_________________________________________________________
AML News / Updates
October 10, 2010 - The Global Forum on Transparency and Exchange
of Information for Tax Purposes has issued a phase one peer review for
India
View Review.....
28 June, 2010 - India becomes a full member of FATF - mutual
evaluation approved.
Read More......
Links:
Worldwide AML Legislation (International Bar Association)
Financial Intelligence Unit-India (FIU-IND)
AML News / Updates
October 10, 2010 - The Global Forum on Transparency and Exchange
of Information for Tax Purposes has issued a phase one peer review for
India
View Review.....
28 June, 2010 - India becomes a full member of FATF - mutual
evaluation approved.
Read More......
Links:
Worldwide AML Legislation (International Bar Association)
Financial Intelligence Unit-India (FIU-IND)
|
|
Sanctions:
None applicable, however the UK government has had a stated
policy on exports to nuclear and nuclear-related end users in
India and Pakistan since March 2002. For further information
please click here.
____________________________________________________
Offshore Jurisdiction Blacklists:
Information unavailable.
____________________________________________________
US State Department Money Laundering Report - 2012:
India is a regional financial center, with a rapidly growing economy
and well-developed formal and informal financial systems. India’s
extensive informal economy and remittance systems, porous
borders, persistent corruption, and onerous tax administration
and currency controls contribute to its vulnerability to economic
crimes (including fraud, cyber crime, and identity theft), money
laundering, and terrorist financing. Tax avoidance and the
proceeds of economic crimes are the mainstays of money
launderers in India, but laundered funds are also derived from
narcotics trafficking and trafficking in persons, transnational
organized crime, illegal trade, and corruption. Transnational
criminal organizations use offshore corporations and trade-based
money laundering to conceal the proceeds of crime. Criminal
networks exchange high-quality counterfeit currency for genuine
notes, which facilitates money laundering.
India’s porous borders and location between heroin-producing
countries in the Golden Triangle and Golden Crescent make it a
frequent transit point for drug trafficking. Proceeds from Indian-
based heroin traffickers re-enter the country via bank accounts,
the hawala system, and money transfer companies.
India is also a significant target for both domestic and foreign
terrorist groups. Several indigenous terrorist organizations coexist
in various parts of the country; many are linked to external
terrorist groups with global ambitions. Terrorist groups often use
hawaladars and currency smuggling to move funds from external
sources to finance their activities in India. Indian authorities also
report they have seized drugs sold by India-based insurgents to
production and/or trafficking groups in neighboring countries.
High-level corruption both generates and conceals criminal
proceeds. Illicit funds are often laundered through real estate,
educational programs, charities, and election campaigns.
Companies use trade-based money laundering to evade capital
controls.
India licenses seven offshore banking units (OBUs) to operate in
Special Economic Zones (SEZs), which were established to
promote export-oriented commercial businesses, including
manufacturing, trading, and services (mostly information
technology). As of November 2011, there were 143 SEZs in
operation, with another 582 SEZs formally approved. Customs
officers control access to the SEZs. OBUs essentially function as
foreign branches of Indian banks, but with defined physical
boundaries and functional limits. OBUs are prohibited from
engaging in cash transactions, can only lend to the SEZ
wholesale commercial sector, and are subject to the same anti-
money laundering/counter-terrorist financing (AML/CFT)
provisions as the domestic sector.
