From UPSC perspective, the following things are important :
Prelims level : FATF
Mains level : Not Much
Central agencies, including the Financial Intelligence Unit (FIU) and the Directorate of Revenue Intelligence (DRI), have begun preparations for the Financial Action Task Force’s (FATF) mutual evaluation process of India.
What is the news?
- India is due to undergo the mutual evaluation process in the second half of 2022, which will assess the country’s compliance with international anti-money laundering and counter-terror financing standards.
What is FATF?
- FATF is an intergovernmental organization founded in 1989 on the initiative of the G7 to develop policies to combat money laundering.
- The FATF Secretariat is housed at the OECD headquarters in Paris.
- It holds three Plenary meetings in the course of each of its 12-month rotating presidencies.
- As of 2019, FATF consisted of 37 member jurisdictions.
India’s say in FATF
- India became an Observer at FATF in 2006. Since then, it had been working towards full-fledged membership.
- On June 25, 2010, India was taken in as the 34th country member of FATF.
What is FATF’s mutual evaluation process?
- The mutual evaluation process is a review of a country’s legal and institutional framework to combat money laundering and terrorist financing, as well as its implementation of measures to prevent these crimes.
- During the process, the FATF assesses a country’s compliance with its 40 recommendations on anti-money laundering and counter-terror financing, as well as the level of effectiveness of these measures in practice.
- The outcome of the mutual evaluation is a report that highlights a country’s strengths, weaknesses, and areas for improvement, and assigns a rating based on the level of compliance and effectiveness.
How will FATF evaluate India?
- The FATF’s evaluation will cover a wide range of areas, including India’s legal framework, regulatory system, law enforcement efforts, and international cooperation.
- Central agencies have been working to ensure that India’s anti-money laundering and counter-terror financing laws are in line with international standards, and that their implementation is effective.
Significance of this evaluation
- The outcome of the evaluation will be a report that highlights India’s strengths, weaknesses, and areas for improvement, and assigns a rating based on the level of compliance and effectiveness.
- The mutual evaluation process is an important tool in the global fight against money laundering and terrorist financing.
- Its outcome can have significant implications for a country’s access to international financial markets and its reputation in the global community.
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