India's Precious Metals and Stones Sector Under Scrutiny for Money Laundering Risks

The Financial Action Task Force (FATF) has flagged India's precious metals and stones sector as a potential tool for money laundering and terrorist financing. The Paris-based watchdog's mutual evaluation report stresses the vulnerability due to the sector's size and calls for enhanced understanding and regulation.

The Financial Action Task Force (FATF) has identified India's precious metals and stones sector as a high-risk area for money laundering and terrorist financing in its recent mutual evaluation report. The inadequacies in risk understanding and regulation within this sector have raised significant concerns.

The report highlights that with approximately 1,75,000 dealers in precious metals and stones (DPMS) but only 9,500 registered with the Gems and Jewellery Export Promotion Council (GJEPC), there's a substantial regulatory gap that needs addressing. The FATF has recommended India integrate deeper qualitative and quantitative data to assess and mitigate money laundering risks more effectively.

Given India's significant role as a consumer and producer in the global market for gold and gems, the FATF has urged continuous monitoring of fraud, smuggling, and associated money laundering techniques. Strengthened domestic coordination and cooperation at policy and operational levels are deemed crucial to address these risks comprehensively.

(With inputs from agencies.)