The Financial Action Task Force (FATF), a global Anti-Money Laundering (AML) organisation, has announced that India passed its review, achieving a high level of technical compliance.
As detailed by FATF, India essentially complied with its regulations, with the country imposing effective methods for minimising money laundering and terrorist financing. However, the organisation advises that India needs to solidify supervision of its non-financial sectors to further mitigate financial crime. Considering that India is a member of FATF together with other major economies such as the US, Japan, France, the EU, and China, the country is required to improve its counter-terrorism laws and AML regulations.
The FATF’s evaluation of India
The FATF, which is an intergovernmental organisation that works towards combating money laundering, terrorist financing, and other threats to the integrity of the international financial system, approved a mutual evaluation report on India. As part of the report, the FATF reviewed the effectiveness of the country’s measures to mitigate money laundering, terrorist financing, and proliferation financing. The organisation mentioned that India complies on a technical level with its standards, showing a good understanding of risks related to money laundering and terrorist financing, engaging in international cooperation, divesting criminals of their assets, and introducing counter-proliferation financing procedures.
On the other hand, the FATF underlined that India must apply a risk-based approach to implementing counter-terrorist financing measures in the non-profit sector, with the organisation intending to provide a more detailed report on the region after a quality and consistency assessment. Additionally, the FATF can place countries with deficient terrorist financing and money laundering procedures on a grey or black list, which can impact their international borrowing capacities. When it comes to India, the country was placed in the regular follow-up category, a status shared by only four other G20 nations.
Moreover, the organisation recognised India’s endeavours to eliminate risks caused by money laundering and terrorist financing, such as procedures to transition from a cash-based to a digital economy. By implementing the Jan Dhan, Aadhaar, Mobile (JAM) Trinity and other regulations on cash transactions, the country managed to expand financial inclusion and the use of digital transactions. The current news which announces India’s considerable performance in the FATF evaluation is projected to increase investments in the region and offer improved access to global financial markets. Furthermore, India’s status is set to assist the global expansion of the Unified Payments Interface (UPI), the country’s payment system.
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