India stands at a low 22nd rank in preparing and disseminating reports by banking and other monetary bodies for cases of illegal financing and shady transactions among 24 countries, accounting for 80 per cent of the world trade, says a study.
The survey, “Effectiveness of Financial Intelligence and Anti-Money Laundering Compliance in India”, has placed the country with 1,916 Suspicious Transaction Reports (STRs) last year at 22nd position, above Saudi Arabia (256) and the Mauritius (129).
The study, conducted by anti-fraud consultancy service provider Indiaforensic Consultancy Services (ICS), included G-20 countries, which account for over 90 per cent of the global gross national product. Russia notched up the first place with 5.76 million STRs, followed by the US (1.25 million), Canada (542,002), the UK (232,716), Japan (158,041), Korea (52,481), Poland (46,950) and Australia (29,089), among others.
“India contributes just 0.022 per cent of STRs filed globally. The top five countries, which were taken up for the study, contribute over 87 per cent to STRs filed globally,” ICS Director Pradeep Akkunoor said.
“An STR, at the basic level, is a lead to investigating agencies. It can lead to the culprit and the entire syndicate of illegal money supply,” a finance ministry official said.
“In India, the Financial Intelligence Unit-India collects STRs from different banking and financial agencies and after analysis passes it on to investigating and intelligence agencies for further probe and deterrent action,” the official said. The data pertain to 2007-08, except for Germany, Italy, Turkey and Thailand which gave figures of 2006-07.
STRs have been taken as the benchmark for the study as they have “a more or less uniform definition across the world, they are objectively measurable and a large number of countries have published this data”, Akkunoor said.
“With an average of 160 STRs filed per month by over 5,000 reporting entities, Indian entities are giving the least number of leads to the investigating agencies. According to the FIU-IND Annual Report 2007-08, only 34 STRs in the entire year were forwarded to the regulatory authorities such as the Reserve Bank, Sebi, IRDA and NHB,” the study said. “While with other countries, it is a problem of plenty — too many STRs — India is having too few,” Akkunoor said.
For comparison, Australia’s financial intelligence unit AUSTRAC disseminated 36,511 SUSTRs (for STRs) to partner agencies in 2007-08, FIU-IND did so with 935 STRs, he said. “The study assumes significance as the country is debating on various measures to curb money laundering attempts, especially after the November 26 Mumbai terror attacks,” Akkunoor said.
According to the study, there are more than 54,000 bank branches in India, but together they file less than 2,000 STRs.