Is NMFT a treaty that binds other countries?

No. It is a ministerial conference to align practice. Binding listing still runs through UN and domestic law.

Does cutting hawala end terror?

It raises the cost. Modules still use drugs, cash, and charities, so finance law must sit with ordinary investigation.

Give out the major sources of terror funding in India and efforts being made to

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Major sources are overseas patronage, hawala, narcotics, counterfeit notes, extortion, misuse of non-profits, and emerging crypto rails. India uses UAPA, PMLA, NIA, FIU-IND, FCRA, narcotics and fake-currency drives, and FATF standards. The No Money for Terror conference in New Delhi in November 2022 was the third ministerial on terror finance. Its aim was joint investigation, freezing, and no safe haven for financiers, including new payment tech. International cooperation is required because the money chain is rarely inside one country.

Model answer

Copper italics in this answer — like this — are the key facts. Each one is unpacked in the Facts & figures rail.

Introduction

A terrorist module needs cash, hawala, drugs, or a charity front more than it needs a speech. Cutting terror funding is therefore a core internal-security job. Because money crosses borders in minutes, India hosted the No Money for Terror (NMFT) ministerial conference in New Delhi in November 2022 to push that job onto a common table.

Body

Major sources

State and overseas patronage and diaspora collections routed through informal channels.
Hawala and underground banking that avoid the formal wire.
Narcotics (including Afghanistan–Pakistan and Golden Triangle routes) as a profit and a logistics line.
Counterfeit currency.
Extortion and taxation by armed groups in some theatres (left-wing extremism, some north-east pockets).
Misuse of non-profits, trusts, and religious collections; trade-based laundering (over- or under-invoicing).
Kidnap, robbery, and local crime.
Newer: virtual digital assets, prepaid instruments, and social-media solicitation.

Efforts to curtail

Unlawful Activities (Prevention) Act provisions on raising and using funds for terrorism; listing of individuals and groups.
Prevention of Money Laundering Act and Enforcement Directorate attachment of proceeds.
National Investigation Agency cases that include the finance charge, not only the blast.
Financial Intelligence Unit – India suspicious-transaction reports; Reserve Bank and Securities and Exchange Board of India know-your-customer rules.
Fake Indian Currency Note drives with security-press upgrades and police.
Narcotics Control Bureau and border forces on drug-for-arms routes.
Foreign Contribution (Regulation) Act scrutiny of associations.
Financial Action Task Force (FATF) standards, mutual evaluations, and cooperation on targeted financial sanctions.
Domestic gaps remain: cash intensity, hawala in trade, and slow trial of the finance charge.

NMFT, New Delhi, November 2022

No Money for Terror is a ministerial series on countering terror finance. India hosted the third conference in New Delhi on 18–19 November 2022 (Ministry of Home Affairs).
Aim: share practice on investigation, freezing, prosecution, non-profit abuse, and new payment technologies; keep UN listings meaningful; and refuse safe havens for financiers.
Why international cooperation: a handler, an exchange house, a drug lab, and a social-media wallet rarely sit in one jurisdiction. Without FIU-to-FIU sharing, extradition, and common listing, a freeze in Delhi is a transfer in another city. NMFT is a political push for that plumbing, alongside FATF and UN processes.

Flow diagram

Conclusion

Terror money in India comes from hawala, drugs, fakes, extortion, overseas patronage, and new digital rails. UAPA, PMLA, NIA, FIU-IND and FATF are the curtailment tools. The November 2022 No Money for Terror conference in New Delhi aimed to make States treat the financier as a shared target, because the wallet is already global.

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Next question on this syllabus topic (2022 · Q20). View answer →
Is NMFT a treaty that binds other countries?

No. It is a ministerial conference to align practice. Binding listing still runs through UN and domestic law.
Does cutting hawala end terror?

It raises the cost. Modules still use drugs, cash, and charities, so finance law must sit with ordinary investigation.

Same topic · past papers

UPSC has asked this before

These previous-year questions sit on the same topic. Open one to practise the earlier ask.

2026 · Q20 · GS III · 15 marks
Discuss counterfeit currency and money laundering as major sources of terror funding in India. State the actions being taken at International level to check these menaces. Highlight the role of Financial Action Task Force (FATF) and methods of compliance by its member states in preventing terror funding.
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Give out the major sources of terror funding in India and efforts being made to curtail these sources. In the light of this, also discuss the aim and objective of the ' No Money for Terror [NMFT]' Conference recently held at New Delhi in November 2022.