FATF Commends India's Anti-Money Laundering Efforts

The Financial Action Task Force (FATF) has recognized India's strides against money laundering and terrorism financing with a 'Regular Follow-up' rating. The FATF praised India's structural and institutional frameworks, while highlighting areas for improvement in prosecution, non-profit sector protection, and preventive measures implementation.

The Financial Action Task Force (FATF) has praised India's efforts in combating money laundering and terrorism financing, awarding the nation a 'Regular Follow-up' rating. This marks a significant milestone for India, endorsed in the FATF's comprehensive mutual evaluation report titled 'Anti-money laundering and counter-terrorist financing measures'.

The report emphasizes that India possesses the essential structural elements necessary for an effective anti-money laundering and terrorism financing system. These elements include a high-level commitment to addressing these issues, political stability, strong institutions, and adherence to the rule of law.

While the FATF commended India's technical compliance with its standards, it also pointed out the need for significant improvements in prosecution processes, protection of the non-profit sector from terrorist exploitation, supervision, and the implementation of preventive measures. India's proactive stance in these areas demonstrates its ongoing commitment to tackling money laundering and terrorism financing, both domestically and on international platforms, according to the report.

The FATF, an intergovernmental organization established by the G7 in 1989 to combat money laundering, expanded its mandate in 2001 to include anti-terrorism financing efforts. The 365-page evaluation report noted that India has initiated effective systems in several domains. These include understanding risks related to money laundering and terrorist financing, national coordination, the use of financial intelligence, depriving criminals of their assets, and international cooperation against financial crimes.

According to the report, continuous coordination and cooperation at both central and state levels strengthen India's system. The Enforcement Directorate (ED), tasked with investigating money laundering activities, has been effective in tackling fraud and forgery crimes but needs to address issues linked to human trafficking, smuggling, and drug trafficking more comprehensively.

The report highlighted that the number of money laundering convictions has been impacted by recent constitutional challenges and an overburdened court system. Despite this, there has been an increase in prosecutions and convictions, although a backlog remains. The ED has successfully attached assets worth EUR 9.3 billion over the past five years, helping to prevent illegal proceeds from being reintegrated into the economy.

India's primary money laundering risks derive from fraud, cyber-enabled fraud, corruption, and drug trafficking. While the country is not a major destination for criminal proceeds, cross-border risks exist due to funds moving in and out. The Finance Ministry celebrated the FATF's recognition as a testament to India's resolve in combating financial crimes, noting that India ranks among only four G20 nations with a 'Regular Follow-up' rating.

The Finance Ministry further highlighted the importance of India's robust use of financial intelligence in this success, reaffirming the country's commitment to global collaboration in fighting money laundering and terrorism financing.

(With inputs from agencies.)