For additional information focusing on terrorism financing, please
refer to the Department of State’s Country Reports on Terrorism,
which can be found here: http://www.state.gov/j/ct/rls/crt/
Do Financial Institutions engage in currency transactions related
to international narcotics trafficking that include significant
amounts of U.S. currency; currency derived from illegal sales in
the U.S.; or that otherwise significantly affect the U.S.: NO
Criminalization of Money Laundering:
All serious crimes approach or list approach to predicate crimes:
List approach
Legal persons covered: criminally: YES civilly: YES
Know-your-customer (KYC) rules:
Enhanced due diligence procedures for PEPs: Foreign: YES
Domestic: YES
KYC covered entities: Banks and merchant banks; insurance
companies; housing and non-banking finance companies;
casinos; payment system operators; authorized money changers
and remitters; chit fund companies; charitable trusts that include
temples, churches and non-profit organizations; intermediaries;
stock brokers; sub-brokers; share transfer agents; trustees,
underwriters, portfolio managers and custodians; investment
advisors; depositories and depository participants; foreign
institutional investors; credit rating agencies; venture capital
funds; collective schemes including mutual funds; and the post
office
Suspicious Transaction Reporting (STR) Requirements:
Number of STRs received and time frame: 20,698 from April 2010
to March 2011
Number of CTRs received and time frame: 8,687,107 from April
2010 to March 2011
STR covered entities: Banks and merchant banks; insurance
companies; housing and non-banking finance companies;
casinos; payment system operators; authorized money changers
and remitters; chit fund companies; charitable trusts that include
temples, churches and non-profit organizations; intermediaries;
stock brokers; sub-brokers; share transfer agents; trustees,
underwriters, portfolio managers and custodians; investment
advisors; depositories and depository participants; foreign
institutional investors; credit rating agencies; venture capital
funds; collective schemes including mutual funds; and the post
office
Money Laundering Criminal Prosecutions/Convictions:
Prosecutions: 36 from April 2006 to March 2011
Convictions: Zero
Records exchange mechanism:
With U.S.: MLAT: YES Other mechanism: YES
With other governments/jurisdictions: YES
India is a member of the Financial Action Task Force (FATF), as
well as two FATF-style regional bodies, the Asia/Pacific Group on
Money Laundering (APG) and the Eurasian Group on Combating
Money Laundering and Terrorist Financing (EAG). Its most recent
mutual evaluation can be found here: www.fatf-gafi.
org/dataoecd/60/56/45746143.pdf
Enforcement and implementation issues and comments:
India is strongly committed to implementing an effective AML/CFT
framework and has taken numerous steps to improve its AML/CFT
regime and bring it into compliance with international standards. In
2011, the Government of India (GOI) drafted amendments to the
Prevention of Money Laundering Act (PMLA) and the Unlawful
Activities (Prevention) Act that would expand the scope of India’s
AML/CFT regime to cover several designated non-financial
businesses and professions, including jewelers and real estate
firms. The draft amendments also would address deficiencies with
respect to the criminalization of money laundering and terrorist
financing and to confiscation and provisional measures, including
by making money laundering a stand-alone offense and allowing
authorities to attach property even if the predicate offense is not
proven.
In 2011, the financial services regulators issued an extensive
range of enforceable circulars improving customer due diligence
requirements, including with respect to customers and
transactions involving countries with “strategic AML/CTF
deficiencies.” In addition, the FIU enhanced outreach to the
financial sector on suspicious transaction reporting, revised the
cash and suspicious transaction reporting format for non-banking
financial companies, and streamlined an electronic reporting
format for CTRs and STRs, resulting in a significant increase in
the number of STRs filed with respect to both money laundering
and terrorist financing.
Despite these important steps, deficiencies remain. Since
Parliament has not yet approved the draft PMLA amendments,
India lacks both effective criminal asset forfeiture provisions and
conspiracy laws. Moreover, effective implementation of the current
law remains a significant concern. Despite increased law
enforcement resources, as of April 2011, there were still no
money laundering convictions or confiscations. Law enforcement
typically opens substantive criminal investigations reactively, after
an offense is discovered, and seldom initiates proactive analysis
and long-term investigations. At the prosecutorial level, there is
an appropriate focus on terrorist financing; however, this effort
has yet to be followed up convincingly by convictions and firm
case law. Furthermore, while the GOI has taken action against
certain hawala activities, these successes generally stem from
prosecuting primarily non-financial businesses that conduct
hawala transactions on the side.
Levels of training and expertise in financial investigations
involving transnational crime or terrorist-affiliated groups vary
widely among the federal, state, and local levels and depend on
the particular jurisdiction’s financial capabilities and perceived
necessities. U.S. investigators have had limited success in
coordinating the seizure of illicit proceeds with their GOI
counterparts. While intelligence and investigative information
supplied by U.S. investigators have led to numerous money
seizures, a lack of follow-through on investigational leads has
prevented a more comprehensive offensive against offenders and
related groups.
