FATF tells India to do more to target illicit finance
India has achieved high technical compliance with its recommendations and made progress in tackling illicit finance
In a new report, the Paris-based Financial Action Task Force, an international watchdog mandated to curb money laundering and other international financial crimes, has said that while India has achieved high technical compliance with its recommendations and made progress in tackling illicit finance, it must continue improving money laundering and terrorist financing trials with proper sanctions.
In a press statement, FATF says that India faces major money laundering risks from domestic illegal activities, primarily related to fraud, corruption and drug trafficking.
FATF says that financial institutions are enhancing measures for politically exposed persons (PEPs), but India must address the lack of coverage for domestic PEPs and ensure compliance. The implementation of preventative measures by the non-financial sector and virtual asset service providers is still in early stages. India also needs to prioritise improving cash restrictions for dealers in precious metals and stones due to the sector’s significance.
It says that India has made substantial strides in financial inclusion, doubling the number of individuals with bank accounts and has fostered digital payment adoption, enhancing financial transparency and strengthening its anti-money laundering and counter-terrorist financing efforts.
It adds that India is placed under “regular follow-up” after its 2024 Mutual Evaluation Report, requiring the country to improve its measures against money laundering and terrorist financing, with a progress review due in three years.
FATF says that financial institutions are enhancing measures for politically exposed persons (PEPs), but India must address the lack of coverage for domestic PEPs and ensure compliance. The implementation of preventative measures by the non-financial sector and virtual asset service providers is still in early stages. India also needs to prioritise improving cash restrictions for dealers in precious metals and stones due to the sector’s significance.
It adds that a joint FATF, Asia/Pacific Group on Money Laundering and EAG, assessment found India’s anti-money laundering and counter-terrorist financing measures effective, with strong results in risk understanding, asset seizure and beneficial ownership access. It further adds that authorities effectively use financial intelligence and cooperate well both domestically and internationally.
The statement adds that India faces significant terrorism and terrorist financing threats from groups like Islamic State of Iraq and the Levant (ISIL) and Al Qaeda. While the country emphasises disruption and prevention and has shown capability in complex financial investigations, it must focus on concluding prosecutions and appropriately sanctioning terrorist financiers.
It adds that the country must implement measures to prevent the non-profit sector from being exploited for terrorist financing, following a risk-based approach, including outreach to non-profit organisations about their risks.
