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Source – This post on the Performance of India in FATF’s Mutual Evaluation Report has been created based on the article “India achieves ‘outstanding outcome’ in FATF evaluation” published in “The Hindu” on 29 June 2026.
Why in the news?
Recently, India has achieved an outstanding outcome in the mutual evaluation conducted during 2023-24 by the Financial Action Task Force (FATF).
About Mutual Evaluation Report of India
1. The Mutual Evaluation Report of India is released by the Financial Action Task Force (FATF).
2. It was adopted at the FATF plenary held in Singapore.
3. India is now in the ‘regular follow-up’ category. It is a prestigious group that includes only four other G20 countries.
Key highlights of the report:
As per the report, India has achieved “high level of technical compliance”, against the requirements put forward by FATF for fighting money laundering.
1. Reducing ML/TF Risks: India has effectively tackled the dangers of money laundering and terrorist financing, including crimes related to corruption, fraud, and organized crime.
2. Moving to a Digital Economy: India has made a big shift from cash to digital transactions. This change helps reduce the risks of Money Laundering and Terror Funding.
The use of the JAM (Jan Dhan, Aadhaar, Mobile) Trinity and strict rules on cash transactions have increased financial inclusion (more people using banking services) and made transactions easier to track.
3. Increased Financial Inclusion: With more people using digital transactions thanks to the JAM Trinity, ML and TF risks have decreased.
Benefits for India’s Economy:
i) It shows that India’s financial system is stable and trustworthy, which helps attract investors and improves access to global financial markets.
ii) This also supports the expansion of the Unified Payments Interface (UPI) which is India’s fast payment system worldwide.
Suggestions for further improvements by FATF
i) India needs to address delays related to concluding money laundering and terrorist financing prosecutions and ensure counter terrorist financing measures are implemented.
ii) Better Supervision in Non-Financial Sectors: India needs to improve how it monitors and enforces anti-ML and TF rules in non-financial sectors, like real estate and precious metals.
iii) Faster Prosecutions: There are delays in concluding cases related to Money Laundering and Terror Funding, which need to be addressed to ensure justice is served promptly.
iv) Protecting Non-Profit Organizations: India needs to make sure that measures to protect NPOs from being used for Terror Funding are effective. This involves educating NPOs about the risks and how to avoid being exploited for Terror Funding.
UPSC Syllabus: International organisation, Internal Security
