FATF Praises NIA and ED: The Financial Action Task Force (FATF) has applauded India for its strides in tackling illicit finance but cautioned the nation about ongoing threats related to terrorism and terrorist financing, particularly those linked to ISIL and Al Qaeda.
In a post shared on X (formerly Twitter), the FATF stated, “India achieved a high-level of technical compliance across the FATF Recommendations and has taken significant steps to implement measures to tackle illicit finance. Nevertheless, India needs to continue to improve its system as its economy & financial system continue to grow,”
A joint report from FATF, the Asia/Pacific Group on Money Laundering (APG), and the Eurasian Group (EAG) highlighted India’s strong anti-money laundering (AML) and counter-terrorist financing (CFT) frameworks. The report noted that the country has demonstrated success in understanding risks, gaining access to beneficial ownership information, and depriving criminals of their assets.
However, the global watchdog stressed that India must now focus on prosecuting and convicting terrorist financiers. “India faces serious terrorism and terrorist financing threats, including related to ISIL or Al Qaeda. India as a strong emphasis on disruption and prevention and has demonstrated its ability to conduct complex financial investigations. Nevertheless, the country must continue to improve its system as its economy and financial system continue to grow, in particular ensuring that money laundering and terrorist financing trials are completed and offenders are subject to appropriate sanctions; and taking a risk-based and educative approach with non-profit organisations.” the report added.
India, home to the world’s largest population and the fifth-largest economy, faces primary money laundering risks from domestic activities such as fraud, corruption, and drug trafficking. While significant efforts have been made in cases of fraud-related money laundering, the FATF urged India to close gaps in cases related to human and drug trafficking.
The report also praised India for its push towards financial inclusion, noting that efforts to expand bank account access, promote digital payments, and simplify procedures for small accounts have all strengthened the country’s AML/CFT capabilities. Indian authorities were lauded for their effective coordination in tackling illicit financial flows both domestically and internationally.
Despite these successes, FATF emphasised the need for further outreach to non-profit organisations regarding terrorist financing risks, as well as stronger compliance measures for smaller financial institutions and non-financial sectors, such as dealers in precious metals and stones.
India has now been placed on “regular follow-up” and is expected to report back to the FATF Plenary in three years’ time.