{"id":42545,"date":"2025-10-27T01:11:27","date_gmt":"2025-10-26T19:41:27","guid":{"rendered":"https:\/\/vajiramandravi.com\/current-affairs\/?p=42545"},"modified":"2025-10-30T15:16:42","modified_gmt":"2025-10-30T09:46:42","slug":"fatf-commends-indias-anti-money-laundering-and-terror-financing-measures-in-2024-report","status":"publish","type":"post","link":"https:\/\/vajiramandravi.com\/current-affairs\/fatf-commends-indias-anti-money-laundering-and-terror-financing-measures-in-2024-report\/","title":{"rendered":"FATF Commends India\u2019s Anti-Money Laundering and Terror Financing Measures in 2024 Report"},"content":{"rendered":"<h2><strong>What\u2019s in today\u2019s article?<\/strong><\/h2>\n<ul>\n<li>Why in News?<\/li>\n<li>What is Financial Action Task Force (FATF)?<\/li>\n<li>What is FATF\u2019s Mutual Evaluation Process?<\/li>\n<li>Key highlights of the FATF\u2019s mutual evaluation report on India<\/li>\n<\/ul>\n<h2><strong>Why in News?<\/strong><\/h2>\n<p>Global anti-money laundering and terror financing body FATF has launched its mutual evaluation report on India. The report commending the country&#8217;s systems to tackle the menace of money laundering and terror financing. It also urged India to expedite its prosecutions in financial fraud cases.<\/p>\n<h2><strong>What is Financial Action Task Force (FATF)?<\/strong><\/h2>\n<ul>\n<li><strong>About<\/strong>\n<ul>\n<li>Set up in 1989, FATF is the global money laundering and terrorist financing watchdog.<\/li>\n<li>It was established during the <a href=\"https:\/\/vajiramandravi.com\/upsc-exam\/g7\/\" target=\"_blank\" rel=\"noopener noreferrer\" target=\"_blank\"><strong>G7 Summit<\/strong><\/a> in Paris.<\/li>\n<li>It currently comprises 38 member jurisdictions and 2 regional organisations.<\/li>\n<li>India became an Observer at FATF in 2006. On June 25, 2010 India was taken in as the <strong>34th country member of FATF<\/strong>.<\/li>\n<li>The inter-governmental body sets international standards that aim to prevent these illegal activities and the harm they cause to society.<\/li>\n<li>The FATF functions as an independent body guiding policy, with its president selected by the plenary for a one-year period.<\/li>\n<li>The FATF Secretariat is located at the OECD headquarters in Paris.<\/li>\n<\/ul>\n<\/li>\n<li><strong>Functions<\/strong>\n<ul>\n<li>The FATF has developed the FATF Recommendations, or FATF Standards, which ensure a co-ordinated global response to prevent organised crime, corruption and terrorism.<\/li>\n<li>It also works to identify national-level vulnerabilities with the aim of protecting the international financial system from misuse.<\/li>\n<li>They help authorities go after the money of criminals dealing in illegal drugs, human trafficking and other crimes.<\/li>\n<li>It also works to stop funding for weapons of mass destruction.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<h2><strong>What is FATF\u2019s Mutual Evaluation Process?<\/strong><\/h2>\n<ul>\n<li><strong>About<\/strong>\n<ul>\n<li>Mutual Evaluation Process is a comprehensive and rigorous assessment conducted <strong>to evaluate a country&#8217;s compliance with international standards for combating <\/strong><a href=\"https:\/\/vajiramandravi.com\/upsc-exam\/money-laundering\/\" target=\"_blank\" rel=\"noopener noreferrer\" target=\"_blank\"><strong>money laundering (ML)<\/strong><\/a><strong> and terrorist financing (TF)<\/strong>.\u00a0<\/li>\n<li><strong>India and FATF\u2019s mutual evaluation report<\/strong><\/li>\n<li>In its previous evaluation in <strong>June 2010<\/strong>, India was placed in the <strong>\u201cregular follow-up\u201d<\/strong> category, which was removed in <strong>June 2013<\/strong>.<\/li>\n<li>India&#8217;s next assessment is set for 2031.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<h2><strong>Key highlights of the FATF\u2019s mutual evaluation report on India<\/strong><\/h2>\n<ul>\n<li><strong>India in the regular follow-up category<\/strong>\n<ul>\n<li>FATF placed India in the <strong>\u201cregular follow-up\u201d<\/strong> category for its compliance with anti-money laundering (AML) and counter-terror financing (CTF) recommendations.