Terror and Stock Market: India Wakes Up To Novel Threat

By Animesh Roul

Terrorist attacks on vital institutions and installations often send stock indexes tumbling in the past. But the scenario is changing fast. Jihadi groups are now floating fictitious companies to manipulate stock markets to generate funds for their operations. India’s National Security Advisor (NSA), M K Narayanan warned of similar developments in India citing isolated reports of companies that had come in from the Mumbai and Chennai stock exchanges, some of which were traced to terrorist outfits. The NSA aired his inputs at the 43rd Conference on Security Policy in Munich on Feb 11. Though all his revelations on methods employed by terrorist outfits to generate funds (in the context of South Asia) are not startling, and well known facts now in counter terror circle, couple of points, especially terror infiltration/manipulation in Stock market operation and misuse of legitimate banking channels are somewhat new fangled.

The NSA observed:

Stock market operations: Isolated instances of terrorist outfits manipulating the stock markets to raise funds for their operations have been reported. Stock Exchanges in Mumbai and Chennai (India) have, on occasions, reported that fictitious or notional companies were engaging in stock-market operations. Some of these companies were later traced to terrorist outfits.

Misuse of banking channels: Legitimate banking channels are regularly being used to fund terrorist operations. Many instances of funds received via banking channels from so-called safe locations such as Dubai and UAE intended for terrorist organizations have been detected by Indian Counter-Terrorist Agencies. Each individual transaction tends to be small so as not to attract attention and to avoid detection. Use of both real, and fraudulent, ATM cards has also been resorted to at times.

In October last year, Professor Jammy Gurule who specializes in international criminal law and was the Under Secretary in the US Treasury Department from 2001-03, visited India and expressed similar concern over the financial sources available to Jihadi terror outfits. Gurule pointed at Islamic charities, States engaged in providing support to terrorist groups and terrorist groups themselves funding one another.

Though the NSA did not specify names of organizations or outfits involved in these two sectors during a TV interview on Feb 14 evening, he reiterated that these are generalized observations made in Munich last week and holds potential of future threats. His other points on the common ways of terrorist funding are, voluntary contributions, State support/sponsorship, forced and compulsory donations (forcible subscription of religious and terror publications), extortion, drug money, utilization of legitimate business enterprises (real estate, restaurants and shipping ), Association with organized criminal syndicate, counterfeit currency and charities (al Rashid Trust, Sanabil al Khir Foundation).

Back home, the NSA is meeting with a mixed reaction for his inputs and some criticism too.

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