MUTUAL EVALUATION REPORT OF INDIA - REPORTS AND
INDICES
News: FATF adopts India's
mutual evaluation report, but flags ‘delays’ in terrorist financing, money
laundering
What's in the news?
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Recently, India has achieved an outstanding outcome in the mutual
evaluation conducted during 2023-24 by the Financial Action Task Force (FATF).
Mutual Evaluation Report of India:
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The Mutual Evaluation Report of India is released by the Financial Action Task Force (FATF).
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It was adopted at the FATF plenary held in Singapore.
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India is now in the ‘regular
follow-up’ category.
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It is a prestigious group that includes only four other G20 countries.
Key Highlights of the Report:
As per the report,
India has achieved “high level of technical compliance”, against the
requirements put forward by FATF for fighting money laundering.
1. Reducing ML/TF Risks:
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India has effectively tackled the dangers of money laundering and
terrorist financing, including crimes related to corruption, fraud, and
organized crime.
2. Moving to a Digital Economy:
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India has made a big shift from cash to digital transactions. This
change helps reduce the risks of Money Laundering and Terror Funding.
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The use of the JAM (Jan Dhan,
Aadhaar, Mobile) Trinity and strict rules on cash transactions have increased
financial inclusion (more people using banking services) and made transactions
easier to track.
3. Increased Financial Inclusion:
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With more people using digital transactions thanks to the JAM Trinity,
ML and TF risks have decreased.
Suggestions for Further Improvements by FATF:
1. Reduce Delays:
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India needs to address delays related to concluding money laundering and
terrorist financing prosecutions and ensure counter terrorist financing
measures are implemented.
2. Better Supervision in Non-Financial Sectors:
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India needs to improve how it monitors and enforces anti-ML and TF rules
in non-financial sectors, like real estate and precious metals.
3. Faster Prosecutions:
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There are delays in concluding cases related to Money Laundering and
Terror Funding, which need to be addressed to ensure justice is served
promptly.
4. Protecting Non-Profit Organizations:
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India needs to make sure that measures to protect NPOs from being used
for Terror Funding are effective.
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This involves educating NPOs about the risks and how to avoid being
exploited for Terror Funding.
Go back to basics:
Financial Action Task Force (FATF):
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It is the global money laundering
and terrorist financing watchdog.
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The inter-governmental body
sets international standards that aim to prevent these illegal activities and
the harm they cause to society.
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As a policy-making body, the FATF works to generate the necessary
political will to bring about national legislative and regulatory reforms in
these areas.
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It was established in 1989 during the G7 Summit in Paris.
Secretariat:
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Located at the Organisation for Economic Cooperation and Development (OECD) headquarters in Paris.
Functions:
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The FATF has developed the FATF
Recommendations, or FATF Standards, which ensure a coordinated global
response to prevent organized crime, corruption and terrorism.
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They help authorities go after the money of criminals dealing with
illegal drugs, human trafficking, and other crimes.
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The FATF also works to stop funding for weapons of mass destruction.
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It also assesses the strength of a country’s anti-money laundering and
anti-terror financing frameworks.
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It does not go by individual
cases.
Members:
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FATF currently has 37 members
including two regional organisations
- the European Commission and Gulf Cooperation Council.
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India is a member of the
FATF.
Lists under FATF:
1. Grey List (Jurisdictions under Increased
Monitoring):
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Countries that are considered safe haven for supporting terror funding
and money laundering are put in the FATF grey list.
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Inclusion in this list means a warning to the country that it may enter
the blacklist.
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Recently, South Africa and Nigeria got listed under this grey
list, whereas Pakistan was removed from this list.
2. Black List (High Risk Jurisdictions Need Call
for Action):
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Countries known as Non-Cooperative Countries or Territories (NCCTs) are
put in the blacklist.
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These countries support terror funding and money laundering activities.
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The FATF revises the blacklist regularly.
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Iran and Democratic
People’s Republic of Korea (DPRK) and Myanmar are under High-risk Jurisdiction
or black list.