Singapore, Jun 28: The Financial Action Task Force (FATF) on Friday adopted a mutual evaluation report that assesses the effectiveness of India’s anti-money laundering and countering the terrorist financing regime, a move hailed by the government as a “significant milestone”.
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In its brief outcome statement at the end of its three-day plenary meeting here, the global body said India’s legal regime in these two domains was “achieving good results” and that the country has reached a “high level of technical compliance” with the FATF requirements.
It, however, said the country needs to address “delays” related to conclusion of money laundering and terrorist financing prosecutions.
The final evaluation report for the country will be published later when the “quality and consistency review” is completed, it said.
Sources involved in the process said India has been placed in the “regular follow up” category, a distinction shared by only four other G20 countries, which means that it needs to submit a progress report on implementing FATF measures only in October, 2027.
Countries placed in the ‘enhanced follow up’ category are required to submit a follow up report every year.
The Paris-headquartered body leads global action to tackle money laundering, terrorist and proliferation financing. The latest decisions were made public at the end of the June 26-28 FATF plenary.
The Indian side was represented by Additional secretary in the Union finance ministry and Financial Intelligence Unit (FIU) in-charge Director Vivek Aggarwal.
In New Delhi, the Union finance ministry issued a statement saying the positive evaluation of India by the FATF was a significant milestone in the country’s efforts to combat money laundering and terror financing.
India’s performance on FATF mutual evaluation demonstrates overall stability, integrity of the financial system, the ministry said.
India’s mutual evaluation on FATF guidelines, a measure that checks a country’s efficacy to frame robust laws and policy and implement them to check financial crimes, was last done in 2010.
An FATF peer review of India ended early this year after a team of international experts made an ‘on-site’ or a physical visit to New Delhi and met officials from various central and state intelligence, investigative agencies, financial regulators and judiciary.
The statement issued at the end of the plenary said it was concluded that India has reached a high level of technical compliance with the FATF requirements and its AML/CFT/CPF regime is achieving good results, including in its money laundering and terrorist financing risk understanding, international cooperation, access to basic and beneficial ownership information, use of financial intelligence, and depriving criminals of their assets and counter-proliferation financing measures.
AML stands for anti-money laundering, CFT for countering financing of terror and CPF means counter proliferation financing.
The statement, however,added that India required “improvements” to strengthen the supervision and implementation of preventive measures in some of the non-financial sectors.
“India also needs to address delays relating to concluding money laundering and terrorist financing prosecutions, and to ensure that CFT 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,” it said.
The government said India’s performance on the FATF mutual evaluation “accrues significant advantages to our growing economy, as it demonstrates the overall stability and integrity of the financial system.”
“Good ratings will lead to better access to global financial markets and institutions and increase investor confidence. It will also help in the global expansion of the Unified Payments Interface (UPI), India’s fast payment system,” it said.
The finance ministry said this recognition from the FATF was a “testament to the rigorous and effective measures implemented by India over the last 10 years to safeguard its financial system from ML/TF threats.”
“It underscores the country’s commitment to international standards and its proactive stance in the global fight against financial crimes,” it said adding this also sets a benchmark for “countries in our region” to effectively implement international standards on terrorist financing.
The ministry said by this adoption, FATF has recognised India’s efforts mitigating the risks arising from money laundering and terrorist financing, including the laundering of proceeds from corruption, fraud, and organised crime.
External Affairs Ministry spokesperson Randhir Jaiswal said the FATF has given a good and an astounding outcome for India. “It is a significant achievement in that sense.”
Effective measures implemented by India to transition from a cash-based to a digital economy to reduce these risks are also highlighted and the implementation of the JAM (Jan Dhan, Aadhaar, Mobile) Trinity, along with stringent regulations on cash transactions, has led to a significant increase in financial inclusion and digital transactions as these measures make transactions more traceable, it said. (AGENCIES)
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