Cashless Transactions And Cyber Terrorism – Analysis

By N. Sathiya Moorthy*

In his November 8 address to the nation on demonetisation of higher denomination currencies, Prime Minister Narendra Modi mentioned terrorists circulating counterfeit notes in these denominations as part of their cross-border strategy. The Government, starting with the Prime Minister, have since begun campaigning even more for cashless transactions as a way to stamping out black money in a big way, even if only over time.

Combined together, the two issues may raise more questions for the Government to address than at the time of introducing demonetisation, if only to ensure that hiccups of the kind do not resurface. That is to say that cashless transaction should not become a victim of cross-border terrorists and their bosses, and the latter’s brothers elsewhere, to use cyber methods to wreck Indian economy even more than counterfeit currency may have done in the past.

Ahead of demonetisation, public sector State Bank of India (SBI) was reported to have been hit by ‘theft’ of credit/debit card data, of over three million customers. SBI reportedly has the largest network of branches, and the numbers would have gone up after the merger of some weak affiliated banks with the parent not very long ago. Though the Bank replaced the ‘stolen’ cards in double quick-time, some of the customer-apprehensions also got diluted, first owing to poor news coverage, and later through the ‘shock’ and secrecy surrounding demonetisation.

The ‘theft’ of bank-data of millions of customers is only a recent instance of how in this era of wire-transfers en route to an era of cashless transaction, customer-confidence could be shattered by an even more determined ‘data terrorist’ in the place of a ‘data thief’. Pranksters and hackers have always been at such mischief, but motivated, State-sponsored initiators of cross-border terrorism would find it all an opportunity, and also a challenge, to go at it with full and repeated vigour, if only to shatter India’s confidence, and also that of ordinary Indians in themselves.

It’s not unlikely in such scenarios and worse, cyber-terrorists could wantonly indulge in huge transfer of funds from someone’s account to that of so many others, without any being wiser to it. It can become even more embarrassing if in the light of such ‘unreported’ transactions of the side of the ‘impacted’ individual or corporate, departmental officials keen on proving the Government more correct than already, could launch tax proceedings on specific issues and concerns.

Ghost hoarders

Already, we are now faced with ‘ghost hoarders’, declaring 13,600 crores in one place, and Rs 2-lakh crores, elsewhere. This does not mean that the Government should slow down on either – encouraging cashless transaction on the one hand, and discouraging pranksters and ‘ghost-hoarders’, on the others. The SOP used to address issues of physical terrorism applies here too. That is to say, the security agencies have to get it right all the time, and ahead of the event. The terrorist has to get it right only once.

Tracking down an individual, instead of a group, could also become as much difficult in the case of cyber-terrorism as with acts of physical terrorism. ‘Lone wolf’ cyber-terrorists could even conduct dry-runs before launching a massive attack, and again no one might be wiser to it before the event. Reconstructing a terror-attack of whatever kind for education is one thing, but stalling one before the attack is entirely another.

Counterfeit terror

As PM Modi rightly pointed out in his demonetisation address, Pakistan-based terror groups and their ISI bosses have been indulging in circulating counterfeit currency across the country for a long time now. According to reports, the recent upswing in stone-throwing in the Kashmir Valley owe to the ready availability of counterfeit Indian currency in the hands of the local ‘motivators’ of those violent protests, targeting the security agencies.

There was definitely a lull in the street activities following demonetisation but it has not obviously ended targeted terror attacks on Army camps and other high-value assets. Giving a fair assessment of the security details involved in the new denomination/series of high-value currency put in circulation since the PM’s declaration, counterfeit terrorists might have been unsettled to an extent, as were their Indian hoarder-counterparts.

However, security agencies, including those now involved more directly in currency security, have to be more active than ever, to ensure that there is no repeat – or, at least an early repeat. In the past again, the demonetised currency did carry a lot of security features, some of them irreplaceable or duplicated. Yet the acknowledged fact that counterfeit currency was in circulation in a big way implies that it could happen in the case of the new currencies – sooner or later.

