Black Money – Domestic and International Efforts

Govt asks NBFCs to report details of clients to FIU-IND


Mains Paper 2: Polity | Statutory, regulatory & various quasi-judicial bodies

From UPSC perspective, the following things are important:

Prelims level: NBFCs, FIU-IND

Mains level: Money laundering and measures to curb it

NBFCs to register with the country’s financial intelligence unit

  1. The government has asked non-banking financial companies (NBFCs) to register with the country’s financial intelligence unit (FIU-IND)
  2. They have to report details of clients as per the requirements under the Prevention of Money Laundering Act

Why this move?

  1. As unregistered NBFCs remain outside the reporting ambit of FIU-IND, they pose a risk to the integrity of the country’s financial system
  2. Last month, FIU-IND had put out a list of nearly 9,500 NBFCs who were non-compliant
  3. The list has been published by FIU-IND to enable the bankers to conduct enhanced due diligence of the transactions carried out by such NBFCs


Financial intelligence unit (FIU-IND)

  1. Financial Intelligence Unit – India (FIU-IND) was set by the Government of India vide O.M. dated 18th November 2004 as the central national agency responsible for receiving, processing, analyzing and disseminating information relating to suspect financial transactions
  2. The main function of FIU-IND is to receive cash/suspicious transaction reports, analyze them and, as appropriate, disseminate valuable financial information to intelligence/enforcement agencies and regulatory authorities
  3. FIU-IND is also responsible for coordinating and strengthening efforts of national and international intelligence, investigation and enforcement agencies in pursuing the global efforts against money laundering and related crimes
  4. FIU-IND is an independent body reporting directly to the Economic Intelligence Council (EIC) headed by the Finance Minister
  5. FIU-IND is a multidisciplinary body with personnel being inducted from different organizations namely Central Board of Direct Taxes (CBDT), Central Board of Excise and Customs (CBEC), Reserve Bank of India (RBI), Securities Exchange Board of India (SEBI), Department of Legal Affairs and Intelligence agencies
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