Tracing the terror trail

“To fight and conquer in all your battles is not supreme excellence; supreme excellence consists in breaking the enemy’s resistance without fighting” – Sun Tzu
The recent hijacking of the Jaffar Express on March 11, 2025 was unprecedented in Pakistan’s history. The Balochistan Liberation Army (BLA) militants who hijacked the train were more than just armed gunmen; they were suicide bombers seated among the passengers, waiting for orders to detonate.
The attack killed more than 30 people. Days later, on March 16, a suicide bomber from the BLA struck a military convoy in Naushki, killing security personnel and civilians.
Simultaneously, the banned outfit, Tehrik-e-Taliban Pakistan (TTP), also escalated its insurgency, launching a series of attacks – the first in Bannu Cantt, killing 13 and injuring 32 and the second on an army post on the Afghan border which killed 7 army personnel.
These attacks are part of a rising wave of terrorism that saw over 2,500 deaths in 2024 alone, making it Pakistan’s deadliest year in nearly a decade. Furthermore, the Global Terrorism Index 2025 ranks Pakistan as the second most impacted country by terrorism, moving up two positions from fourth place in 2024.
Although the government has successfully countered these threats with an appropriate military response, a fundamental question remains unanswered: how are these outfits funding such sophisticated, high-profile attacks? Whether it’s a hijacked train, a coordinated ambush or a suicide bombing, all of these operations cannot occur without sufficient funds.
The BLA’s transition into a sophisticated, well-funded insurgency has raised questions about its sources of financing. Unlike its past constituency, the group now recruits educated, middle-class individuals, with access to modern financial tools.
With this renewed composition, BLA has expanded its operations and formed alliances with other separatist groups under BRAS, even forming new military units that aim to target infrastructure projects under China-Pakistan Economic Corridor (CPEC). These facts reiterate that the new war on terrorism isn’t just a military war; it’s a financial one as well.
The funding sources of BLA remain largely obscure, but available evidence suggests that it sustains itself through vast illicit means. These include the exploitation of coal mining, extortion, smuggling, and international financial remittances.
The Khorasan Diary, cited by Al-Jazeera, confirms that illegal coal mining has become one of the group’s primary sources of revenue. Smuggling routes across Afghanistan and Iran provide additional funding, while ransom payments from kidnappings constitute another important source.
The TTP, on the other hand, remains heavily dependent on drug trafficking and cross-border arms sales, utilizing American weapons left behind after the US withdrawal from Afghanistan to strengthen its arsenal.
Beyond local revenue streams, diaspora financing plays a major role. Sympathetic individuals and organizations abroad channel funds through informal money transfer networks such as Hawala, making it difficult to trace transactions.
In 2024 alone, the Federal Investigation Agency recovered $20 million from illicit money transfers and arrested over 300 people involved in Hawala trading, proving that financial crime enforcement is possible. What is needed is strict surveillance of the Hawala network of these banned outfits.
Fueling the fire of terrorism are external actors, hostile to Pakistan’s national interests. Pakistan has long accused its regional rival of backing Baloch separatists, especially after the arrest of Kulbhushan Jadhav in 2016 (an alleged Indian intelligence officer linked to BLA activity) but the real challenge lies in proving these accusations. Islamabad can only substantiate the veracity of these claims by tracing the terror trail.
This would be a clear indicator of foreign or non-state backing. If these claims are substantiated, Pakistan must act decisively to track and freeze terrorist funds before the insurgency does more serious damage.
Another factor to consider, as Dr Bhattacharya points out in the Friday Times, is that the Baloch insurgency is not just a security problem; it is also a political one. There are deep-seated causes for resentment within the locals which need to be addressed.
The government’s rejection of calls for dialogue and use of force has only added fuel to the fire of separatism. History testifies to the fact that brute force alone does not end insurgencies, it intensifies them. The only way forward is a dual approach: crippling terror financing while simultaneously engaging in meaningful political dialogue.
Pakistan must prioritize and advance its counterterrorism finance strategies by strengthening anti-money laundering (AML) regulations and increasing oversight of Hawala networks. Additionally, blockchain forensic firms need to be brought into the loop in order to track cryptocurrency transactions.
The Financial Action Task Force (FATF)’s Targeted Update on Virtual Asset and VASP report of 2024 noted that “Public and private sector participants recognised the increased adoption and use of stablecoins for illicit activities, including fundraising campaigns by terrorist groups.
These findings are supported by reports of blockchain analytics firms, which found an increased use in particular of Tether’s stablecoin, USDT30. Mass adoption of VAs, including stablecoins, could potentially decrease the use of AML/CFT-obliged entities as stablecoins stored in unhosted wallets could potentially be used to purchase goods without being converted to fiat currency.“
Furthermore, Chainalysis ’s 2025 Crypto Crime Report estimated the total cryptocurrency volume received by illicit addresses in 2023 to around $46.1B and $51.3B for 2024. These are substantial amounts.
The report also highlighted that “…since 2021, we have observed a steady diversification away from BTC, with stablecoins now occupying the majority of all illicit transaction volume (63% of all illicit transactions).” This confirms that stablecoins are increasingly used to fund terrorist activities.
Pakistan ranked 9th globally in Chainanalysis’s 2024 Global Crypto Adoption Index, and 4th in centralized exchange inflows. Most of the transactions performed were retail ones. This reinforces the fact that digital asset activity is high in the country with little regulatory oversight.
A significant step forward to potentially regulate terror financing is the formation of the Pakistan Crypto Council (PCC) in March 2025, which aims to create a framework for crypto currencies in Pakistan. Amid the recent surge in terrorism, the PCC can be very resourceful in combating financial funding of these terrorist organizations.
As more terrorists use Monero and Bitcoin along with other digital currencies to evade traditional financial surveillance, the PCC must collaborate with blockchain forensic firms like Chainalysis to monitor and disrupt insurgency-linked digital transfers.
The PCC must hasten to build regulatory frameworks taking in loop other financial watchdogs such as the State Bank of Pakistan and the Securities and Exchange Commission, to enhance oversight mechanisms.
Western governments in liaison must also cooperate to impose stricter regulations on foreign donations and non-governmental organizations suspected of financing separatism in Pakistan. At the same time, Islamabad must open political dialogue to address the political and economic grievances that spark insurgencies, ensuring that non-state actors do not exploit the Baloch people.
This financial war cannot be won without allies. The transnational nature of terror financing necessitates international cooperation. Islamabad must seek support from global financial watchdogs such as the Financial Action Task Force (FATF), the UN Office on Drugs and Crime (UNODC), and Interpol to enhance intelligence-sharing and regulatory enforcement.
The BRICS 2024 Summit Kazan Declaration explicitly acknowledged that crypto-currencies have become a key tool for illicit financing, with the report stating “We reiterate our commitment to preventing and combating illicit financial flows, money laundering, terrorism financing, drug trafficking, corruption and the misuse of new technologies, including crypto-currencies, for illegal and terrorist purposes.” These findings further validate the urgency of dismantling the financial networks sustaining the BLA and TTP.
Pakistan needs to raise its voice on multi-lateral forums such as SAARC to gather international support.
Islamabad’s counterterrorism strategy has for too long been reactive, fighting fire with fire, while allowing the financial arteries of insurgency to remain open. The state must stop treating the symptoms and start curing the disease. If it fails to act now, the next attack is not a matter of if, but when.
Copyright Business Recorder, 2025