Regional insurgencies in the Northeast and North of India -- matter of concern, says global anti-money laundering body Financial Action Task Force (FATF)

 “India faces a disparate range of terrorism threats, categorised into six different theatres. 

These can be summarised as theatres associated with ISIL or AQ-linked extremist groups active in and around Jammu and Kashmir, whether directly or via proxies or affiliates, as well as other separatist movements in the region," the FATF said.

It also talks about other ISIL and AQ cells, their affiliates, or radicalised individuals in India; regional insurgencies in the Northeast and North of India; and left-wing extremist groups seeking to overthrow the government. 

"The most significant terrorism threats appear to relate to ISIL or AQ-linked groups active in and around Jammu and Kashmir,” FATF said.  

In its India’s mutual evaluation report, the FATF said that the terrorist financing risks are generally closely linked with terrorism risks, with flows of funds or provision of other assets constrained to within India or surrounding countries.

Praising India’s performance in fighting against the anti-money laundering, the FATF report said that New Delhi has implemented an anti-money laundering (AML)/counter-terrorist financing (CFT) system that is effective in many respects and particularly good results are being achieved in the areas of money laundering/TF risk understanding.

There has been ensured 'national coordination and cooperation'; use of financial intelligence for money laundering, predicate offences and TF investigations; depriving criminals of their assets; preventing misuse of legal structures; the implementation of targeted financial sanctions related to proliferation; and international cooperation.

FATF also said that there are scope of major improvements to strengthen the prosecution of money laundering and terror funding, protecting the non-profit sector from terrorist abuse, supervision and implementation of preventive measures.

India achieved major success in the last two to three years before the FATF on-site visit, according to the report.  

"Despite the size and institutional complexity of the Indian system, Indian authorities cooperate and coordinate effectively on matters dealing with illicit financial flows, including the use of financial intelligence. India also achieved positive results in international cooperation, asset recovery and implementing targeted financial sanctions for proliferation financing," the report states. 

Indian authorities also have a comprehensive understanding of the money laundering, terrorism and proliferation financing risks, it says, but also points to a need for sharing insights on them with stakeholders.

The report says there is a good understanding of risk and application of preventative measures in the financial sector, especially by commercial banks, but less so by some other smaller financial institutions.

"Following the assessment, India is placed in 'regular follow-up' and, in line with procedures, will report back to the Plenary in three years," the report says. 

The evaluation noted that India is the largest country in the world by population and has the largest diaspora. It is also a lower-middle-income country with one of the world's fastest-growing economies, which is currently the fifth-largest economy in the world.  India's main money laundering risks, the report says, originate from illegal activities within the country - relating primarily to fraud, including cyber-enabled fraud, corruption and drug trafficking. 

India pursues money laundering cases related to fraud and forgery in line with predicate crime (a criminal act that is a component of a larger crime) risks to a large extent, the report says, but needs to do more for some other offences such as human trafficking and drug trafficking. The country, it said, needs to address the backlog of money laundering cases pending conclusion of court processes.

Another area pointed out by the report is a need to ensure that measures aimed at preventing the non-profit sector from being abused for terrorist financing are implemented in line with a risk-based approach, including by conducting outreach to such organisations. 

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