India faces money laundering, terrorist financing risk

Washington (PTI) India, which has witnessed
numerous terror attacks and still remains a potential target
for such strikes, faces significant money laundering and
terrorist financing risk, the IMF has warned.
The International Monetary Fund in its report "India:
Observance of Standards and Codes FATF Recommendations for
Anti-Money Laundering and Combating the Financing of
Terrorism" however appreciate the steps taken by New Delhi to
counter money laundering and terrorist financing.
The report dated July 2010 was released yesterday.
"As a leader among the emerging economies in Asia
with a strongly growing economy and demography, India faces a
range of money laundering and terrorist financing risks," it
said.
"The main sources of money laundering in India
result from a range of illegal activities committed within and
outside the country, mainly drug trafficking; fraud;
counterfeiting of Indian currency; transnational organised
crime; human trafficking; and corruption," the report said.
"India continues to be a significant target for
terrorist groups and has been the victim of numerous attacks.
There are no published figures of terrorist cells
operating in the country," it said.
Based on a threat assessment, India has identified
the following major sources for terrorist financing (FT):
funds/resources from organisations outside India, including
foreign NPOs; counterfeiting of currency; and criminal
activities including drug trafficking and extortion.
According to the report, since mid-2009, India has
increased its focus on money laundering and the use of the
money laundering (ML) provisions.
However, there are still some important and in some
instances, long-standing legal issues, such as the threshold
condition for domestic predicate offences, that remain to be
resolved.
Effectiveness concerns are primarily raised by the
absence of any ML convictions, it said.
Key recommendations made to India include the need
to: address the technical shortcomings in the criminalisation
of both money laundering and terrorist financing and in the
domestic framework of confiscation and provisional measures;
broaden the CDD obligations with clear and specific measures
to enhance the current requirements regarding beneficial
ownership.