New Delhi: The Financial Action Task Force (FATF) has issued a warning to India regarding the risks of money laundering and terror financing, attributing these challenges primarily to domestic mismanagement.

According to Kashmir Media Service, the FATF’s recent assessment highlighted concerns related to fraud, including cyber-enabled fraud, corruption, and drug trafficking, which are predominant risks within the country’s current anti-money laundering and counter-terrorist financing framework. The international watchdog emphasized the critical nature of these challenges during its review of India’s measures to combat such illicit activities.

The report acknowledges India’s efforts against money laundering associated with fraud and forgery, but notes deficiencies in handling other serious offenses such as human trafficking and drug trafficking. The FATF pointed out the need for India to address the significant backlog of money laundering cases that are pending in its courts and stressed the importance of concluding prosecutions and effectively sanctioning those financing terrorism, particularly in light of threats from groups like ISIL and Al Qaeda.

The FATF also urged India to enhance the implementation of cash transaction restrictions for dealers in precious metals and stones, considering the sector’s substantial role in the economy. It called for a risk-based approach to education and prevention of abuse in the non-profit sector for terrorist financing, emphasizing direct outreach to these organizations about their specific risks.

Furthermore, the report highlighted the need for better compliance regarding politically exposed persons (PEPs) within India, suggesting that financial institutions and other entities need to fully implement required measures.

In conclusion, while India has made strides in addressing some areas of financial crime, the FATF has placed the country on regular follow-up and will reassess the situation in three years as part of its ongoing monitoring processes.