Illegal domestic activities main cause of Indian money laundering, terror financing risks: FATF
New Delhi: The Financial Action Task Force (FATF), a global money laundering and terrorism financing watchdog has warned India to streamline matters causing money laundering and terror financing due to domestic mismanagement
According to Kashmir Media Service, the FATF stated, “These risks relate primarily to fraud, including cyber-enabled fraud, corruption, and drug trafficking,” while reviewing the country’s anti-money laundering and counter-terrorist financing measures.
The FATF acknowledged that India addresses money laundering related to fraud and forgery to a significant extent, but “less so with some other offences such as human trafficking and drug trafficking.”
The FATF report noted that India needed to tackle the backlog of money laundering cases pending in various courts. It emphasized the need for India to focus on concluding prosecutions and sanctioning terrorist financiers, as the country “faces serious terrorism and terrorist financing threats, including those related to ISIL or Al Qaeda.”
Despite implementing measures to combat illicit finance, the organization urged the nuclear-armed nation to ensure that money laundering and terrorist financing trials are completed and that offenders are subjected to appropriate sanctions.
The FATF further revealed that India should adopt a risk-based and educative approach with non-profit organizations. Additionally, the country must ensure that measures to prevent the non-profit sector from being abused for terrorist financing are implemented according to this risk-based approach, including outreach to non-profit organizations regarding their terrorist financing risks.
The international watchdog also acknowledged that financial institutions are taking steps to apply measures to politically exposed persons (PEPs); however, the “issue of lack of coverage of domestic PEPs” from a technical compliance perspective must be addressed.
The FATF also urged India to ensure that reporting entities fully implement these requirements.
“Implementation of preventative measures by the non-financial sector and virtual asset service providers, as well as supervision of those sectors, is at an early stage. India needs to prioritize improving the implementation of cash restrictions by dealers in precious metals and stones, given the materiality of the sector,” it stated.
Following the assessment, the FATF has placed India in “regular follow-up” and, in accordance with procedures, will report back to the plenary in three years.
