The Financial Action Task Force (FATF), following the release of its mutual evaluation report of India on Thursday (September 19, 2024), said the country had achieved a high level of technical compliance across the FATF recommendations and had taken significant steps to implement measures to tackle illicit finance.
Citing the report, Department of Revenue Additional Secretary Vivek Aggarwal told mediapersons that India was the only major economy with a federal structure to have been placed in the “regular follow-up” category of the FATF.
The requirements for the category is that a member country has to be compliant/largely compliant in over 32 of 40 recommendations (India got 37 compliant/largely compliant ranking); compliant/largely compliant in three or more of ‘Big-Five’ recommendations (India is complaint/largely compliant in all of them); five or more ‘substantially effective/highly effective’ ratings in Immediate Outcomes (India got six); and no requirement on ‘low level of effectiveness’ (India did not receive any).
Mr. Aggarwal said the FATF appreciated India’s Jan Dhan-Aadhaar-Mobile initiative and the major boost to cashless digital fund transfer systems for a greater financial inclusion and shrinkage of cash-based economy; and introduction of Goods and Services Tax requiring e-invoices and e-bills allowing greater transparency of the supply chain.
The Indian Cybercrime Coordination Centre scheme, Ministry of Corporate Affairs’ publicly available registry of beneficial ownerships, and the Central KYC Records Registry (CKYCR) — repository of KYC papers and customer records — were a big plus.
High-level committees
The measures highlighted in the report include setting up of task forces and high-level committees for action against offences ranging from corruption, black money, drug trafficking, and fake currency; close coordination among the Financial Intelligence Unit, law enforcement agencies, regulators, etc.; and relevant update of the legal framework against money laundering, terror funding, and proliferation financing.
On the investigation front, the FATF acknowledged the achievements of the Enforcement Directorate (ED) in attaining tangible results. The agency confiscated assets worth ₹16,537 crore during the review period (2018-October 2023); it facilitated restitution of funds to the tune of ₹141.3 billion to consortium of banks in Vijay Mallya case; and attached even the proceeds of crime located overseas.
The assessment team noted that the ED was able to pursue different types of money laundering cases, including complex/large-scale/cross-border transactions involving multi-layered modus operandi and “hawala” operations. It appreciated the measures taken to pursue the assets of launderers under the Benami Transactions (Prohibition) Act and the Income Tax Act. The Fugitive Economic Offenders Act also provides for confiscation of assets belonging to designated persons.
The team was presented with several case studies involving terror financing cases, demonstrating the National Investigation Agency (NIA) and the ED were able to effectively conduct such probes. It found that the NIA has access to a broad range of operational intelligence for both terrorism and terror financing. It also noted that the authorities were able to track movements of virtual assets.
Also, it was brought on record that a task force on shell companies was formed; 3,82,875 entities (30% of registered companies) removed from the register between 2017 and 2021, and 3,09,619 directors — who did not file financial statements/annual returns — were disqualified.
The FATF also acknowledged the supervision mechanisms and methodical risk-based assessment procedure adopted by Indian authorities.
“Despite the size and institutional complexity of the Indian system, Indian authorities cooperate and coordinate effectively on matters dealing with illicit financial flows, including the use of financial intelligence. India also achieved positive results in international cooperation, asset recovery, and implementing targeted financial sanctions for proliferation financing,” said the FATF.
The FATF report observed that India faces serious terrorism and terror financing threats, including related to Islamic State or al-Qaeda.
Published - September 19, 2024 06:23 pm IST
