UPSC Mains 2026 GS3 Q20: model answer
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.
What the question wants
Three parts: how FICN and laundering fund terror in India; international action; FATF's role and how members comply (standards, evaluations, grey list).
How to structure it
Intro: terror needs money. Body: FICN and laundering routes; international actions; FATF (flowchart of compliance). Conclusion: India's position after its 2024 evaluation.
- 1FICN and laundering routes
- 2International actions
- 3FATF (flowchart of compliance)
Model answer
Terror groups need money for recruits, weapons and propaganda. In India, fake currency (FICN) and laundered money are two steady sources.
- 140 Recommendations
- 2National laws (PMLA, UAPA) and FIU
- 3KYC and suspicious transaction reports
- 4Mutual evaluation by peers
- 5Grey list or regular follow-up
Repeats: the last stage feeds back into the first
Counterfeit currency: high-quality FICN printed across the border enters via Nepal, Bangladesh, Punjab and Jammu. It funds modules and erodes trust in the rupee. Section 15 of UAPA treats it as a terrorist act; the NIA has a dedicated cell.
Money laundering: hawala, trade mis-invoicing, misused NGOs, crypto and gaming wallets, and Golden Crescent drug money in Punjab and J&K.
International action
- UNSC Resolutions 1373 (2001) and 2462 (2019); the 1999 Terror Financing Convention.
- Egmont Group for FIU data-sharing (FIU-IND).
- India's 'No Money for Terror' conference (2022).
Role of FATF
- 40 Recommendations: criminalise terror financing (R.5), targeted sanctions (R.6), protect NPOs (R.8), regulate virtual assets (R.15).
- Mutual evaluations of law and effectiveness.
- Grey and black lists; Pakistan's grey-listing (2018–22) forced some action.
How members comply: PMLA and UAPA, KYC and suspicious transaction reports, beneficial-ownership registers, crypto providers under PMLA (India, 2023), asset freezes.
FATF put India in 'regular follow-up' in 2024, its best category. Faster terror-finance convictions and tighter control of hawala and crypto are next.
Keywords, cases and data to drop in
FICN Section 15 UAPA hawala trade-based money laundering UNSCR 1373 and 2462 Egmont Group FIU-IND No Money for Terror 2022 FATF 40 Recommendations mutual evaluation (India 2024) grey list PMLA 2002 VDA under PMLA 2023
Where most answers lose marks
- Explaining money laundering in general with no terror-financing link.
- Calling FATF a UN body; it is an inter-governmental body set up by the G7 in 1989.
- Not covering 'methods of compliance', a separate demand.
Same theme in Prelims
Consider the following statements with respect to the AI Impact Summit, 2026 held in New Delhi :
- 1. The Summit’s intellectual framework was based on three foundational Sutras : People, Planning, and Progress.
- 2. The Preamble of the Summit stresses Democratising AI Resources, which acknowledges the Charter for Democratic Diffusion of AI as a binding framework to support locally relevant innovation and strengthen resilient AI ecosystems while respecting national laws.
- 3. The New Delhi Declaration on AI Impact was structured around seven Chakras (Pillars), which included Access for Social Empowerment, AI for Science, and Secure and Trusted AI.
Which of the statements given above is/are correct ?
Answer (d) & explanation
Only statement 3 is correct (d). Statement 3 is right: the New Delhi Declaration on AI Impact was built around seven chakras (pillars), including access for social empowerment, AI for science and secure and trusted AI. Statement 1 is wrong: the three sutras were People, Planet and Progress, not "Planning". Statement 2 is wrong: the Charter for Democratic Diffusion of AI is voluntary, not binding. So options (a), (b) and (c) fail.
Notice the event: the AI Impact Summit was held at Bharat Mandapam, New Delhi, in February 2026, the first global AI summit in the Global South. It followed the summits at Bletchley Park (2023), Seoul (2024) and Paris (2025). At home, the IndiaAI Mission (2024) funds shared GPU computing.
Statement 1 changes one word, Planet to Planning. Statement 2 changes voluntary to binding.
Answer as per the official UPSC answer key.
Which of the following connectivity projects is/are a part of cooperation between India and the ASEAN member countries ?
