FATF praises India's progress in combating illegal finance, calls for faster money laundering trials

In a report, the watchdog acknowledged that while India has made progress, it must improve its system as the economy grows, particularly by speeding up trials related to money laundering and terrorist financing, reported NDTV.

India has been placed in the regular follow-up category, a distinction shared by only four other G20 nations.

The mutual evaluation report, conducted by a joint assessment team from FATF, the Asia/Pacific Group on Money Laundering (APG), and the Eurasian Group (EAG), found that India has successfully implemented an anti-money laundering and counter-terrorist financing (AML/CFT) framework with positive outcomes, reported NDTV.

These achievements include a strong understanding of risks, better access to beneficial ownership information, and efforts to deprive criminals of their assets.

The report highlights that Indian authorities effectively utilize financial intelligence and maintain strong cooperation both domestically and internationally.

It also noted that India, the world's most populous country with the largest diaspora, is a lower-middle-income nation with one of the fastest-growing economies, currently ranking as the fifth-largest globally.

According to the report, India's primary money laundering risks stem from domestic illegal activities, particularly fraud (including cyber-enabled fraud), corruption, and drug trafficking.

While India investigates money laundering cases related to fraud and forgery, in line with its predicate crime risks, the report stressed the need for greater action in addressing offences like human trafficking and drug trafficking.

The report underscored the importance of reducing the backlog of money laundering cases awaiting court resolution.

The report lauded India’s efforts on financial inclusion, highlighting that the proportion of the population with bank accounts has more than doubled, with due diligence being conducted for small accounts, and a strong emphasis has been placed on promoting the use of digital payment systems.

These efforts have strengthened financial transparency, bolstering the efforts to tackle anti-money laundering and counter-terrorist financing.

"Despite the size and institutional complexity of the Indian system, Indian authorities cooperate and coordinate effectively on matters dealing with illicit financial flows, including the use of financial intelligence. India also achieved positive results in international cooperation, asset recovery and implementing targeted financial sanctions for proliferation financing," the report states.

Indian administration also has a complete understanding of the money laundering, terrorism and proliferation financing hazards, it says.

The organisation emphasised that there is a need for sharing insights on them with stakeholders.

The report states that while there is a strong understanding of risks and effective implementation of preventative measures within the financial sector, particularly by commercial banks, smaller financial institutions show less proficiency in these areas.

"Following the assessment, India is placed in 'regular follow-up' and, in line with procedures, will report back to the Plenary in three years," the report says.