\n<ul>\n<li>This category signifies a high level of compliance in combating ML and TF, though some non-financial sectors require improvement in supervision and preventive measures.<\/li>\n<\/ul>\n<\/li>\n<li>This classification is shared by only four other G20 countries [the UK, France, Italy and Russia (now suspended from FATF)].\u00a0\n<ul>\n<li>Most of the developing countries are in the <strong>enhanced follow-up<\/strong> category, which requires submission of reports on an annual basis, as against once in three years in the \u201cregular follow-up\u201d category.<\/li>\n<\/ul>\n<\/li>\n<li>India complied\/largely complied with <strong>37 of 40<\/strong> recommendations and all of the <strong>\u201cBig-Five\u201d<\/strong>.<\/li>\n<\/ul>\n<\/li>\n<li><strong>Lauds India\u2019s PMLA, terror financing<\/strong>\n<ul>\n<li>The report praised India\u2019s systems to tackle the menace of money laundering and terror financing.<\/li>\n<li>India is taking steps to address the <strong>fast-tracking of trials<\/strong> in terror financing and money laundering cases, which was identified as a priority.<\/li>\n<\/ul>\n<\/li>\n<li><strong>Areas for Improvement<\/strong>\n<ul>\n<li><strong>Limited Prosecutions and Convictions<\/strong>: India has seen a limited number of prosecutions and convictions in money laundering and terror financing cases.\n<ul>\n<li>It flagged delays in the prosecution of terror financing cases due to challenges in the constitutionality of the Prevention of Money Laundering Act (PMLA) between 2014-2022.<\/li>\n<li>Though the Enforcement Directorate (ED) increased investigations, the number of prosecutions and concluded trials has not shown a proportionate increase.<\/li>\n<\/ul>\n<\/li>\n<li><strong>Risk-Profiling:<\/strong> Customer risk-profiling in financial institutions requires improvement.<\/li>\n<li><strong>MCA Registry Monitoring<\/strong>: Accurate ownership information in the Ministry of Corporate Affairs (MCA) registry needs better oversight.<\/li>\n<li><strong>Human Trafficking Link<\/strong>: Greater focus is required on the connection between money laundering and human trafficking.<\/li>\n<\/ul>\n<\/li>\n<li><strong>Jan Dhan-Aadhaar-Mobile Initiative &amp; GST<\/strong>\n<ul>\n<li>FATF praised India\u2019s Jan Dhan-Aadhaar-Mobile (JAM) initiative for boosting financial inclusion and reducing the cash-based economy.<\/li>\n<li>The implementation of GST, requiring e-invoices and e-bills, was recognized for increasing transparency in the supply chain.<\/li>\n<\/ul>\n<\/li>\n<li><strong>Key Compliance Measures<\/strong>\n<ul>\n<li>India&#8217;s Cybercrime Coordination Centre, beneficial ownership registry by the Ministry of Corporate Affairs, and Central KYC Records Registry (CKYCR) were highlighted as positive steps.<\/li>\n<li>The establishment of task forces and high-level committees to combat corruption, black money, drug trafficking, and fake currency was commended.<\/li>\n<\/ul>\n<\/li>\n<li><strong>Enforcement Achievements<\/strong>\n<ul>\n<li>The ED was recognized for confiscating assets worth \u20b916,537 crore and securing restitution of \u20b9141.3 billion in the Vijay Mallya case.<\/li>\n<li>ED&#8217;s success in pursuing complex, large-scale, cross-border money laundering cases and \u201chawala\u201d operations was noted.<\/li>\n<\/ul>\n<\/li>\n<li><strong>Shell Companies Task Force<\/strong>\n<ul>\n<li>The report highlighted the removal of 3,82,875 shell companies and the disqualification of over 3 lakh directors who failed to file financial statements.<\/li>\n<\/ul>\n<\/li>\n<li><strong>International Cooperation and Asset Recovery<\/strong>\n<ul>\n<li>India\u2019s strong coordination on illicit financial flows, financial intelligence, and international cooperation was appreciated.\u00a0<\/li>\n<li>The FATF also noted India\u2019s ability to implement targeted financial sanctions.