FATF praises India’s efforts to curb money laundering, terror financing; places in ‘regular follow-up’ category

The Financial Action Task Force (FATF) on Friday 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”. 

The Mutual Evaluation Report of India, which was adopted in the FATF plenary held in Singapore between June 26 and June 28, 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). 

The anti-terrorism watchdog said that India's anti-money laundering and counter terrorist financing regime achieving good results. It, however, said that the country needs to address delays relating to concluding of money laundering and terrorist financing prosecutions.

“The Plenary concluded that India has reached a high level of technical compliance with the FATF requirements and its AML/CFT/CPF [anti-money laundering/countering the financing of terrorism/ counter proliferation financing] regime is achieving good results, including in its ML [money laundering] and TF [terrorist financing] risk understanding, international cooperation, access to basic and beneficial ownership information, use of financial intelligence, and depriving criminals of their assets and counter-proliferation financing measures,” the watchdog said in a statement. 

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. 
• 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.  
• 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,” the government said in a press release.  

India is already a member of the FATF Steering Group.