NEW DELHI: India has finally become a member of the elite global body Financial Action Task Force, which would allow the country to gain easy access to real-time exchange of information on money laundering and terror financing. “We have become a member of the FATF,” said a finance ministry official.
The FATF is an inter-governmental body set up by the G-7 for creating global policies and framework to combat money laundering and terror financing. Membership of this body is very select and was limited to only 33 countries and two organisations. India has become the 34th member country.
The membership makes the country a more attractive destination for foreign investments and allows easier market access for India’s financial institutions in the industrialised world, besides providing information on money laundering and terror financing.
The membership of this elite body is granted only after a very stringent evaluation process by the officials of the FATF. Assessment of India preparedness for the membership of this body, founded in 1989, began in December 2009. Prime minister Manmohan Singh had also given directions that India needed to gain membership of this body and had urged for necessary steps to meet FATF’s requirements. FATF has 49 action points for member countries to act upon.
India amended the Prevention of Money Laundering Act (PMLA) in line with the FATF recommendations. Overseas payment gateways such as Visa and Master, money changers and money transfer service providers were brought under the ambit of PMLA.
Insider trading and market manipulation, human trafficking, smuggling of migrants, piracy and environmental crimes, over-invoicing and under-invoicing under customs were also made offences under the PMLA, inviting stricter punishment.
However, membership to the body comes with its own challenges. “Becoming a member also brings its own gamut of challenges. These include effective and efficient KYC implementation, coordinated intelligence between various institutions and agencies, etc. We have cleared the evaluation but the road map to success has to be written and walked upon now,” said Navita Srikant, an expert on anti-money laundering laws.
The membership of FATF is very limited and another expansion in unlikely anytime soon. The recent expansions include Argentina, Brazil and Mexico joining in 2000, Russia and South Africa in 2003, and China in 2006. India and Korea have observer status in the body but are members of the Asia-Pacific Group, a FATF-style regional body. India became an observer in 2007.
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