Key Findings of FATF Report on India

Key Findings of FATF Report on India and Significance of the Observations

FATF is the global money laundering and terrorist financing watchdog. Check here the Key Findings of FATF Report on India and Significance of the Observations.

Table of Contents

The global money laundering and terror financing watchdog Financial Action Task Force (FATF) has released the Mutual Evaluation Report for India. India has been placed in the “regular follow-up” category, which is considered favourable.

Key Findings of FATF Report on India

The FATF’s report highlighted several areas where India has made progress but also flagged critical areas which need improvement:

Prosecution and Convictions: There is a need to strengthen prosecution efforts in Money Laundering (ML) and Terror Financing (TF) cases.
- Between 2018 and 2023, only 28 convictions were secured by the Enforcement Directorate (ED) for money laundering.
Non-Profit Sector Protection: The report emphasised the importance of safeguarding non-profit organisations from being misused for terrorist financing.
Preventive Measures Implementation: There are calls for enhanced supervision and implementation of preventive measures across various sectors.

Financial Action Task Force (FATF)

It is an inter-governmental body that has developed standards to prevent and combat money laundering and terror financing.
Headquarters: Paris, France.
Background: It was established in 1989 during the G7 Summit in Paris to develop policies against money laundering.
Objective:
- To establish international standards and to develop and promote policies, both at national and international levels for combating money laundering and terror financing.
Members: 40 (38 Countries + 2 Organisations – European Union and Gulf Cooperation Council)
- Major countries: US, India, China, Saudi Arabia, UK, Germany, France, .
- India became a member of FATF in

FATF Lists

Black List:
- Includes countries considered safe havens for supporting money laundering and terror funding.
- Presently Iran, North Korea, and Myanmar are currently on the FATF Black List.
Grey List:
- Includes countries that are considered to have weak anti-money laundering (AML) and counter-terrorism financing (CFT) regimes.
- This inclusion serves as a warning to the country that it may enter the blacklist.
Effects of being on the FATF Blacklist:
- No financial help is given to those countries by the International Monetary Fund (IMF), World Bank, Asian Development Bank (ADB) and the European Union (EU).
- They also face a number of international economic and financial restrictions & sanctions.