FATF says India not a money laundering destination, victim of terror’ from Al-Qaeda, ISIL

By Anjali Sharma

WASHINGTON – The Financial Action Task Force on Thursday released a report stated that India is not a destination for money laundering proceeds to crime and has committed that the country’s risk assessment will happen every three years.

FATF has released India’s mutual evaluation report on combating terror financing and anti-money laundering regime.

A joint FATF-APG-EAG assessment of the country’s measures to tackle illicit finance concluded that India has implemented an anti-money laundering and counter-terrorist financing framework that is achieving good results, including on risk understanding, access to beneficial ownership information, and depriving criminals of their assets.

India has achieved a high level of technical compliance across the FATF recommendations and has taken significant steps to implement measures to tackle illicit finance, according to the latest report.

It said that India’s main sources of money laundering originate from illegal activities committed within the country. These proceeds may be laundered within India, laundered abroad, or laundered abroad and returned to India for re-integration into the licit economy.

India’s largest money laundering risks are related to fraud, including cyber-enabled fraud, corruption, and drug trafficking, it added consistent with the outcomes of the NRA.

FATF added that the authorities make good use of financial intelligence and cooperate effectively, both domestically and internationally. However, major improvements are needed to strengthen prosecution in money laundering, and terror financing cases.

The report said that India faces serious terrorism and terrorist financing threats, including those related to ISIL (Islamic State of Iraq and the Levant) or Al-Qaeda active in and around Jammu and Kashmir.

India needs 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 report added.

FATF said that the Enforcement Directorate, the sole competent authority mandated to investigate money laundering activities, can investigate and prosecute complex money laundering activities.

The number of money laundering convictions over the last five years has been impacted by a series of constitutional challenges (resolved in 2022) and the saturation of the court system.

FATF added that the number of prosecutions and convictions has started to increase, the backlog of pending cases remains considerable.