvy criminals on the Dark Web.
No incident regarding the use of cryptocurrency by the Indian Maoists has surfaced in public domain so far. While this status quo might strengthen the idea of brushing away the possibilities raised through this article, a reconsideration of the elements of surprise that the Maoists have been inflicting on the government on innumerable occasions must bring the point home. In this very context, it must also be noted that the recent demonetisation drive that was expected to hit the Maoist finances the hardest, failed to do so after initial hiccups, when they routed their funds in fragments through local tribals/villagers and urban linkages, and got the demonetised currency exchanged through banks.[xi] The use of the banking system, which is most easily traceable, was used by the ultras, thus taking on the government- absolutely unprepared and unexpected. Given that tapping of suspicious bank accounts has increased since 2016, exploiting of newer means by the Maoists should come as no surprise. Moreover, the use of cryptocurrency in terror attacks globally, and its rapidly increasing popularity among jihadi terrorists, not always with an effective urban base, like the Indian Maoists, must push us towards preparing in a pro-active act.
Ultimately, the question of whether the Maoist financing in the country’s Red Corridor deserves a de-emphasis in the ongoing crypto-debate, must find its answers before an incident by the ultras proves the requirement of this ‘emphasis’.
[i]Bitcoins form a decentralised form of digital currency, known as cryptocurrency, which uses the principle of cryptography to secure and control the creation of new coins. Transactions are processed on a peer-to-peer basis and recorded in a public ledger, called blockchain. The appeal of these transactions lies in the fact that although the record of the transactions is publicly accessible, they do not hold any record whatsoever of the sender or the recipient. The seamless transferring capabilities coupled with an absolute anonymity that crypto-transactions offer make them a prime choice for the upcoming means of financing terror internationally. [ii] Anna Baydakova , Nikhilesh De, “All Global Crypto Exchanges Must Now Share Customer Data, FATF Rules”, Coindesk, June 2019. Accessed in July 2019 at https://www.coindesk.com/fatf-crypto-travel-rule. [iii] Saad Alsubaie, “Hawala Vs. Bitcoin: The digital trust network of the 21st century”, June 2017, Accessed in July 2019 at https://bit.ly/2jVOuK0 [iv] Ramananda Garge, “Security and Development: An Appraisal of the Red Corridor”, Vivekananda International Foundation, January 2019. [v] India is sandwiched between the two most infamous drug-trafficking corridors of the world: the Golden Crescent and the Golden Triangle. Illegal drug cultivation and trafficking through the central Indian states, that form the hot-bed of Left-wing Extremism, forms another major source of finances for the Maoists within. [vi]Ramananda Garge, “Security and Development: An Appraisal of the Red Corridor”, Vivekananda International Foundation, January 2019. [vii] Aman Malik, “Government identifies 128 front organisations for Naxals”, Livemint, October 2013. Accessed in July 2019 at https://www.livemint.com/Politics/B9Pmu3NurDrcRdD9ttb6JP/Government-identifies-128-front-organizations-for-Naxals.html [viii] Lt Gen VK Alhuwalia, “Red Revolution 2020 and Beyond Strategic Challenges to Resolve Naxalism”, Bloomsbury Publications, 2012. [ix] Most recently, in 2018, one Abhay Devdas Nayak, who had travelled across certain countries in Europe, North America and Southeast Asia and Russia, raising funds for CPI (Maoist), was arrested from Delhi Airport. [x]Geetha A Rubasundaram, “The Dark Web and Digital Currencies: A Potent Money Laundering and Terrorism Opportunity”, International Journal of Recent Technology and Engineering, 2019. [xi] Tejusvi Shukla, “Identification of Stakeholders- Assessing Left-wing Extremism in India”, Centre For Land Warfare Studies, January 2019. Accessed in July 2019 at https://bit.ly/2k1du2H