FATF‘s review on India must be crucial

Because it has been a decade since the international anti-graft body conducted its review, FATF's review of India must be crucial.

The Covid-19 pandemic caused a delay in the review process, which was originally scheduled to begin in 2020.

India's national-level vulnerabilities will be identified during the forthcoming mutual evaluation by the Asia Pacific Group of the FATF, an intergovernmental body tasked with safeguarding the international financial system from misused money laundering and terror financing.

In June 2010, India's anti-money laundering and terrorist financing regime underwent its most recent review, which typically occurs every ten years.

Taking these petitions into consideration, the Indian Supreme Court issued a notice on a petition on August 25, 2022, filed, among others, by Congress Member of Parliament Karti P Chidambaram, seeking to review its July 27 judgment that upheld the ED's authority to arrest, attach, and search and seizure.

Two aspects of the judgment upholding the PMLA's provisions, according to a bench headed by the then-Chief Justice N. V. Ramana, need to be reexamined on the basis of the evidence.

The first provision is that the accused are not required by law to receive a copy of the ECIR.

whether an arrestee can be denied a copy of the ECIR, which is the criminal case's equivalent of an FIR, on the grounds that it is simply an internal ED document.

The second provision deals with whether the law can reverse the presumption of innocence—that is, whether it can ascribe the presumption of guilt to an accused person—as opposed to the fundamental common law principle of being innocent until proven guilty.

Another official familiar with the situation stated that an on-site visit by FATF experts to India in February 2023 would follow the technical evaluation of Indian anti-money laundering, counterterrorism financing, and the role of relevant legal framework and agencies enforcing these measures under this revised assessment calendar.

Indian financial, regulatory, and enforcement agencies are expected to present their action taken reports and dossiers for their anti-money laundering, criminal tax evasion, and CFT (combating financing of terrorism) enforcement, regulatory, and investigative work during this evaluation.

An officer stated last year that the Indian presentation included the enactment of the Fugitive Economic Offenders Act in 2018, the anti-black money Act of 2015, amendments to the PMLA over time, the introduction of the Goods and Services Tax (GST), new protocols to better regulate suspicious transactions in banks and financial intermediaries, and the demonetization of two large currencies in 2016.

India's presentation to the FATF review team will also include the high number of domestic and international asset attachments, penalties imposed by the PMLA of 2002, which was amended in 2005, and charge sheets filed by various investigation agencies under criminal sections of the law against financial crimes and terror funding.

If a fair analysis of the Indian economy is done, some areas show signs of economic chaos, which the FATF body should take seriously.

In particular, various terms like "black money," "unaccounted income," "underground income," "black wealth," "black economy," "shadow economy," and "unofficial economy" are frequently used in India.

According to the findings, every sector of India's money regulators creates and makes use of black money in order to survive in the country's and the world's markets, society, and so on.

Real estate, the financial market, the bullion and jewelry market, non-profit organizations, and external trade are the most exclusive of these areas.

Black money persists in India as a result of the demonstration effect model, which emphasizes living one's life from the perspective of other people's livelihoods.

In India, the overwhelming desire for rapid social change has had a significant impact on the lives of other members of the society, many of whom maintain a high social status and want to emulate them.

They want to make money in any way they can for this. In May 2012, the Indian government released a White Paper titled "Black Money" (Ministry of Finance, 2012). In it, the government discussed the various facets of black money as well as its complicated relationship to the country's policy and administrative system. It also discussed the policy options and strategies the government has been employing to address the problem of black money and corruption in public life.

However, the task of eradicating black money is significantly more difficult and time-consuming, necessitating the use of novel tactics and methods at the governmental level through increased State intervention.

The Benami Transaction Act of 1988 did not stop the flow of black money or money laundering in India, despite its existence.

Having said that, Non-Governmental Organizations (NGOs) in India frequently have complicated financial operations that include multiple donors, investments, and currencies. They also frequently receive and use cash, must account for a large volume of small transactions, and use informal money transfers.

As of March 31, 2012, the Foreign Contribution (Regulation) Act has registered 43,527 NGOs.

NGOs that receive more than Rs. 11,500 crore ($1.9 billion) in foreign funding annually will be required to hold themselves accountable under the new rules.

The Indian Home Ministry recently issued a warning that the NGOs may be at risk from money laundering and the financing of terrorism.

Additionally, it is possible that some non-governmental organizations (NGOs) operate in or near the regions that are most vulnerable to terrorist activity or money laundering.

It may be harder to identify suspicious transactions because NGOs may have income and expenditure streams that are erratic and unusual.

Further, it could be argued that a significant number of financial and economic anomalies have remained under FATF technical review since the organization's most recent examination of India in 2010.

As a result, the instances of money laundering and terror financing in India require the international anti-graft body to conduct an objective and unbiased investigation.

India requires a comprehensive tax law reform model to avoid FATF's grey list benchmarking.

Additionally, and most importantly, an ongoing requirement is a comprehensive financial examination, both domestically and internationally.