FATF lauds India’s efforts to implement measures to tackle illicit finance including money laundering and terror funding: Report

By R Anil Kumar

• A joint FATF-APG-EAG assessment has concluded that India has implemented an anti-money laundering and counter-terrorist financing (AML/CFT) framework that is achieving good results.

• The report highlights that India has made significant steps in financial inclusion, more than doubling the proportion of the population with bank accounts, encouraging greater reliance on digital payment systems.

• These efforts have supported financial transparency, which in turn contribute to AML/CFT efforts.

New Delhi, September 19. The Financial Action Task Force (FATF) has lauded India’s efforts to implement measures to tackle illicit finance including money laundering and terror funding.

In its Mutual Evaluation Report for India ‘Anti-Money laundering and Counter terrorist financing Measures’ FATF emphasizes that India has achieved a high-level of technical compliance across the FATF Recommendations.

India has taken significant steps to implement measures to tackle illicit finance, the reports mentions.

A joint FATF-APG-EAG assessment has concluded that India has implemented an anti-money laundering and counter-terrorist financing (AML/CFT) framework that is achieving good results. Authorities make good use of financial intelligence and co-operate effectively, both domestically and internationally.

Following the assessment, India has been placed in “regular follow-up” which is the highest rating category by FATF. UK, France and Italy are among the only G-20 countries which have been placed in this category apart from India, according to Report.

The report highlights that India has made significant steps in financial inclusion, more than doubling the proportion of the population with bank accounts, encouraging greater reliance on digital payment systems. These efforts have supported financial transparency, which in turn contribute to AML/CFT efforts.

Despite the size and institutional complexity of the Indian system, Indian authorities cooperate and coordinate effectively on matters dealing with illicit financial flows, including the use of financial intelligence. India also achieved positive results in international co-operation, asset recovery and implementing targeted financial sanctions for proliferation financing.

There is a good understanding of risk and application of preventative measures in the financial sector, especially by commercial banks.

Indian authorities also have a comprehensive understanding of the money laundering, terrorism and proliferation financing risks but need to do more to share insights on these risk across all relevant stakeholders, the report says.

It also states that India faces serious terrorism and terrorist financing threats, including related to ISIL or Al Qaeda. India has demonstrated its ability to conduct complex financial investigations but needs to focus on concluding the prosecutions and convict and appropriately sanction terrorist financiers.

It further adds that the country needs to ensure that measures aimed at preventing the non-profit sector from being abused for terrorist financing are implemented in line with the risk-based approach, including by conducting outreach to non-profit organisations on their terrorist financing risks.

Financial Institutions are taking steps to apply enhanced measures to politically exposed persons (PEPs). However, India needs to address the issue of lack of coverage of domestic

PEPs from a technical compliance perspective and ensure reporting entities fully implement these requirements. Implementation of preventative measures by the non-financial sector and virtual asset service providers, and supervision of those sectors, is at an early stage. India needs to improve implementation of cash restrictions by dealers in precious metals and stones as a priority given the materiality of the sector.