The 2023-24 Mutual Evaluation conducted by Financial Action Task Force (FATF) has seen India which achieves superb results.
India is in the “regular follow-up” category, an honor previously reserved for four other countries. These include G20 country.
It is a crucial step forward in the fight against epidemic of money laundering (ML) and terrorism financing (TF).
FATF acknowledged India’s efforts in:
Reducing the risks associated with terrorist financing as well as money laundering such as corruption, fraud and organized crime.
India has put to place good measures to transform from being cash based economy into digital economy aimed at reducing chances of having money laundering/terrorism financing.
Enactment of JAM (Jan Dhan, Aadhaar, Mobile) trinity and stringent regulation on cash transaction has increased financial integration and digital transactions leading to more transparent transactions which reduces risks of ML/TF and thus enhancing financial inclusion .
What does a good rating imply for India?
India’s performance under Financial Action Task Force Mutual Assessment will bring significant benefits for its growing economy since it demonstrates overall soundness and integrity of the financial system.
Better access to global financial markets/institutions and enhanced investor confidence will arise out of a good rating. Further, this can help widen the global reach of India’s fast payments system Unified Payments Interface (UPI).
India already sits on the FATF Steering Group. This is an opportunity for India to contribute meaningfully towards the working of the group given its present performance.
What did Centre say?
“It confirms how serious we have been over the past decade in taking stringent, effective measures that protect our financial system against MLL/TF threats.” Said Indian Finance Ministry about Financial Action Task Force recognition statement.
“ This shows that both we are committed to international standards and demonstrate leadership in global anti-financial crimes drive; it also means that this sets a benchmark for regional countries to take on board effectively international standards combating financing of terrorism. Should India score well, it will help lead global fight against cross-border terrorist financing and money laundering,” the ministry added.
It also noted that India remains committed to further strengthening its AML/CFT framework and continues to work with international partners to combat financial crime. “The country will build on this success to ensure a safe and transparent financial environment for all,” it said.
About the Financial Action Task Force
Financial Action Task Force (FATF) is an intergovernmental organization established in 1989 as an international watchdog responsible for combating money laundering, terrorist financing, etc., which pose threats to the integrity of the global financial system. India joined FATF in 2010.
