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| India to become Financial Action Task Force member |
| Sapna Dogra Singh / New Delhi Jun 19, 2009, 00:05 IST |
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India might be able to secure membership of the Financial Action Task Force (FATF) only in 2010, as the scheduled mutual-evaluation with the international body, a pre-requisite for the membership, will happen only by 2009-end.
Getting membership of the FATF, an inter-government body formed to tackle money laundering and terrorist financing, would enable India to get international cooperation in such cases and would change perception of India abroad, said Arpinder Singh, Executive Director, Forensic Services, KPMG. Also, Indian banks would not have to face regulatory hurdles in setting up of overseas branches.
Money laundering is a global menace and as India becomes a prominent global business destination, FATF membership gains all the more importance, said Singh and added that it would also open the doors for Indian banks to expand globally.
Enactment of the amended Prevention of Money Laundering Act (PMLA), which was passed by Parliament recently to make the anti-money laundering regime more effective, was the final step for India to move towards getting the coveted membership of FATF next year.
Since February 2007, India has been participating as an observer at FATF, the first step in getting full membership of the FATF. India is also a member of the APG (the Asia-Pacific Group on Money Laundering), an associate member of FATF.
FATF, which was created in 1989 to generate the necessary political will to bring about legislative and regulatory reforms, has 34 members, including the US, the UK, Japan, Germany and China.
According to a finance ministry official, India and APG will do a mutual evaluation by this year-end. “We are sure to get the FATF membership when the next evaluation is done this December,” he added.
FATF review is done after every four years. India’s last FATF review was done in 2005.
In order to obtain full-member status, an observer has to undergo a successful mutual evaluation. According to industry officials, the Indian government has shown political commitment to implement the FATF 40+9 recommendations and to become an FATF member. Amending the PMLA, specifying that suspected cases of terror financing would be part of the suspicious transaction reporting system, setting up of a Financial Intelligence Unit (FIU) and making Know Your Customer (KYC) norms legally binding are necessary to become an FATF member.
There is a certain level of preparedness required to become an FATF member, which involves having anti-money laundering legislation and implementation of the same, said Neeta Potnis, a partner with Deloitte Haskins and Sells, and head of the Deloitte Financial Advisory Services’ anti-fraud and forensic practice in India.
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