India has a “high level of technical compliance” with its standards to counter money laundering and terror financing: FATF

By R Anil Kumar

• Financial Action Task Force (FATF), International Intergovernmental Organisation clears India during mutual evaluation

• FATF adopts Mutual Evaluation Report of India in its June 2024 Plenary held in Singapore

• The Mutual Evaluation Report of India, which was adopted in the FATF plenary held in Singapore between June 26th and June 28th, 2024, places India in the ‘regular follow-up’ category, a distinction shared by only four other G20 countries.

• India achieves an outstanding outcome in the Mutual Evaluation conducted during 2023-24 by Financial Action Task Force (FATF)

• The decision comes after a year-long process, during which FATF team visited Delhi for an on-site evaluation of the country’s measures and met senior officials.

• FATF recognises India’s efforts to combat Money Laundering and Terrorist Financing

• India’s performance on the FATF Mutual Evaluation accrues significant advantages to India’s growing economy

Singapore, June 28. The Financial Action Task Force (FATF) on Friday, June 28, concluded India had a “high level of technical compliance” with its standards to counter money laundering and terror financing and said New Delhi’s mechanisms for this are “achieving good results”.

FATF Places India in the ‘regular follow-up’ category

India has achieved an outstanding outcome in the Mutual Evaluation conducted during 2023-24 by Financial Action Task Force (FATF).

The Mutual Evaluation Report of India, which was adopted in the FATF plenary held in Singapore between June 26th and June 28th, 2024, places India in the ‘regular follow-up’ category, a distinction shared by only four other G20 countries. This marks a significant milestone in the nation’s efforts to combat money laundering (ML) and terrorist financing (TF).

Among other things, FATF has recognised the efforts made by India on:

Mitigating the risks arising from ML/TF, including the laundering of proceeds from corruption, fraud, and organised crime.

Effective measures implemented by India to transition from a cash-based to a digital economy to reduce ML/TF risks.

Implementation of the JAM (Jan Dhan, Aadhaar, Mobile) Trinity, along with stringent regulations on cash transactions, has led to a significant increase in financial inclusion and digital transactions; these measures have made transactions more traceable, thereby mitigating ML/TF risks and enhancing financial inclusion.

India’s performance on the FATF Mutual Evaluation accrues significant advantages to our growing economy, as it demonstrates the overall stability and integrity of the financial system. Good ratings will lead to better access to global financial markets and institutions and increase investor confidence. It will also help in the global expansion of the Unified Payments Interface (UPI), India’s fast payment system.

This recognition from the FATF is a testament to the rigorous and effective measures implemented by India over the last 10 years to safeguard its financial system from ML/TF threats. It underscores the country’s commitment to international standards and its proactive stance in the global fight against financial crimes. This sets a benchmark for countries in our region to effectively implement international standards on terrorist financing. India’s excellent rating will enhance the capacity of our country to lead the global effort on countering cross border terror financing and money laundering.

Since 2014, the Government has enacted a series of legislative changes and bolstered enforcement efforts to tackle ML, TF, and black money. This multi-pronged strategy has brought these measures in line with international standards and has demonstrably proven to be effective, yielding positive results. Indian authorities have had success in dismantling the terror funding network using actionable intelligence inputs. These operations have stemmed the flow of terror funding, black money, and narcotics, even along the coastline.

Over a two-year period, the Department of Revenue (DoR) spearheaded India’s engagement with FATF during the mutual evaluation process.  This success was driven by the exceptional efforts and invaluable contribution of a diverse, multi-disciplinary team comprising representatives from various ministries, the National Security Council Secretariat (NSCS), state authorities, the judiciary, financial sector regulators, self-regulatory organisations, financial institutions, and businesses all played a critical role. This collaborative effort demonstrated India’s effective AML/CFT framework.

India is already a member of the FATF Steering Group. India’s current performance will provide it with an opportunity to contribute significantly to the group’s overall functioning.

India remains committed to further strengthening its AML/CFT framework and continuing its collaboration with international partners to combat financial crimes. The nation will build on this success to ensure a secure and transparent financial environment for all.

About FATF: Paris, France

The Financial Action Task Force (FATF) is an intergovernmental organisation established in 1989 as the international watchdog to combat money laundering, terrorist financing, and other related threats to the integrity of the international financial system. India became a member of FATF in 2010.