FATF Praises India’s AML Progress but Calls for Enhanced NGO Oversight

India has received positive recognition from the Financial Action Task Force (FATF) for its advancements in anti-money laundering (AML) and countering the financing of terrorism (CFT). The FATF, the global standard-setter for AML/CFT efforts, highlighted India's strong progress in clamping down on illicit financial activities and its efforts in fostering international cooperation. India's compliance with FATF recommendations, particularly in areas like asset freezes and seizures, has been applauded.

However, despite these achievements, the FATF has called for greater oversight of the non-governmental organization (NGO) sector. NGOs are often vulnerable to exploitation by terrorist organizations and criminals who seek to use these entities to funnel funds illicitly. The FATF urged India to adopt a risk-based approach in monitoring and regulating NGOs to prevent their misuse for financing terrorism.

The report underlines the importance of maintaining transparency and fairness in India’s AML/CFT regulatory framework, particularly concerning the supervision of NGOs. This evaluation forms part of a broader assessment of global efforts to combat financial crimes.

In other developments, the FATF has recently added Venezuela to its high-risk "blacklist" of countries due to significant deficiencies in combating financial crime. On the other hand, Turkey was removed from the FATF's "grey list" after making considerable improvements in AML/CFT compliance, while Monaco was newly added to the grey list.

India’s progress in addressing financial crimes has been evident through the FATF’s positive review. However, to sustain its global reputation and bolster confidence in its financial institutions, India must continue strengthening its action plan, particularly in enhancing NGO supervision to mitigate risks in the non-profit sector.