FATF Recognises India’s Efforts To Combat Money Laundering, Terror Financing: Finance Ministry

India has earned recognition from the FATF for its effective measures combating money laundering and terrorist financing. The FATF placed India in the 'regular follow-up' category.

Representational Image | FATF is an intergovernmental organisation established in 1989 as the international watchdog to combat money laundering, terrorist financing, and other related threats to the integrity of the international financial system. ( Image Source :fatf-gafi.org )

The Financial Action Task Force (FATF) has recognised India's robust measures in combatting money laundering and terrorist financing, as revealed in the Mutual Evaluation Report adopted during the FATF plenary held in Singapore between June 26th and June 28th, 2024, the Ministry of Finance stated. The FATF is an intergovernmental organisation established in 1989 as the international watchdog to combat money laundering, terrorist financing, and other related threats to the integrity of the international financial system. India became a member of FATF in 2010.

The Ministry of Finance issued a statement highlighting India's "outstanding outcome" in the 2023-24 Mutual Evaluation. The report places India in the 'regular follow-up' category, a distinction shared by only four other G20 countries. 

The FATF has commended India for its proactive measures, particularly in mitigating risks arising from money laundering and terrorist financing. This includes tackling the laundering of proceeds from corruption, fraud, and organised crime. A key highlight is India's transition from a cash-based to a digital economy, significantly reducing money laundering/terrorist financing risks.

"This recognition from the FATF is a testament to the rigorous and effective measures implemented by India over the last 10 years to safeguard its financial system from ML/TF threats," the statement continued. It emphasises India's commitment to international standards and its proactive stance in the global fight against financial crimes.

"It underscores the country’s commitment to international standards and its proactive stance in the global fight against financial crimes. This sets a benchmark for countries in our region to effectively implement international standards on terrorist financing. India’s excellent rating will enhance the capacity of our country to lead the global effort on countering cross border terror financing and money laundering," the ministry stated.

Since 2014, the Indian government has enacted a series of legislative changes and bolstered enforcement efforts to tackle money laundering, terrorist financing, and black money, the ministry noted. "Since 2014, the Government has enacted a series of legislative changes and bolstered enforcement efforts to tackle ML, TF, and black money. This multi-pronged strategy has brought these measures in line with international standards and has demonstrably proven to be effective, yielding positive results. Indian authorities have had success in dismantling the terror funding network using actionable intelligence inputs. These operations have stemmed the flow of terror funding, black money, and narcotics, even along the coastline," it stated.

India’s Performance On FATF Mutual Evaluation Accrues Significant Advantages To Our Growing Economy: Ministry Of Finance

The implementation of the JAM (Jan Dhan, Aadhaar, Mobile) Trinity, alongside stringent regulations on cash transactions, has markedly increased financial inclusion and digital transactions. These measures have made transactions more traceable, thereby mitigating ML/terrorist financing risks and enhancing financial inclusion.

The Ministry of Finance noted, "India’s performance on the FATF Mutual Evaluation accrues significant advantages to our growing economy, as it demonstrates the overall stability and integrity of the financial system." This recognition is expected to improve India's access to global financial markets and institutions, boost investor confidence, and support the global expansion of the Unified Payments Interface (UPI), India’s fast payment system.

The Department of Revenue (DoR) spearheaded India's engagement with FATF during the mutual evaluation process. This success was driven by the exceptional efforts of a diverse, multi-disciplinary team comprising representatives from various ministries, the National Security Council Secretariat (NSCS), state authorities, the judiciary, financial sector regulators, self-regulatory organisations, financial institutions, and businesses, the ministry noted.

It stated that India, already a member of the FATF Steering Group, will use this opportunity to contribute significantly to the group's overall functioning.