India Placed in 'Regular Follow-Up' Category by FATF

Tags: International News

India has been categorized under the 'regular follow-up' by the Financial Action Task Force (FATF). 

An Overview of the News

• The FATF held its plenary meeting in Singapore from June 26-28, 2024.

• This decision follows a review of India's efforts in implementing anti-money laundering, anti-terrorism financing, and anti-proliferation financing measures.

• Alongside India, Russia, France, Italy, and the United Kingdom were also placed in the 'regular follow-up' category.

• One country was added to the grey list, and others were categorized under 'enhanced follow-up'.

• The FATF acknowledged India's efforts in combating money laundering and terrorist financing but highlighted the need to address delays in concluding prosecutions related to these crimes.

FATF Evaluation of India:

• India joined FATF in 2010 and underwent its first evaluation in the same year.

• The next evaluation was delayed due to the COVID-19 pandemic and occurred in 2023.

• India must submit a report addressing FATF concerns by October 2027.

Implications for India:

• Being in the regular follow-up category enhances ease of financial transactions globally.

• Easier access to international capital markets at lower costs for Indian companies.

• Increased foreign investment due to enhanced confidence in India's legal and payment systems, including UPI.

About FATF:

• Established in 1989 by G-7 countries to set global standards on AML/CFT/PF.

• Inter-governmental body issuing recommendations and assessing countries' actions against financial crimes.

• Collaborates with IMF, World Bank, UN, and FATF-style regional bodies.

• Headquartered in Paris, France, with 39 current members excluding Russia (suspended since 2023).

• President: T Raja Kumar of Singapore.

PMLA 2002:

• Based on FATF recommendations, Prevention of Money Laundering Act (PMLA) 2002 combats money laundering in India.

• Enforced by the Directorate of Enforcement (ED) since July 1, 2005.