FATF Praises India for Fighting Illicit Finance but Warns of Terrorism Threats
Paris [France], September 19: The Financial Action Task Force (FATF) has commended India for its efforts to combat illegal financial activities. However, the organization also warned India about serious terrorism and terrorist financing threats, including those related to ISIL and Al Qaeda.
India’s Achievements
According to FATF, India has achieved a high level of technical compliance with FATF Recommendations and has taken significant steps to tackle illicit finance. The joint FATF-APG-EAG report highlighted India’s effective anti-money laundering and counter-terrorist financing (AML/CFT) framework, which has shown good results in understanding risks, accessing beneficial ownership information, and depriving criminals of their assets.
Indian authorities have been praised for their effective use of financial intelligence and their cooperation both domestically and internationally.
Areas for Improvement
Despite these achievements, FATF emphasized that India needs to continue improving its system as its economy and financial system grow. The report urged India to focus on concluding prosecutions, convicting, and appropriately sanctioning terrorist financiers. It also stressed the importance of a risk-based and educative approach with non-profit organizations to prevent their abuse for terrorist financing.
India faces significant money laundering risks from illegal activities such as fraud, corruption, and drug trafficking. The country needs to address the backlog of money laundering cases pending in court and improve the implementation of cash restrictions by dealers in precious metals and stones.
Financial Inclusion and Transparency
The report praised India’s efforts in financial inclusion, noting that the proportion of the population with bank accounts has more than doubled. This has encouraged greater reliance on digital payment systems and supported financial transparency, contributing to AML/CFT efforts.
Indian authorities have shown a comprehensive understanding of money laundering, terrorism, and proliferation financing risks. However, more needs to be done to share insights on these risks across all relevant stakeholders.
Future Steps
Following the assessment, India has been placed in ‘regular follow-up’ and will report back to the FATF Plenary in three years.
Doubts Revealed
FATF -: FATF stands for Financial Action Task Force. It is a group of countries that work together to stop illegal money activities and terrorism funding.
Illicit finance -: Illicit finance means money that is earned or moved around in illegal ways, like through crime or corruption.
Terrorism -: Terrorism is when people use violence to scare others, often for political reasons. Groups like ISIL and Al Qaeda are known for such activities.
ISIL -: ISIL stands for Islamic State of Iraq and the Levant. It is a terrorist group that has caused a lot of violence in different countries.
Al Qaeda -: Al Qaeda is another terrorist group that has been responsible for many attacks around the world, including the 9/11 attacks in the USA.
Anti-money laundering -: Anti-money laundering means stopping people from hiding money they got illegally by making it look like it came from legal sources.
Counter-terrorist financing -: Counter-terrorist financing means stopping the flow of money to terrorist groups so they can’t use it to plan attacks.
Prosecutions -: Prosecutions are legal actions taken against someone who is accused of breaking the law, like going to court to decide if they are guilty.
Financial transparency -: Financial transparency means making sure that all money transactions are clear and open, so it’s easy to see where the money is coming from and going to.