India has implemented anti-money-laundering and combating terror financing system that is effective in many respects, the FATF report said.
It said major improvements were needed to strengthen prosecution in money-laundering, terror financing cases, adding that improvements were required to protect non-profit sector from the terror abuse.
India's main sources of money-laundering originate from within, from illegal activities committed within the country, it said, adding that India faces disparate range of terror threats, most significantly from ISIL or AQ-linked groups active in and around J-K.
India recognises the need to streamline trial process in terror financing and money laundering cases and is taking steps to improve it, a senior official said on Thursday.
Finance ministry Additional Secretary (Revenue) Vivek Agarwal said global crime watchdog FATF has given high rating to India on parameters, including financial intelligence, anti money laundering and terror financing risks, as well as disclosure of beneficial ownership. Of the recommendations made by FATF, fast tracking trials in terror financing and money laundering cases is important. Rest of the recommendations are ancillary in nature, Agarwal said.
The Financial Action Task Force (FATF) on Thursday released India mutual evaluation report on combating terror financing and money laundering. The report said that India has implemented an effective anti-money laundering and combating terror financing
India’s money laundering risks originate from illegal activities within the country, the Financial Action Task Force (FATF), a global money laundering and terrorism financing watchdog, said on Thursday.
“These risks relate primarily to fraud, including cyber-enabled fraud, corruption and drug trafficking,” the FATF said in a statement while reviewing the country’s anti-money laundering and counter-terrorist financing measures.
It acknowledged that the South Asian country pursues 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.”
According to FATF, the country needed to address the backlog of money laundering cases pending the conclusion of court processes.
It went on to add that India needed to focus on concluding the prosecutions, convict and sanction terrorist financiers as it “faces serious terrorism and terrorist financing threats, including related to ISIL or Al Qaeda.”
Despite implementing measures to tackle illicit finance, the organisation has exhorted the nuclear-armed country to ensure that money laundering and terrorist financing trials are completed and offenders are subject to appropriate sanctions. It added that India should take a risk-based and educative approach with non-profit organisations.
Moreover, the nuclear-armed country has 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.
The international body acknowledged that financial Institutions were 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 has to be addressed. It also wants India to ensure reporting entities fully implement such requirements.
“Implementation of preventative 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,” it said.
Following the assessment, FATF has placed India in “regular follow-up” and in line with procedures, will report back to the plenary in three years.
