Virtual Private Networks (VPNs)/What is Crowdfunding?

Why in News? The Financial Action Task Force (FATF) released a report on July 9, 2025, highlighting how digital platforms are increasingly being misused for terror financing. The report cited examples of the Pulwama terror attack (2019) and Gorakhnath Temple attack (2022), where online payment services, VPNs, and e-commerce platforms were exploited for raising and transferring funds to support terrorism.

Relevance : UPSC Pre &  Mains

Prelims :FATF/VPNs

Mains :   GS 3

Key Concerns Highlighted by the FATF Report:

Misuse of digital platforms like:

• Online payments
• Messaging apps
• Social media
• E-commerce platforms
• Crowdfunding websites

1. Growing use of VPNs and encryption tools to mask digital footprints.
2. State-sponsored terrorism financing — some governments allegedly aiding terrorist groups through funding and resources.

Virtual Private Networks (VPNs) and Terror Financing:

What is a VPN?

A Virtual Private Network (VPN) creates an encrypted tunnel between the user’s device and the internet, masking the user’s IP address and online activity.

How VPNs are Misused?

• Anonymity: Terrorists use VPNs to hide their identity and location while accessing dark web or communication platforms.
• Circumvention of national laws: VPNs help bypass geo-restrictions or surveillance mechanisms set by intelligence agencies.
• Secured communication: Encrypted tunnels make it difficult for law enforcement to track online movements or communication among terror modules.

Crowdfunding and Terror Financing:

What is Crowdfunding?

Crowdfunding is a method of raising small amounts of money from a large number of people, typically through online platforms.

Terrorist Misuse of Crowdfunding:

• Fake charitable causes: Terrorists often set up sham humanitarian campaigns (e.g., “help for war victims”) to gather money.
• Use of cryptocurrencies and third-party payment processors which are hard to trace.
• Exploitation of lack of KYC/AML compliance in small, international crowdfunding platforms.

 Examples:

• Raising funds for “relief work” which is then diverted for terror logistics.
• Using QR codes, UPI links, or anonymous wallets to collect funds from sympathisers.

India-Specific Context:

Pulwama Attack (2019):

• 40 CRPF personnel were killed in a suicide bombing.
• Digital payments and encrypted apps were reportedly used for coordination and financing.

Gorakhnath Temple Attack (2022):

• An ISIS-inspired lone wolf attacker assaulted police personnel.
• Investigation revealed use of VPNs and encrypted chat platforms for indoctrination and planning.

Implications for India:

• Need for stronger cyber surveillance and digital intelligence
• Tighter regulation of fintech and crowdfunding platforms.
• Greater cooperation with global institutions like FATF to curb cross-border terror financing.
• Balance between privacy and national security, especially in regulating VPNs and encrypted platforms.

Conclusion:

The FATF report is a reminder that as India advances digitally, terror financing too is becoming more sophisticated and tech-driven. It underlines the need for robust cyber laws, international cooperation, and technological preparedness to combat the digital dimension of terrorism.