- 1. Kaladan Multi-Modal Transit Transport Project
- 2. IMT Trilateral Highway
- 3. Agartala-Akhaura Rail Line
Select the answer using the code given below :
Answer (a) & explanation
Projects 1 and 2 involve ASEAN members (a). Item 1 is right: the Kaladan Multi-Modal project links Kolkata to Sittwe port and on to Mizoram through Myanmar. Item 2 is right: the India–Myanmar–Thailand Trilateral Highway runs from Moreh in Manipur to Mae Sot in Thailand. Myanmar and Thailand are both ASEAN members. Item 3 is wrong: the Agartala–Akhaura rail line links Tripura with Bangladesh, which is not in ASEAN. So options (b), (c) and (d) fail.
Notice the policy: these projects are the backbone of India's Act East Policy (2014), which upgraded the Look East Policy (1991). ASEAN has 11 members since Timor-Leste joined in 2025. Bangladesh links fall under BBIN and BIMSTEC instead.
Answer as per the official UPSC answer key.
Match List I with List II and select the answer using the code given below the Lists :
| List I (Project Supported by India) | List II (Country)
| A. Mangdechhu Hydroelectric Project | 1. Maldives
| B. Restoration of Stor Palace | 2. Afghanistan
| C. District Hospital at Dickoya | 3. Bhutan
| D. Institute of Security and Law Enforcement Studies | 4. Sri Lanka
Code :
Answer (b) & explanation
The correct match is A-3, B-2, C-4, D-1 (b). Mangdechhu (720 MW) is an India-built hydro project in Bhutan (A-3). India restored the Stor Palace in Kabul, Afghanistan (B-2), opened in 2016. The Dickoya hospital is in the hill country of Sri Lanka (C-4), serving the Indian-origin Tamil community. The Institute of Security and Law Enforcement Studies was built for the Maldives police (D-1). Options (a), (c) and (d) mix these up.
Notice the pattern: India's Neighbourhood First policy relies on such development partnership projects. In Afghanistan, India also built the Parliament building and the Salma Dam (Afghan–India Friendship Dam). Bhutan's hydropower, including Chukha and Tala, sells surplus power to India.
Answer as per the official UPSC answer key.
Fresh examples from current affairs
Police Commemoration Day 2026: Shah pays tribute, sets drug-free India target of 2029
On Police Commemoration Day, 21 October 2026, Union Home Minister Amit Shah paid tribute at the National Police Memorial in New Delhi to police personnel who died on duty. He recalled that India was declared free of Naxalism on 31 March 2026, asked all forces to work for a ‘Nasha Mukt Bharat’ by 31 December 2029, and flagged off a nationwide ‘Fight Against Drugs’ motorcycle rally.
UPSC angle: Prelims: Hot Springs, National Police Memorial, State List entries, NDPS Act. · Mains GS-III: police reforms and narcotics.
21 Oct 2026
SCO Heads of Government meet in Dushanbe: Rajnath calls for dismantling the terror ecosystem
Defence Minister Rajnath Singh represented India at the 25th meeting of the SCO Council of Heads of Government in Dushanbe, Tajikistan, on 20 October 2026. With Pakistan’s Deputy Prime Minister in the room, he said there can be no justification and no double standards on terrorism. The meeting adopted the SCO budget for 2027 and a 2026–30 action plan for trade and economic cooperation.
UPSC angle: Prelims: SCO bodies and locations, new centres, INSTC. · Mains GS-II: SCO’s value for India; GS-III: terror financing.
21 Oct 2026
First BIMSTEC Home Ministers Meeting adopts Delhi Declaration on security
India hosted the first BIMSTEC Home Ministers Meeting in New Delhi on 13 October 2026. The seven member States adopted the Delhi Declaration, condemning terrorism including cross-border terrorism, and called for full use of the BIMSTEC anti-terror and mutual legal assistance conventions. A Disaster Management Centre is planned in Jamnagar, Gujarat.
UPSC angle: Prelims: members, HMM, conventions and dates, Jamnagar centre. · Mains GS-II: regional groupings; India's neighbourhood and security cooperation.
13 Oct 2026
DRI seizes 54 ivory artefacts, busts trafficking syndicate
On 19 August 2026 the Directorate of Revenue Intelligence busted a wildlife trafficking syndicate in Lucknow and seized 54 carved ivory artefacts. Four people were arrested and handed over, with the items, to the UP Forest Department. The Wildlife (Protection) Act, 1972 bans trade in elephant ivory, in line with India's obligations under CITES.
UPSC angle: Prelims: CITES; WPA schedules.
19 Aug 2026Learn the concept
Question text as printed in the official UPSC question paper: https://www.upsc.gov.in/sites/default/files/QP-CSM-26-010926-GENERAL-STUDIES-PAPER-III.pdf The model answer is original Battle IAS work; use it to learn structure, not to memorise.