In Kashmir,Crypto Hawala Raises New Red Flags: Terror Funding Evolves -

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Srinagar/ New Delhi: A fresh attempt to resurrect separatist and terror-related activities in Jammu and Kashmir through a clever funding structure that avoids conventional financial surveillance systems has been reported by security services. Investigators claim that in order to transfer foreign monies into the area without leaving traditional audit traces, terrorist and separatist networks are increasingly using what authorities refer to as “crypto hawala.”

The change represents a major progression from cash couriers and conventional hawala channels to decentralized digital pathways involving cryptocurrencies, secret wallets, and peer-to-peer transactions, according to inputs supplied by several organizations. Officials claim that the new approach has made it more difficult to track the source, flow, and ultimate use of cash.

From Cash Couriers to Digital Shadows

The Valley’s traditional hawala networks have been badly disrupted by persistent enforcement activities over the past few years, according to security officials. Handlers located overseas are now using digital currencies to transfer money discreetly since cash moves are becoming more easily detected and intercepted.

The cryptocurrency hawala model transfers money without the need for banks or other regulated financial intermediaries. This greatly reduces the visibility of transactions for enforcement agencies by enabling transfers to occur beyond the scope of regular reporting systems.

According to an official evaluation, “this is a technology-driven workaround designed to defeat financial oversight,” adding that the technique allows cross-border financial movements to stay anonymous.

Foreign handlers, private wallets, and VPNs

According to investigators, handlers who operate from several international places are convincing local contacts to set up private cryptocurrency wallets without first undergoing know-your-customer (KYC) verification. Virtual private networks (VPNs) are frequently used to access these wallets in order to conceal geographical locations and digital traces.

Cryptocurrency is sent straight from foreign accounts once the wallets are authorized. In order to successfully break the transaction trail, the money is subsequently transferred via several digital levels before being transformed into cash within India.

According to officials, the use of VPNs and non-custodial wallets complicates attribution, and prompt identification is hampered by the lack of centralized records.

P2P Trades Bridge Digital and Cash Worlds

Peer-to-peer (P2P) merchants operating in large cities like Delhi and Mumbai usually make up the last leg of the operation. These unofficial agreements allow cryptocurrencies to be traded for cash without passing through bank accounts.

Investigators observe that intermediaries and “mule accounts” are often employed to further obfuscate the money movement. The digital trail has mostly vanished by the time money reaches its final receivers.

An official described the procedure as one of the most difficult parts of the inquiry, saying, “This is where digital opacity meets physical cash.”

Money Intended to Revitalize Moribund Networks

Security officials suspect that the funds are being used to resurrect separatist factions that had become dormant as a result of persistent police and central agency activity. Officials claim that even very small sums of money can be carefully used to support logistics, reestablish local networks, and spread propaganda, even though the exact amount of funds is still being evaluated.

Authorities emphasize that there is no sign of a widespread comeback, but they caution that the changing funding sources suggest hostile networks are using adaptive tactics.

Regulatory and Investigative Challenges

According to experts, crypto hawala poses a larger problem for law enforcement and financial intelligence organizations across the globe. Decentralized digital currencies function across jurisdictions, frequently outside the purview of a single regulatory body, in contrast to traditional banking systems.

To combat such networks, officials emphasize the need for stricter legal frameworks, more sophisticated technology monitoring, and increased international cooperation. Real-time information sharing, blockchain forensics, and enhanced data analytics are regarded as essential instruments in this endeavor.

Heightened vigilance across agencies

In order to spot suspect digital trends and block new channels, security authorities have increased their cooperation with cybercrime and financial intelligence departments. Monitoring of P2P networks, bitcoin exchanges, and unofficial trade hubs has increased.

Authorities have also emphasized the importance of raising public awareness by cautioning against engaging in unregulated cryptocurrency transactions that can unintentionally encourage criminal activity.

A shifting threat landscape

The rise of crypto hawala demonstrates how quickly the threat landscape is changing in reaction to pressure from law enforcement. The change, according to officials, emphasizes the necessity of continuously modifying investigation strategies as adversary networks increasingly take advantage of technological weaknesses.

Agencies admit that digital banking has added a complicated new dimension to an already difficult security situation in Jammu and Kashmir, even if they are still confident in their ability to combat the threat.

About The Author:

Yogesh Naager is a content marketer who specializes in the cybersecurity and B2B space. Besides writing for the News4Hackers blogs, he also writes for brands including Craw Security, Bytecode Security, and NASSCOM.