The global Financial Action Task Force Thursday lauded the Indian authorities for having shown a good understanding of both current and emerging Terror Financing threats and risks in various theatres of risk in the country and carried investigations accordingly.
"Case studies provided reflect India's ability, in particular the National Investigative Agency (NIA) and ED to conduct complex financial investigations and identify money trails to support the investigation and prosecution of terrorist activity and TF," the independent inter-governmental body said on Thursday while releasing its Mutual Evaluation Report.
The FATF works and promotes policies to protect the global financial system from money laundering, terrorist financing, and the financing of proliferation of weapons of mass destruction. The recommendations issued by the FATF are recognized as the global Anti-Money Laundering (AML) and Counter-Terrorist Financing (CTF) standard.
In recognition of its efforts, the Mutual Evaluation Report gave India a thumbs-up toward achieving "a high level of technical compliance" across its recommendations and taking "significant steps" to implement measures to tackle illicit finance.
"A joint FATF-APG-EAG evaluation of the country's measures to counter illicit finance concludes that India has put in place an AML/CFT system that is performing satisfactorily, including on understanding the risk, accessing beneficial ownership information and depriving criminals of their assets. Authorities make good use of financial intelligence and co-operate effectively both domestically and internationally," it said.
It is a report that summarizes AML/CFT measures in India and analyzes the level of compliance with the recommendations of FATF-40, as well as the level of effectiveness of India's AML/CFT system. The report makes recommendations on how the system could be strengthened.
The FATF recognized the severe threats of terrorism and terrorist financing against India: "including related to ISIL or Al Qaeda," while accepting that terrorist financing risks were generally closely linked with terrorism risks, with flows of funds or provision of other assets constrained to within India or surrounding countries.
"India faces a disparate range of terrorism threats, grouped into six different theatres. These can be summarised as theatres associated with ISIL or AQ-linked extremist groups active in and around Jammu and Kashmir, whether directly or through proxies or affiliates, as well as other separatist movements in the region; other ISIL and AQ cells, their affiliates, or radicalized individuals in India; regional insurgencies in the Northeast and North of India; and left-wing extremist groups seeking to overthrow the government, detailed the report.
It has said in terrorism threats that the most critical threats appear to relate to ISIL or AQ-affiliated groups operating in and around Jammu and Kashmir.
The FATF also stated that India had made notable progress on financial inclusion where more than double of the population now has bank accounts. This further increased reliance on digital payment systems, along with the utilization of streamlined due diligence for small accounts.
India must further improve the system as its economy and financial system keep growing, specifically in ensuring that money laundering and terrorist financing trials are completed while offenders face the appropriate sanctions.
"India's main money laundering risks come from crimes committed in India; such risks are essentially linked with fraud, including cyber-enabled fraud, corruption, and drug trafficking. Concerning the predicate crime risk, India engages itself extensively with money laundering cases related to fraud and forgery but to a much lesser extent with some other crimes like human trafficking and drug trafficking. To that end, the country has to clear the arrears of money laundering cases pending conclusion of court processes, according to the report.
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