The Mutual Evaluation conducted during 2023-24 by Financial Action Task Force (FATF) has placed India in the ‘regular follow-up’ category, a distinction shared by only four other G20 countries.

The Mutual Evaluation Report of India was adopted in the FATF plenary held in Singapore between June 26th and June 28th, 2024.

Advertisement

This marks a significant milestone in the nation’s efforts to combat money laundering (ML) and terrorist financing (TF).

India’s performance on the FATF Mutual Evaluation accrues significant advantages to our growing economy, as it demonstrates the overall stability and integrity of the financial system, Ministry of Finance said in a statement.

Good ratings will lead to better access to global financial markets and institutions and increase investor confidence. It will also help in the global expansion of the Unified Payments Interface (UPI), India’s fast payment system, it added.

Among other things, FATF has recognised the efforts made by India on: Mitigating the risks arising from ML/TF, including the laundering of proceeds from corruption, fraud, and organised crime.

Effective measures implemented by India to transition from a cash-based to a digital economy to reduce ML/TF risks was also recognised.

Implementation of the JAM (Jan Dhan, Aadhaar, Mobile) Trinity, along with stringent regulations on cash transactions, has led to a significant increase in financial inclusion and digital transactions, and these measures have made transactions more traceable, thereby mitigating ML/TF risks and enhancing financial inclusion, the FATF recognised.

This recognition from the FATF is a testament to the rigorous and effective measures implemented by India over the last 10 years to safeguard its financial system from ML/TF threats. It underscores the country’s commitment to international standards and its proactive stance in the global fight against financial crimes, the ministry said.

This sets a benchmark for countries in our region to effectively implement international standards on terrorist financing. India’s excellent rating will enhance the capacity of our country to lead the global effort on countering cross border terror financing and money laundering.

The ministry highlighted that over a two-year period, the Department of Revenue (DoR) spearheaded India’s engagement with FATF during the mutual evaluation process.

This success was driven by the exceptional efforts and invaluable contribution of a diverse, multi-disciplinary team comprising representatives from various ministries, the National Security Council Secretariat (NSCS), state authorities, the judiciary, financial sector regulators, self-regulatory organisations, financial institutions, and businesses all played a critical role.

This collaborative effort demonstrated India’s effective AML/CFT framework.