India may join war on terror financing

NEW DELHI: India could soon find a place at the important inter-governmental body set up for creating global policies and framework to combat money laundering and terror financing ��� the Financial Action Task Force (FATF).

New Delhi had recently tightened its anti-money laundering laws, and is leaving no stone unturned in preparedness for evaluation by the elite group���s team next month.

Membership of this body would allow India to gain easy access to real-time exchange of information on money laundering and terror financing. ���Importantly, it will allow India ��� a victim of terrorism ��� to raise a globally diplomatic pitch against export of terror from neighbouring nations,��� said a government official. Prime Minister Manmohan Singh has given clear directions to his government that India needs to be on this body. The entire process could take 6-8 months after the December assessment.

FATF is an inter-governmental body founded by the G-7 countries in 1989 for developing and promoting national and international policies to combat money laundering and terrorist financing.

���We have already carried out amendments in the Prevention of Money Laundering Act (PMLA), in line with the FATF recommendations. Most of the regulatory bodies and departments have also issued relevant rules and guidelines,��� the official said.

FATF had suggested 49 action points. The government has already allowed overseas payment gateways such as Visa and Master, brought money changers and money transfer service providers under the ambit of PMLA, imposing mandatory disclosures on these entities. Insider trading and market manipulation, human trafficking, smuggling of migrants, piracy and environmental crimes, over invoicing and under invoicing under customs have also become an offence under that PMLA, inviting stricter punishment.

These changes would also make the country a more attractive destination for foreign investments as well as allow easier market access for India���s financial institutions in the industrialised world.

The membership of FATF is very select, limited to only 35 countries at present. The recent expansions include Argentina, Brazil and Mexico joining in 2000, Russia and South Africa in 2003, and China in 2006. India and Korea have observer status in the body but are members of the Asia-Pacific Group, a FATF-style regional body. India became an observer in 2007.

���This will go a long way in changing India���s perception in the eyes of global investors as well as promote bilateral co-operation on information exchange among regulators,��� Navita Srikant, partner and national leader fraud investigation and dispute services, Ernst & Young, a firm that is assisting India���s Financial Intelligence Unit with the assessment process.

���However, the membership also comes with its challenges. India will have to improve the pace of implementing statutes to remain compliant,��� she added.

The membership of FATF is very select, limited to only 35 countries at present. The recent expansions include Argentina, Brazil and Mexico joining in 2000, Russia and South Africa in 2003, and China in 2006. India and Korea have observer status in the body but are members of the Asia-Pacific Group, a FATF-style regional body. India became an observer in 2007.