29th June 2024 (9 Topics)
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India achieves ‘outstanding outcome’ in FATF evaluation
Context
India has achieved an outstanding outcome in the 2023-24 mutual evaluation by the Financial Action Task Force (FATF). This milestone highlights India's efforts to combat money laundering (ML) and terrorist financing (TF), placing India in the "regular follow-up" category, a distinction shared by only four other G-20 countries.
FATF:
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- FATF Evaluation and Its Significance:
- High-Level Compliance: The FATF plenary concluded that India has reached a high level of technical compliance with FATF requirements. The anti-money laundering (AML), countering the financing of terrorism (CFT), and counter-proliferation financing (CPF) regimes of India are achieving good results, including international cooperation and access to beneficial ownership information.
- Effective Measures: India's AML/CFT/CPF framework has been effective in using financial intelligence and depriving criminals of their assets. The evaluation highlighted India's success in transitioning from a cash-based to a digital economy to reduce ML/TF risks.
- Recognition of Efforts: The FATF has recognized India's rigorous measures over the past decade to safeguard its financial system from ML/TF threats, including efforts to mitigate risks arising from corruption, fraud, and organized crime.
- Areas Needing Improvement:
- Supervision and Implementation: The FATF observed that India needs to strengthen the supervision and implementation of preventive measures in some non-financial sectors.
- Delays in Prosecutions: India needs to address delays in concluding ML and TF prosecutions to ensure timely justice.
- CFT Measures for NPOs: Improvements are required to ensure that CFT measures aimed at preventing the non-profit sector from being abused for TF are implemented effectively, including conducting outreach to NPOs about their TF risks.
- Policy Implications and Future Directions:
- Enhancing Supervision: Strengthening the supervision of non-financial sectors will be crucial to maintaining and improving compliance with FATF standards.
- Speeding Up Legal Processes: Addressing delays in ML and TF prosecutions will enhance the effectiveness of India's AML/CFT framework and ensure quicker justice.
- Outreach to NPOs: Conducting regular outreach and providing guidance to NPOs will help them understand and mitigate TF risks, ensuring compliance with FATF's risk-based approach.
Initiatives by the Indian government against money laundering
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What are the Black List and Grey List?Those are two types of lists that FATF maintains;
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UPSC Mains Questions:
Q. Examine the challenges faced by India in strengthening the supervision and implementation of preventive measures in non-financial sectors. How can these challenges be addressed to ensure better compliance with FATF standards?
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