FATF Report on India: Observations and Significance
The Financial Action Task Force (FATF) recently released its Mutual Evaluation Report on India, following an on-site assessment in November 2023. India, which became a FATF member in 2010, was placed in the “regular follow-up” category, which is viewed positively given prior objections from some developed countries. The FATF identified key areas for improvement, including the prosecution of money laundering (ML) and terror financing (TF) cases, the protection of the non-profit sector from terrorist abuse, and the implementation of preventive measures.
Established in 1989, the FATF is a global watchdog focused on combating money laundering and terrorist financing. Its framework consists of 40 Recommendations across seven categories:
FATF mutual evaluations provide in-depth analyses of a country’s compliance with its standards, offering peer-reviewed recommendations to enhance measures against illicit financial activities.
India’s “regular follow-up” rating aligns it with only four other G20 nations— the UK, France, Italy, and Russia (currently suspended). This rating indicates a less stringent reporting requirement than the “enhanced follow-up” category, which many developing countries fall under.
The FATF highlighted several critical areas needing attention in India:
Prosecution and Conviction Rates: There is a significant gap between the number of investigations and prosecutions, with only 28 convictions secured by the Enforcement Directorate (ED) between 2018 and the assessment in 2023.
Risk Profiling: Improvement is needed in customer risk profiling within financial institutions.
Non-Profit Sector Oversight: Measures to prevent the abuse of non-profit organizations for terrorist financing must be strengthened.
Terror Financing Prosecutions: Delays in prosecuting terror financing cases need to be addressed, particularly concerning the Prevention of Money Laundering Act (PMLA).
Rivers have shaped human civilization for thousands of years, but some rivers tell stories far…
In an important ruling strengthening the principle of equality of opportunity, the Supreme Court of…
In a land where sand stretches far and rain is rare, water becomes the most…
Cleanliness has become one of the most important measures of a city’s growth and quality…
The Karnataka government has taken an important step to modernise land governance in the Kodagu…
In a major boost to open-source artificial intelligence, Google has launched TranslateGemma, a new collection…