<\/li>\n<\/ul>\n<\/li>\n<li><strong>Terrorism Threats in India<\/strong>\n<ul>\n<li>India faces a \u201cdisparate range\u201d of terrorism threats, including regional insurgencies in the Northeast and North, Left-Wing Extremist groups, and Islamic State or al-Qaeda-linked threats in Jammu and Kashmir.<\/li>\n<li>The largest money laundering risks stem from fraud, corruption, and drug trafficking.<\/li>\n<\/ul>\n<\/li>\n<li><strong>Non-Profit Sector Oversight<\/strong>\n<ul>\n<li>India needs to ensure that non-profit organizations (NPOs) are safeguarded against misuse for terror financing.\u00a0<\/li>\n<li>The FATF recommended more focused, coordinated outreach to help NPOs understand these risks better.<\/li>\n<\/ul>\n<\/li>\n<li><strong>Targeted Financial Sanctions<\/strong>\n<ul>\n<li>The FATF urged India to improve the framework for implementing targeted financial sanctions to ensure the prompt freezing of funds and assets.\u00a0<\/li>\n<li>The current process needs streamlining for better communication.<\/li>\n<\/ul>\n<\/li>\n<li><strong>Definition of Domestic Politically Exposed Persons (PEPs)<\/strong>\n<ul>\n<li>The report highlighted the absence of a definition for domestic PEPs under anti-money laundering laws.\u00a0<\/li>\n<li>Foreign PEPs have already been defined, but domestic PEPs require proper identification and risk-based enhanced measures.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<hr \/>\n<h3><strong>Q.1. What did FATF highlight in its 2024 report on India?<\/strong><\/h3>\n<p>The FATF praised India\u2019s robust anti-money laundering systems, recognizing achievements in financial inclusion through the JAM initiative and the enforcement actions taken by the ED.<\/p>\n<h3><strong>Q.2. What areas did FATF suggest India should improve?<\/strong><\/h3>\n<p>FATF urged improvements in customer risk profiling, better prosecution of financial crimes, and enhanced oversight of shell companies and the non-profit sector.<\/p>\n<p><strong>Source: <\/strong><a href=\"https:\/\/indianexpress.com\/article\/india\/fatf-on-india-effective-anti-money-laundering-system-low-prosecution-9577788\/\" target=\"_blank\" rel=\"nofollow noopener\">FATF on India: Effective anti-money laundering system, low prosecution<\/a> | <a href=\"https:\/\/fatf-gafi.org\/en\/publications\/Mutualevaluations\/India-MER-2024.html\" target=\"_blank\" rel=\"nofollow noopener\">FATF<\/a> | <a href=\"https:\/\/www.thehindu.com\/news\/national\/fatf-praises-indias-anti-money-laundering-terror-financing-system-calls-for-better-prosecution\/article68659985.ece\" target=\"_blank\" rel=\"nofollow noopener\">The Hindu<\/a> | <a href=\"https:\/\/economictimes.indiatimes.com\/news\/india\/fatf-lauds-indias-anti-money-laundering-terror-financing-measures\/articleshow\/113492601.cms?from=mdr\" target=\"_blank\" rel=\"nofollow noopener\">Economic Times<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Financial Action Task Force is an intergovernmental policy-making and standard-setting body dedicated to combating money laundering and terrorist financing.<\/p>\n","protected":false},"author":5,"featured_media":42546,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[18],"tags":[],"class_list":{"0":"post-42545","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-upsc-mains-current-affairs","8":"no-featured-image-padding"},"acf":[],"_links":{"self":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts\/42545","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/users\/5"}],"replies":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/comments?post=42545"}],"version-history":[{"count":0,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts\/42545\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/media\/42546"}],"wp:attachment":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/media?parent=42545"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/categories?post=42545"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/tags?post=42545"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}