The government has started a swift but rigorous combing of all economic laws to fix loopholes that may allow dubious cross-border cash flow, terror funding and money laundering, as top officials from an influential global body that India wants to be part of arrive in the capital with some uneasy questions. Paris-based Financial Action Task Force (FATF), an inter-governmental body that sets global benchmarks on legislation to prevent terror funding and money laundering, is in New Delhi until December 11 to evaluate India?s legal muscle to prevent such activities.

At stake is much more than terror financing controls. India is keen to get an FATF membership, a government official explained, as it is a forum setting the global norms for cross-border flow of finance and even trade. India now has an observer status that will expire early next year.

Without an FATF membership, India will be forced to play second fiddle to the standards set by the 35-member body in which neighbouring China is also a member. Indian business entities, including banks that operate abroad, have to comply with FATF requirements enforced by the respective overseas governments to do business in their soil.

As part of the combing, on Monday the government gave a free hand to different investigative agencies, including the Enforcement Directorate, Central Bureau of Investigation, state police and even environment and forest officials, to conduct search, inspections, seizure and investigations inside special economic zones (SEZs) without permission from the development commissioner of a zone.

This was done by scrapping the instruction 34 issued as per the SEZ rules in August this year that prohibited these agencies from carrying out investigation inside SEZs without the commissioner?s nod. Investigating agencies often do not get DC?s approval for checking the consignments within SEZs, said an official with a detective agency, who asked not to be named.

The government?s combing of all economic laws for loopholes is aimed at satisfying itself that the country has enough legal and administrative teeth to catch and punish terror-funding individuals and agencies as FATF is making a crucial assessment of the effective-ness of the country?s legal system.

During the evaluation, the global body is also expected to assess other issues like the crime level in India, its exposure to money laundering and financing of terrorism, legal provisions for confiscation of consignments, rate of convictions and the quantum of penalty.

Terror cover

* India wants say in Financial Action Task Force affairs

* FATF officials are in New Delhi checking India?s credentials

* Indian business have to comply with FATF norms