History/Background:
Financial Action Task force (FATF) is an independent inter-governmental body having 39 members (37 jurisdictions and 2 organization) established by its Member jurisdictions for effective implementation of legal, regulatory and operational measures for combating money laundering, terrorist financing, combating financing of proliferation of weapons of mass destruction in countries across the world.
FATF and India:
India became a member of FATF in 2010. India is also a member of two FATF Style Regional Bodies (FSRBs)- Asia Pacific Group (APG) and Eurasian Group of Combating Money Laundering and Financing of Terrorism (EAG). The core work of FATF is to conduct Mutual Evaluation of its Members and to guide and assist SRBs to conduct Mutual evaluationof their respective member jurisdictions. India’s last Mutual Evaluation was conducted in the year 2010 and the next Mutual Evaluation is scheduled to begin in the year 2020-21 based on the revised standards of FATF(40 recommendations and 11 Immediate Outcomes). The Mutual Evaluation is a very comprehensive and in tense exercise and evaluates the antimony laundering and combating terror financing (AML/CFT) ability of a country’s financial sector.
Function of FATF Cell:
1. Consequent to the decision taken by the Cabinet Secretariat, , work relating to Financial Ac ion Task Force (FATF) and the related Inter-Ministerial Coordination has been transferred from Department of Economic Affairs (DEA) to Department of Revenue (DOR) (vide GOI Gazette Notification dated 9th Nov, 2017).
2. FATF Cell was constituted in DoR in 2017 and currently has four OSDs, 1 Director and four ASOs working under the supervision of and reporting to Join Secretary (Revenue) .
3. Coordination of work related to FATF Secretariat is the main functionof FATF Cell. As part of this, FATF Cell coordinated with agencies of India’s ML/TF infrastructure namely ED,FIU-IND,RBI, SEBI,IRDAL,MHA,NIA,MEA etc.
4. The Cell receives, circulates and discusses various papers/proposals related to FATF, .APG, EAG with all the concerned stakeholders within the country and comments of India are sent on these issues, keeping national interests in view.
5. The FATF Cell also nominates Indian delegates for foreign deputation concerning plenary/meetings namely plenaries and other important meetings of FATF, APG and EAG. Officers of the FATF Cell also participate in; these meetings and the delegation takes part oin the multilateral discussions on various issues.
6. Currently, the FATF Cell is coordinating the work related to India’s upcoming mutual evaluation. JS (Revenue) is the national coordinator and Director (FATF) is the Deputy national coordinator or the Mutual evaluation exercise.
7. An important part of FATF mutual evaluation is to conduct National Risk Assessment where risk of various sectors of the economy like banking, Insurance, Capital Markets, Designated Non-Financial Business and Profession sectors etc. are assessed periodically. FATF Cell, DoR functions as the coordinator for conducting India’s ML/TF NRA.
8. An Inter-Ministerial Coordination Committee has been constituted under the Chairpersonship of Revenue Secretary under s.72A of PMLA with the mandate of macro-level policy decision making on AML/CFT matters, operational co-operation between the Government, law enforcement agencies, the financial Intelligence Unit-India and the regulators or supervisors, and supervision of National Risk Assessment (NRA).
9. An AML/CFT Join Working Group has been created under the chairpersonship of Additional Secretary (revenue) for enhancing operational co-ordination among all stakeholders.
