Intel agencies have no strategy to tackle terror funding
This despite the Financial Action Task Force or FATF’s recommendations made four years ago. The FATF is an intergovernmental organization founded on the initiative of the G7 to develop policies to combat money laundering and terror financing in the international financial system.
In 2012, the FATF had made its recommendations to all G20 countries that they identify, assess and understand money laundering and terrorist financing risks and devise their anti-money laundering (AML) system accordingly. However, India failed to act on the FATF’s key recommendations despite the rising threat of terror funding and black money in the country.
“Without understanding where the risks lie, such as how domestic and foreign legal entities and arrangements can be used for money laundering purposes, no country can effectively regulate and detect money laundering-related offences. The risk assessments should be part of a longer policy process that provides a continuous update of the anti-money laundering regulatory framework and supervisory practices,” said Ashutosh Kumar Mishra, Executive Director, Transparency International India.
Highly placed sources in Economic Affairs Wing told Millennium Post that India should conduct risk assessment on black money. However, he pointed at the bigger flaw in our financial system and said: “India should first define Politically Exposed Persons (PEPs) in our law book under the prevention of money laundering act to enhance its enforceability as PEPs generally present a higher risk for potential involvement in bribery and corruption by virtue of their position and the influence that they may wield”
Speaking on the lack of awareness of PEP among bank officials, the enforcement official shared his personal experience and said: “While filling the application form, once I filled the PEP’s column. The bank official said that it was not meant for me. Then, I explained to him that it was meant for all politicians and bureaucrats.” He further said that had it been clearly defined in our law book for all bank officials we would not have seen Yadav Singh amassing multi-crore disproportionate assets.
“In 2009, the Reserve Bank of India had issued Master Circulars asking the banks to have a process for due diligence while dealing with accounts belonging to politicians, bureaucrats and their family members or close relatives. However, it is just an instruction,” the official said. “At a time when government is taking slew of measures to curb the black money, it should have acted on FATF’s recommendations and defined PEPs in our lawbook to keep a check on the source of income of politicians and bureaucrats,” the official further added.