FATF pats India for anti-terrorism steps
Global anti-terror watchdog Financial Action Task Force (FATF) on Thursday gave top rating to India, lauding national efforts to tackle illicit finances.
Highest rating
- The FATF has placed India in regular follow-up category, which is the highest rating segment by the anti-terror watchdog
- The UK, France and Italy are among the only other G-20 nations which have been placed in this category
In the Mutual Evaluation Report on India published today, the FATF flagged serious terrorism and terrorist financing threats to India, including from the ISIL and the Al-Qaida, and said the country needed to focus on concluding the prosecutions and convict and appropriately sanction terrorist financiers.
“India has achieved a high-level of technical compliance across the FATF recommendations and has taken significant steps to implement measures to tackle illicit finance,” the report said, placing the country in the regular follow-up category, which is the highest rating segment by the FATF.
The UK, France and Italy are among the only other G20 nations which have been placed in this category.
The joint FATF-Asia/Pacific Group on Money Laundering-Eurasian Group assessment of India concluded that the country had implemented an anti-money laundering and counter-terrorist financing (AML/CFT) framework that was achieving good results, including on risk understanding, access to beneficial ownership information and depriving criminals of their assets.
“The authorities make good use of financial intelligence and cooperate effectively, both domestically and internationally....India faces serious terrorism and terrorist financing threats, including related to the ISIL or the Al-Qaida. India has a strong emphasis on disruption and prevention, and has demonstrated its ability to conduct complex financial investigations. However, India needs to focus on concluding the prosecutions and convict and appropriately sanction terrorist financiers,” the FATF report said. Noting that India’s main money laundering risks originated from illegal activities within the country and related primarily to fraud, including cyber-enabled fraud, corruption and drug trafficking, the FATF said India pursued money laundering related to fraud and forgery in line with predicate crime risks to a large extent, but less so with some other offences such as human trafficking and drug trafficking.
“The country needs to address the backlog of money laundering cases pending conclusion of court processes. 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,” it said.
The FATF also acknowledged India’s “significant steps in financial inclusion, more than doubling the proportion of the population with bank accounts, encouraging greater reliance on digital payment systems and making use of simplified due diligence for small accounts.”
These efforts have supported financial transparency, which in turn contribute to the AML/CFT efforts, the assessment report says.
It adds that there is a good understanding of risk and application of preventive measures in the financial sector, especially by commercial banks, although less so by some other smaller financial institutions.
“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 preventive 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,” the report advises, asking India to report back in three years.
The mutual evaluation report is an assessment of a country’s measures to combat money laundering and the financing of terrorism and proliferation of weapons of mass destruction.
