India is poised to join the Financial Action Task Force's (FATF) prestigious group of top performers in fighting financial crimes on September 19, surpassing major global economies such as the US, China, Germany, Japan, and Canada. This recognition highlights India's leadership in preventing money laundering and terrorism financing, while promoting transparency in online transactions and credit card payments.

India’s High Standards Acknowledged

Officials revealed that India's comprehensive performance report on financial crime prevention earned commendation for meeting 37 out of 40 rigorous evaluation criteria set by the FATF. This places India among only three other G20 nations—the United Kingdom, France, and Italy—that have achieved similarly high standards.

India’s outstanding performance during FATF's mutual evaluation for 2023-24 placed the country in the "regular follow-up" category. This classification allows India to address its remaining areas for improvement on a voluntary basis. In contrast, nations in the "enhanced follow-up" group, such as the US, China, and Germany, must address all shortcomings and report progress annually.

Implications of the “Regular Follow-Up” Status

India's position in the "regular follow-up" category brings significant advantages. Countries in this group are only required to report progress once every three years, and this process is voluntary. This status boosts India's reputation as a secure financial environment, enhancing its appeal as an attractive destination for international investments.

Key benefits include stronger international cooperation in areas such as countering terrorist financing and asset recovery, greater access to global markets, reduced borrowing costs, and increased trust in India’s trade finance systems, all contributing to a more favorable investment climate.

FATF’s Assessment and Areas for Improvement

The FATF has praised India's "high level of technical compliance" with its standards, recognizing the country’s efforts in understanding money laundering and terrorism financing risks, fostering international cooperation, and ensuring access to ownership information. Additionally, India has been lauded for its effective use of financial intelligence and measures to counter-proliferation financing.

Despite this progress, the FATF recommended improvements in certain areas. It urged India to strengthen supervision and the implementation of preventive measures in specific non-financial sectors, and to address delays in prosecuting money laundering and terrorism financing cases.

India’s Role in Enhancing Global Financial Transparency

Looking forward, India is expected to play a key role in the FATF’s upcoming focus on setting standards for the transparent and efficient disclosure of parties involved in online transactions, including payment aggregators and credit/debit card usage.

Stakeholder consultations and industry outreach will precede the finalization of these standards. The Reserve Bank of India (RBI) is backing enhanced mandatory disclosures and increased information exchange with FATF member countries. Industry giants such as Visa and MasterCard are also actively participating in these discussions.

Established in 1989, the FATF is the leading global organization setting standards to combat financial crimes. With 38 member countries and two regional bodies, it ensures compliance through a strict "mutual evaluation" process.

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