FATF praised India’s anti-money laundering and counter-terrorism financing system

New Delhi| FATF, the global anti-money laundering and terrorism financing body, on Thursday released its much-awaited mutual assessment report on India. It said the country’s systems are ‘effective’ but ‘major reforms’ are needed to strengthen prosecution in these cases.

This 368-page report was issued after the adoption of the said evaluation at the plenary meeting of the month of June on behalf of the Paris-headquartered body FATF (Financial Action Task Force). A previous review of India’s arrangements to combat money laundering and the financing of terrorism was published in 2010.

The report, which follows a visit by FATF experts to India in November last year, placed the country in the “Regular Followup” category, a position enjoyed only by four other G20 countries. India’s next assessment will be in 2031. The report said India has implemented anti-money laundering (AML) and anti-terrorism financing (CFT) systems which are effective in many ways.

However, it said “major reforms” are needed to strengthen prosecution in money laundering and terrorism financing cases. It said the system also needs to be reformed to protect the non-profit sector from terrorist abuse.

“The main source of money laundering in India arises from illegal activities within the country”, the report said. The report also said that the country is facing a variety of terrorist threats, the most prominent being ISIL (Islamic State or ISIS) or Al Qaeda-linked groups operating in and around Jammu and Kashmir.

The report analysed the level of compliance with the 40 recommendations of FATF and the level of effectiveness of India’s AML/CFT system. The report provides recommendations on how the system can be strengthened.