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'Addressed Shortfalls In Its Black Money Fight'

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In a major boost to measures being taken by India against money laundering and terror financing activities, the Financial Action Task Force (FATF) has said the country has substantially addressed the deficiencies in its regulatory framework and has become largely compliant with global standards in this regard.

FATF is an inter-governmental body that sets standards, and develops and promotes policies to combat money laundering and terrorist financing for countries across the world.

With a substantial improvement in India's regulatory provisions, FATF has also decided to remove the country from its regular follow-up process for determining its compliance to for anti-money laundering and countering financing of terrorism (AML/CFT) regulations.

The move would help India get greater support from international authorities in its fight against black money and check the illicit flow of funds from and to the country.

In its latest report on India, FATF said it has "recognised that India had made significant progress in addressing deficiencies identified in its mutual evaluation report (of June 2010) and decided that the country should be removed from the regular follow-up process".

India was earlier placed in the regular follow-up process for mutual evaluation purposes because of partially compliant (PC) ratings on certain core and key Recommendations.

"Since the publication of the mutual evaluation report (in June 2010), India has been reporting back to the FATF on a regular basis on the progress made in the implementation of its Action Plan to strengthen Indias AML/CFT System. India has made significant progress with regard to the implementation of this action plan," FATF said.

Among various improvements in the past three years, India has rectified "nearly all of the technical deficiencies identified with respect to the criminalisation of money laundering and terrorist financing and the implementation of effective confiscation and provisional measures".
The FATF said that India's compliance with global standards for AML/CFT regulations have reached a satisfactory level, but there remains an "effectiveness issue in the process that leads from accusation to conviction" in the cases of suspected money laundering and terror funding activities.

The number of money laundering investigations in India has increased from 798 at the end of 2009 to 1,561 by April 2013.

Besides, the number of persons accused of terror financing and the number of cases under probe has also increased and stood at 470 and 143 respectively between 2006 and March 2013.

"India is taking various actions with the aim to effectively implement the Prevention of Money Laundering Act.

As a result, an increase in money laundering investigations and prosecution complaints can be observed. However, the absence of any money laundering conviction remains a serious effectiveness issue," FATF said.

With regard to the terror financing cases, FATF said that the number of persons convicted has remained low, namely five in total between 2006 and March 2013, while there have been no new convictions since April 2011.

"In addition, there were no cases under trial in 2012, These figures reflect an effectiveness issue in the process that leads from accusation to conviction in India," FATF said.

"Even though some improvement regarding effectiveness since the 2010 Mutual Evaluation Report (of regulatory checks in India) can be observed, the deficiency regarding effectiveness remains," FATF said.

With respect to the suspicious transactions reporting regime, the Financial Intelligence Unit has also enhanced its outreach programme to provide guidance to the financial sector on their reporting obligations, and has engaged in extensive compliance monitoring.