It may not stop there. Though it’s imaginary up to a point, such efforts could become imaginative in the hands of India’s adversaries. Indians should not be surprised, if there is a series of seizures of hoarded new currency from across the country in the coming weeks and months. India’s adversaries might want to weaken the nation’s confidence just now, by resorting to such tactics. It could include tipping off and/or providing ‘actionable intelligence’ to the lower level police about hidden hoards of counterfeit currency.

Likewise, Government leaders have been talking about demonetisation helping to end Naxalite and other militant funding, going beyond cross-border terrorism. In this, State-level intelligence and police may have to look at the possibilities of Naxalites ‘threatening’ locals, big and small, to ‘white-wash’ the demonetised in their hands, including that they might have collected as ransom over decades. They should also look at the future possibilities of such militant groups returning to an era of fresh ‘abductions’ for ransom, and in ‘new currency’.

The question thus should be for the security agencies to frame plans to neutralise such possibilities through a series of checks and balances, and also interceptions, not only of communication but also of huge cash, if it became necessary. Beforehand, the people should also be educated as to what it all was meant for. Having acknowledged the need for demonetisation as a part of the Government’s determined drive against black money, people may cooperate even more, after all.

If in the process, such interceptions helped in reducing black-money transactions and hoarding (as has been happening during election-time over the past decade and more), it’s an additional boon in the nation’s fight against the ‘dark economy’. In this process, the Government has to ensure beforehand that the current efforts and future experimentation do not become a further source of corruption and harassment of the ordinary man – innocent or otherwise.

Subsidy populism

On the popular front, the PM has since hinted that all the black-money collected from demonetisation would be directly deposited in the bank accounts of the poor, at Rs 10,000-15,000 among the 25-million Jan Dhan account-holders. Such announcements raise expectations even before the Government has had the anticipated hoarded money in its hands. If nothing else, it could become as much a butt of political jokes as Modi’s pre-poll claims of 2014, to deposit Rs 15 lakhs into the accounts of every Indian, by bringing back all black money stacked away in foreign banks.

There is the larger economic question that involves the persistent efforts at the withdrawal of subsidies to the poor, or re-shaping them into direct cash subsidies to target groups. This has been the aim and formula since the economic reforms were ushered in. The Congress-UPA said it was ‘reforms with a human face’, and later related it to ‘aam aadhmi’. Modi has his own ‘Achae din’ slogan.

Yet, the Government should evaluate/re-evaluate the impact of such pumping in of hard cash back into the economy, without creating national assets, employment and re-deployable incomes. In a way, cutting down on subsidies was aimed at doing away with such ‘unproductive’ and ‘wasteful’ expenditure in a phased manner. Barring the Left and regional parties that did not hope to come to power anywhere in the foreseeable future, there was grudging national consensus on the issue – whether implemented or not.

An even more direct political evaluation of the cash-transfer subsidies from the immediate past could relate to the methods and moods of beneficiaries of PM Modi’s ‘Swachh Bharath’ programme, wherein the Government transferred Rs 12,000 per head, directly to Jan Dhan bank-accounts. It’s larger impact on the economy, GDP, GNP and the like also need to be looked into before the Government comes up with even more imaginative cash-transfer schemes.

Cashless transfers and attendant caution apart, the authorities, especially the Election Commission (EC), should revisit the conduct of political parties and their candidates over the past few years, to check if the Jan Dhan accounts were used, misused and abused for ‘direct transfer’ of money under their own ‘cash-for-vote’ kind of schemes. The social media was spiked with reports of the kind during various elections ever since UPA-II had launched the Jan Dhan scheme.

At the time, the Opposition BJP (too) had levelled the charge against the rulers of the day. Maybe, the sweeping BJP-NDA victory in the Lok Sabha polls meant that no one was really concerned about such ‘money transfers’, if any.

In subsequent Assembly elections in some States, more specific charges were doing the rounds. But the focus of the EC and its officers on the ground seemed focussed on cash-transfers and transportation, not cashless transactions, if any, for votes! Now that Income-Tax authorities have found ways and reasons to check individual Jan Dhan accounts to end ‘parking’ menace (involving large sums of other people’s black-money), the EC too could consider learning from their experience!

*The writer is a Senior Fellow at the Observer Research Foundation, Chennai Chapter