NEW DELHI: While lauding India on most counts, Financial Action Task Force (FATF), the global money laundering and terror financing watchdog, has called for efforts to reduce pending money laundering cases and recommended “major changes” to address prosecution in terror financing cases.
FATF’s Mutual Evaluation Report on India, released on Thursday, noted that the main sources of money laundering originated through illegal activities within the country and were often laundered overseas and rerouted back.
It also highlighted serious terrorism and terrorist financing threats, including from IS and Al Qaida-linked extremist outfits. It also warned that Left-wing extremist groups were seeking to overthrow the Union govt. tnn
FATF: Need to stop non-profits from becoming vehicles of terror money
The FATF report on India acknowledged that money laundering convictions were impacted by several constitutional challenges. “Though numbers of prosecutions and convictions have started to increase, the backlog of pending cases remains considerable, with a large number of accused persons awaiting conclusion of their trials. This also impacts the extent to which confiscation of criminal proceeds is carried out, in particular the money laundering cases that ED is responsible for, though India has confiscated proceeds via non-conviction based confiscation including in some significant cases,” it said.
Although India has been placed in the regular follow up category, a group with only four G20 members, the report flagged the need for ED to effectively deal with trafficking in human beings and mig-rant smuggling, and drug trafficking. Besides, steps to prevent non-profit organisations (NPOs) from being abused for terrorist financing was another priority highlighted by FATF.
“We were trying to make a case that regulatory framework is good enough… Their case is that since the NPO sector is very big, we should have good risk-based metrics. For India, it should be a risk-based regulation and not stifling regulation. We don’t see a case for further tightening. We see a case for a more nuanced approach to identify at-risk NPOs,” Vivek Agarwal, additional secretary in the revenue department, said.
While India has got good grades in six outcomes, it has received medium rating on five parameters – including abuse of NPOs, terror financing sanctions and prosecution of money laundering and terror financing cases.
The areas identified for heightened scrutiny included suspicious transaction reporting by NBFCs, department of posts, rural banks and designated non-financial businesses and professions. Besides, it said supervision of money transfer services for terror financing needed to be upgraded.
FATF’s Mutual Evaluation Report on India, released on Thursday, noted that the main sources of money laundering originated through illegal activities within the country and were often laundered overseas and rerouted back.
It also highlighted serious terrorism and terrorist financing threats, including from IS and Al Qaida-linked extremist outfits. It also warned that Left-wing extremist groups were seeking to overthrow the Union govt. tnn
FATF: Need to stop non-profits from becoming vehicles of terror money
The FATF report on India acknowledged that money laundering convictions were impacted by several constitutional challenges. “Though numbers of prosecutions and convictions have started to increase, the backlog of pending cases remains considerable, with a large number of accused persons awaiting conclusion of their trials. This also impacts the extent to which confiscation of criminal proceeds is carried out, in particular the money laundering cases that ED is responsible for, though India has confiscated proceeds via non-conviction based confiscation including in some significant cases,” it said.
Although India has been placed in the regular follow up category, a group with only four G20 members, the report flagged the need for ED to effectively deal with trafficking in human beings and mig-rant smuggling, and drug trafficking. Besides, steps to prevent non-profit organisations (NPOs) from being abused for terrorist financing was another priority highlighted by FATF.
“We were trying to make a case that regulatory framework is good enough… Their case is that since the NPO sector is very big, we should have good risk-based metrics. For India, it should be a risk-based regulation and not stifling regulation. We don’t see a case for further tightening. We see a case for a more nuanced approach to identify at-risk NPOs,” Vivek Agarwal, additional secretary in the revenue department, said.
While India has got good grades in six outcomes, it has received medium rating on five parameters – including abuse of NPOs, terror financing sanctions and prosecution of money laundering and terror financing cases.
The areas identified for heightened scrutiny included suspicious transaction reporting by NBFCs, department of posts, rural banks and designated non-financial businesses and professions. Besides, it said supervision of money transfer services for terror financing needed to be upgraded.