'India yet to be largely compliant with international standards on NPOs'

NEW DELHI: India's regulatory framework for non-profit organisations is yet to be "Largely Compliant" with international standards for curbing money laundering and terror financing activities, according to the Financial Action Task Force ( FATF).

"While India has clearly made progress...its level of compliance is not yet equivalent to LC (Largely Compliant)," FATF has said with respect to non-profit organisations operating in the country.

It said the review of foreign contribution by non-profit organisations and the new Foreign Contribution (Regulation) Rules, 2010, together with outreach activities being undertaken, enable the authorities to focus on higher risk non-profit organisations.

FATF is an independent inter-governmental body that develops and promotes policies to combat money laundering and terrorist financing across the world.

Overall, FATF in the follow-up report 'Mutual Evaluation of India' has said the country has substantially addressed the deficiencies in its regulatory framework and has become largely compliant with global standards to tackle money laundering and terror financing activities.

Among other aspects, the grouping had earlier said that the country does not have periodic re-assessments by reviewing new information on the non-profit organisations' potential vulnerability to terrorist activities.

India in its response on the issue has informed the FATF that receipt of foreign funds by individual NGOs/NPOs (non governmental/non-profit organisations) is subject to rigorous scrutiny on a case-by-case basis.

However, according to FATF report released recently, "given that India's focus is on only one part of the NPO sector, this deficiency is only partially addressed".

Regarding the fact that majority of NPOs are not registered with government agencies, India has reported to FATF that banks are mandatorily required to disclose to the government in relation to receipt of a foreign contribution.

"These actions definitely contribute to focus authorities' attention on higher risk NPOs but it is not clear what percentage of the NPO sector is now registered.

"Consequently, it cannot be determined what extent this deficiency is addressed," the report noted.

Meanwhile, FATF has said the government has conducted outreach programmes to protect the NPOs sector from terrorist financing activities.