Yesterday, the global crime watchdog, FATF adopted the mutual evaluation report of India in its plenary session. This session was held in Singapore between 26th-28th of June. FATF was basically established in 1989 to combat terror financing, money laundering and other financial threats and India became its member in 2010. It ranks countries into four categories- regular follow-up, enhanced follow-up, grey list and black list. The “Regular Follow Up” being the top category.
In a significant milestone it has placed India in the “Regular Follow-Up” category which is held by only a four other G20 countries. This a landmark achievement in India’s fight against money laundering (ML) and terror financing (TF). The assessment is based on 40 recommendations and 11 immediate outcomes. One needs at least 33 recommendations and 5 immediate outcomes to be placed in the “regular follow up” category.
FATF Lauds India’s Efforts…
India has since 2014 enacted a series of legislative measures to tackle black money, ML and TF. This time the FATF has commended India’s contributions in anti-ML-
- It recognised India’s efforts in mitigating the risks associated with ML and TF. This includes the laundering of proceeds from corruption, fraud, and organised crime.
- It appreciated India’s initiatives like JAM trinity, along with other regulations which had led to financial inclusion. The agency appreciated the efforts taken by India to transition from a cash based to a digital economy as it reduces the risks of crimes.
- It stated that these measures have made transactions more traceable, thereby mitigating the risk of ML/TF.
- The FATF also hailed India for achieving a high level of technical compliance
Reacting to this development, the Ministry of Finance said, “This recognition from the FATF is 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 further stated that India will continue to work towards strengthening the its anti ML/TF framework to combat such crimes.
Future Implications…
A good FATF rating is an indication that our financial system and the AML/CTF framework are becoming more robust. It means that Indian companies won’t have to go through extensive background checks abroad. Furthermore, it will help in the global adoption of UPI, India’s first payment system. The ranking will lead to better accessibility to global financial markets and institutions, which will boost investors confidence.
Furthermore, the FATF recommended India to address the delays in the persecution of the ML/TF cases. This strengthens the government’s hand for judicial reforms. It also indirectly validates the stringent provisions of the PMLA Act, which was amended during the Congress’s regime. Lastly, all this bursts Pakistan’s propaganda, which was trying to downgrade India’s ranking.