FATF had conducted its last India review in June 2010 and after 13 years it has now started to have its India review on November 3, 2023. Ahead the FATF scheduled Mutual Evaluation Review (MER) to evaluate the anti-money laundering laws and financing of terrorism in India, a report emerged on the global scene, forwarded to the FATF by the Global NPO Coalition on FATF unveils that India has weaponised its laws to target and stifle non-profit organisations (NPOs) in the country. As for the FATF Anti-Money Laundering Regime, combating the abuse of NPOs remains one of prime objectives of the FATF recommendations. To censor its corruption, India introduced draconian laws.
Whereas the MER is an assessment of a country’s measures to combat money laundering and the financing of terrorism and proliferation of weapons of mass destruction. What is alarming that under the guise of combating terrorism and in order to achieve its ulterior designs, the Indian Government has leveraged the FATF recommendations regarding its incorporation of financial and counter-terrorism laws. The 46-page led report alleges that Indian committed gross financial anomalies are subject to FATF investigation. India is alleged of terror financing approximately $ 674.9 during the period (2009-2018).
The said report identifies multiple counts on which India is non-compliant with FATF standards and has failed to act upon the recommendations made by the intergovernmental organisation in the 2010 MER of India. In 2010, the MER specifically noted that India had no comprehensive assessment of its financial institutions. In addition, the MER had also recommended India undertake a detailed risk assessment of the Non Profit Organsation (NPO) sector for terrorist financing. Even 13 years after the recommendation, as per the findings, India has not made public whether or not it has carried out any work to identify such risks in the NPO sector. Instead, the report says: “It follows a one-size-fits-all approach that targets the entire NPO sector.
Crucially, by abusing these laws, the Indian authorities have failed to comply with both the FATF standards and international human rights law. It is alleged that the Indian authorities have exploited FATF’s recommendations which aim to prevent terrorist financing as part of a coordinated campaign to restrict civic space and stifle the rights to freedom of expression, association and peaceful assembly. Draconian laws introduced or adapted to this end include the Foreign Contribution (Regulation) Act (FCRA), the Unlawful Activities (Prevention) Act (UAPA) and the Prevention of Money Laundering Act (PML-A). Their actions have flouted both FATF’s standards and international human rights law, it is argued.
Moreover, “India’s banking institutions did not release the money to the beneficiary organisations citing security concerns flagged by the government,” the report identifies. These hurdles were faced by many domestic NGOs in spite of recipients having full regulatory clearance, including FCRA certification. According to the report, basing its findings on news articles and individual interviews, points out that central agencies like the Enforcement Directorate, the Central Bureau of Investigation and the National Investigating Agency (NIA) have become “a political tool and is being misused to target opposition leaders and civil society in India”.
And yet, among the alarming statistics is the number of cases registered by these agencies and the eventual success (or lack of) in proceeding with them in the courts. For instance, of the over 6,000 cases registered with the Enforcement Directorate (ED), only 25 have gone to trial. The number of cases handled by the Enforcement Directorate has dramatically increased after the 2010 MER, as India tripled its resources to empower the central agency.
India’s case of mutual assessment with India binds New Delhi to be accountable before the TAFT in the following main directions: (i)- address the technical shortcomings in the criminalization of both money laundering and terrorist financing and in the domestic framework of confiscation and provisional measures; (ii)-broaden the Customer Due Diligence (CDD) obligations with clear and specific measures to enhance the current requirements regarding beneficial ownership; (iii)-improve the reliability of identification documents, the use of pooled accounts, PEPs and non-face-to-face business; ensure that India Post, which recently became subject to the PMLA, effectively implements the AML/CFT requirements; (iv)-enhance the effectiveness of the STR reporting regime; enhance the effectiveness of the financial sector supervisory regime and ensure that India Post is adequately supervised;
(v)-ensure that the competent supervisory authorities make changes to their sanctioning regimes to allow for effective, proportionate and dissuasive sanctions for failures to comply with AML/CFT requirements; and (vi)-extend the PMLA requirements to the full range of DNFBP and ensure that they are effectively regulated and supervised. That said, for all countries identified as high-risk, the FATF calls on all members and urges all jurisdictions to apply enhanced due diligence and in the most serious cases, countries are called upon to apply counter-measures to protect the international financial system from the ongoing money laundering, terrorist financing and proliferation financing risks emanating from the country.
The FATF’s AML regime is profoundly based on the IMF-incorporated laws on money laundering that assessment: Each evaluation of financial sector strengths and weaknesses conducted under the Financial Sector Assessment Programme (FSAP) and the Offshore Financial Centres Program must include an assessment of the jurisdiction’s AML/CFT regime. Such assessments measure compliance with the FATF 40+9 Recommendations were adopted in 2012 in regard to an agreed Methodology for Assessing Compliance. Thus, India must face the FATF’s accountability criteria.
In a recently-held seminar titled “Unveiling the Future-FATF’s Impact on South Asia 2023,” organised by Quaid-i-Azam University (QAU), ahead FATF’s scheduled India’s review, the renowned speakers highlighting a “strong” nexus between crime and Indian politics, called for strict scrutiny of India’s involvement in state-terrorism, drug trade and illegal weapons to avert adverse impacts on the stability of South Asian region. The recent surge in terrorist events — including the Tirah valley attack — do have the links with the RAW’s terrorist network. The TPP has become a RAW’s terrorism proxy in Pakistan. Make no mistake, Pakistan’s security forces will topple any India-sponsored terrorist agenda against Pakistan.
—The writer, an independent ‘IR’ researcher-cum-international law analyst based in Pakistan, is member of European Consortium for Political Research Standing Group on IR, Critical Peace & Conflict Studies, also a member of Washington Foreign Law Society and European Society of International Law. He deals with the strategic and nuclear issues.
Email: [email protected]
views expressed are writer’s own.
