In the wake of the April 22 Pahalgam terror attack, which claimed 26 lives, New Delhi has ramped up efforts to expose Pakistan’s role in supporting terrorism. This support extends beyond training and logistics to the crucial area of sustained financial backing.
Coinciding with a diplomatic offensive launched across 33 countries, and in line with the nation’s resolve to counter Pakistan, a recent investigation by Tehelka has revealed illicit forex trading operations flourishing even as national security remains on high alert. In its undercover feature, “In Terror’s Shadow: Forex Racket Thrives,” Tehelka reporters discovered currency dealers in Delhi’s Nizamuddin area openly flouting regulations, dealing in unrecorded cash, and circumventing regulatory oversight altogether. At the same time, law enforcement turns a blind eye.
It’s worth recalling that Prime Minister Narendra Modi, during the ‘No Money for Terror’ Conference on Counter-Terrorism Financing, pointedly referred to Pakistan, stating that certain countries used terrorism as a foreign policy tool. Additionally, Congress MP Shashi Tharoor, during a visit to Panama, accused Pakistan of running a “policy of enabling terror,” citing a pattern of attacks over the last two decades, from New York and Madrid to Mumbai. Despite compelling evidence presented after the 26/11 attacks, not a single terrorist has been convicted in Pakistan.
This move comes amid growing concerns that Pakistan has failed to honor its commitments to curb terror financing, despite its removal from the Financial Action Task Force (FATF) grey list in October 2022. India is also lobbying international financial institutions such as the IMF and World Bank to reassess their aid to Pakistan, citing fears that foreign assistance is being diverted to fund terrorism and support banned terror groups. Pakistan’s high defense spending—nearly 18% of its national budget—and increased arms imports, especially during periods of IMF assistance, point to a possible redirection of foreign aid toward military and potentially terrorist-related objectives.
Experts have also highlighted the role of black market currency exchanges—long linked to tax evasion—in fueling sleeper cells, arming militants, and supporting extremist infrastructure. India’s Financial Intelligence Unit (FIU) has previously tracked links between hawala networks, illegal forex activity, smuggling, and terrorism. However, enforcement has been sluggish, allowing these operations to grow unchecked. National Security Adviser Ajit Doval has called financial support the “lifeblood” of terrorism, a view echoed during a recent India-Central Asia summit.
While international attention remains focused on Pakistan’s external involvement, the growing problem of internal financial leakage is increasingly difficult to ignore. Terror financing is one of the three most critical elements that sustain terrorism in any society, alongside the wrong kind of mindset and the flow of arms. Without money, it’s impossible to recruit ‘volunteers,’ maintain training camps, or ensure that weapons continue to flow. As officials and investigators increasingly acknowledge, terrorism doesn’t just thrive on ideology—it runs on cash. And much of that cash flows in the shadows.
