FATF Applauds India's AML Efforts but Flags Concerns Over Money Laundering Prosecutions

The Financial Action Task Force (FATF) has given India a positive assessment for its compliance with anti-money laundering (AML) standards, though it has expressed concerns over the country's slow progress in prosecuting money laundering cases.

The FATF, an international body that sets global standards for combating illicit financial activities, noted that India was technically compliant in most areas of its AML framework. However, it raised alarms over several practical issues, particularly with respect to prosecutions and threats from terrorist organizations such as ISIL and Al Qaeda.

A member of the 40-member FATF since 2010, India was evaluated on 40 parameters as part of its latest assessment. The FATF found the country "compliant" or "largely compliant" on 37 of these, reflecting the significant progress made by Indian authorities in combating money laundering and terrorist financing.

Despite these positive ratings, the FATF expressed concern about the low number of money laundering convictions secured by India. Recent data revealed that while the country's financial crime watchdog registered nearly 5,300 cases of money laundering since 2014, only 40 convictions have been recorded in the same period.

The FATF pointed to several factors contributing to this discrepancy, including constitutional challenges and the chronic saturation of India's court system. Indian courts are currently burdened with a massive backlog of cases, many of which have remained unresolved for years.

The government, acknowledging these concerns, has been working to expedite the prosecution process. Vivek Aggarwal, additional secretary at the Department of Revenue within the finance ministry, told reporters after the release of the FATF report that the government has implemented measures to speed up trials. "The government has now a system of notifying special courts and we are inducting more prosecutors to expedite trials," Aggarwal stated, adding that these actions have contributed to India receiving better ratings in the FATF assessment.

Nonetheless, the FATF stressed that resolving the backlog of pending money laundering cases was a critical priority for India. "The country needs to address the backlog of money laundering cases pending conclusion of court processes," the FATF said in its report. "It is critical India addresses these issues in view of accused persons waiting for cases to be tried."

In addition to prosecution delays, the FATF highlighted three specific technical areas that need improvement: scrutiny of the wealth sources of political figures, oversight of the finances of non-profit organizations, and supervision of non-financial businesses and professionals.

The FATF also pointed out that India remains vulnerable to terrorist financing, particularly from groups active in the Jammu and Kashmir region. "India needs to focus on concluding the prosecutions and convict and appropriately sanction terrorist financiers," the organization said, stressing the importance of combating these threats.

India's government has vowed to address these concerns, with ongoing efforts to enhance its financial crime-fighting infrastructure and expedite court processes. However, with thousands of cases still awaiting resolution, the FATF has made it clear that there is more work to be done.

By fLEXI tEAM