FATF LAUNCHED MUTUAL EVALUATION REPORT FOR INDIA
21-09-2024
Daily Current Affairs
FATF LAUNCHED MUTUAL EVALUATION REPORT FOR INDIA
IN NEWS
- MER on ‘Anti-money laundering (AML) and counter-terrorist financing (CFT) measures’ placed India in the ‘regular follow up’ category.
- This recognises India’s effective compliance with FATF standards in AML/CFT effort.
KEY HIGHLIGHTS
- Key areas of improvement: Understanding Money laundering and terror financing (ML/TF) risk, national coordination and cooperation, use of financial intelligence for ML, predicate offences and TF investigations.
- Main sources of ML: Illegal activities committed within country including fraud including cyber-enabled fraud, corruption and drug trafficking.
- Security Threats: Islamic State or al-Qaeda linked groups active in and around Jammu and Kashmir are the most significant terror threats.
- India also faces terrorism threats from regional insurgencies in the Northeast and North, and Left-Wing Extremist groups
- Issues in Implementation of PMLA: Despite rising investigations under the Prevention of Money Laundering Act (PMLA), the number of prosecution complaints and concluded trials did not show a proportionate increase.
KEY RECOMMENDATIONS
- Implementing targeted financial sanctions to ensure freezing of funds and assets without delay.
- Define domestic PEPs (politically exposed persons) under the PMLA.
- Currently, foreign PEPs are defined under PMLA.
- Protect the NPOs from terror abuse through risk-based enhanced measures.
WHAT IS FATF?
- Stands for Financial Action Task Force.
- OBJECTIVES - To set standards and promote effective implementation of legal, regulatory and operational measures for combating money laundering, terrorist financing and other related threats to the integrity of the international financial system.
- Headquarters: Its Secretariat is located at the Organisation for Economic Cooperation and Development (OECD) headquarters in Paris.
- Member Countries: The FATF currently has 39 members including two regional organisations - the European Commission and Gulf Cooperation Council.
- India is a member of the FATF. Lists under FATF:
- Grey List: Countries that are considered safe haven for supporting terror funding and money laundering are put in the FATF grey list. This inclusion serves as a warning to the country that it may enter the blacklist.
- Black List: Countries known as Non-Cooperative Countries or Territories (NCCTs) are put in the blacklist.
These countries support terror funding and money laundering activities.
- The FATF revises the blacklist regularly, adding or deleting entries. Currently, Iran and Democratic People's Republic of Korea (DPRK) are under High-risk Jurisdiction or black list.