India has achieved an exceptional outcome in the mutual evaluation conducted by the Financial Action Task Force (FATF) during 2023-24, the Ministry of Finance said on Friday.
The Mutual Evaluation Report of India, adopted in the FATF plenary held in Singapore between 26 and 28 June, 2024, places India in the ‘regular follow-up’ category. This distinction is shared by only four other G20 countries, marking a significant milestone in India’s efforts to combat money laundering (ML) and terrorist financing (TF).
Recognition of India’s efforts by FATF
Mitigating ML/TF risks
FATF has recognised India’s comprehensive efforts to mitigate the risks arising from ML and TF including the laundering of proceeds from corruption, fraud and organised crime.
Transition to digital economy
India has implemented effective measures to transition from a cash-based to a digital economy, significantly reducing ML/TF risks. The adoption of digital financial systems has made transactions more traceable and secure.
Financial inclusion and digital transactions
The implementation of the JAM (Jan Dhan, Aadhaar, Mobile) Trinity, coupled with stringent regulations on cash transactions, has significantly increased financial inclusion and digital transactions. These measures have mitigated ML/TF risks and enhanced financial inclusion.
Advantages of India’s performance
India’s strong performance in the FATF Mutual Evaluation offers significant advantages to its growing economy. High ratings demonstrate the overall stability and integrity of the financial system leading to better access to global financial markets and institutions and increasing investor confidence. This will also aid in the global expansion of the Unified Payments Interface (UPI), India’s fast payment system.
A decade of rigorous measures
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. It underscores the country’s commitment to international standards and its proactive stance in the global fight against financial crimes. India’s excellent rating sets a benchmark for other countries in the region to effectively implement international standards on terrorist financing.
Legislative and enforcement efforts
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 proven effective, yielding positive results, the Ministry of Finance release said. Indian authorities have successfully dismantled terror funding networks using actionable intelligence inputs, stemming the flow of terror funding, black money and narcotics even along the coastline.
Collaborative efforts for success
Over a two-year period, the Department of Revenue (DoR) spearheaded India’s engagement with FATF during the mutual evaluation process. This success was driven by the exceptional efforts and invaluable contributions 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. This collaborative effort demonstrated India’s effective Anti-Money Laundering and Combating the Financing of Terrorism (AML/CFT) framework.
India’s future commitment
Already a member of the FATF Steering Group, India’s current performance will allow it to contribute significantly to the group’s overall functioning. India remains committed to further strengthening its AML/CFT framework and continuing its collaboration with international partners to combat financial crimes. Building on this success, India aims to ensure a secure and transparent financial environment for all.
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India joins elite group with FATF ‘Regular Follow-Up’ status