The GOI is taking steps to increase financial inclusion through
“small [banking] accounts”, but should consider further facilitating
the development and expansion of alternative money transfer
services, including mobile banking, domestic funds transfer, and
foreign remittances. Such an increase in lawful, accessible
services would allow broader financial inclusion of legitimate
individuals and entities and reduce overall AML/CFT
vulnerabilities, particularly in the rural sector, by shrinking the
informal network. The GOI also should establish a clear safe
harbor provision for those filing STRs in good faith.
In May 2011, India ratified both the United Nations Convention
against Corruption and the United Nations Convention against
Transnational Organized Crime.
____________________________________________________
US State Dept Narcotics Report 2012 (introduction):
India is strategically located between Southwest Asia (the Golden
Crescent) and Southeast Asia (the Golden Triangle), the two main
sources of illicit opium. The country's geographic location makes it
an attractive transshipment area for heroin bound for Europe,
Africa, Southeast Asia and North America. In addition, India is
authorized by the international community to produce licit opium
for pharmaceutical uses. Licit opium is grown in the states of
Madhya Pradesh, Rajasthan and Uttar Pradesh. India is also a
major chemical precursor producer, including acetic anhydride
(AA), ephedrine, and pseudoephedrine. India has become one of
the main sources of ketamine. Ketamine, a veterinary anesthesia,
is not under international control, and the number of significant
ketamine seizures at major airports, in sea containers and in
parcels continues to increase. India also manufactures organic
and synthetic licit opiate/psychotropic pharmaceuticals (LOPPS).
Destined for licit sales in markets around the world, these items
(raw opium, chemical precursors, ketamine, LOPPS) are
vulnerable to diversion, including through illegally operating
Internet pharmacies. Licit and illicit manufactured
opiate/psychotropic pharmaceuticals are often diverted in small
quantities to the U.S. as illegal "personal use" shipments. There is
also evidence that opium is grown illicitly in India, especially in the
northeastern regions.
India continues to be a main source of illicitly manufactured
amphetamines and methaqualone. Seizures of amphetamines by
law enforcement authorities continue to increase; seizures of
methaqualone have varied widely, from 2,382 kilograms in 2008,
33 kilograms in 2009, and zero kilograms in 2010. India is a party
to the 1988 UN Drug Convention.
For Full report, click here
____________________________________________________
US State Dept Trafficking in Persons Report 2011
(introduction):
(Tier 2)
India is a source, destination, and transit country for men, women,
and children subjected to forced labor and sex trafficking. The
forced labor of millions of its citizens constitutes India’s largest
trafficking problem; men, women, and children in debt bondage
are forced to work in industries such as brick kilns, rice mills,
agriculture, and embroidery factories. A common characteristic of
bonded labor is the use of physical and, in many instances,
sexual violence – including rape – as coercive tools, in addition to
debt, to maintain these victims’ labor. Ninety percent of trafficking
in India is internal, and those from India’s most disadvantaged
social economic strata including the lowest castes are particularly
vulnerable to forced or bonded labor and sex trafficking. Children
are also subjected to forced labor as factory workers, domestic
servants, beggars, agricultural workers, and, to a lesser extent, in
some areas of rural Uttar Pradesh, as carpet weavers.
Women and girls are trafficked within the country for the purposes
of forced prostitution. Religious pilgrimage centers and cities
popular for tourism continue to be vulnerable to child sex tourism.
Indian nationals engage in child sex tourism within the country
and, to a lesser extent, in other countries. Sex trafficking in some
large cities continued to move from red light areas to road side
small hotels, and private apartments. Women and girls from Nepal
and Bangladesh are also subjected to sex trafficking in India.
Maoist armed groups known as the Naxalites forcibly recruited
children into their ranks.
There are also victims of labor trafficking among the hundreds of
thousands of Indians who migrate willingly every year to the
Middle East and, to a lesser extent, the United States, Europe,
and other countries, for work as domestic servants and low-skilled
laborers. In some cases, such workers are lured from their
communities through fraudulent recruitment, leading them directly
to situations of forced labor, including debt bondage; in other
cases, high debts incurred to pay recruitment fees leave them
vulnerable to exploitation, conditions of involuntary servitude, and
physical and sexual abuse by unscrupulous employers in the
destination countries. Nationals from Bangladesh and Nepal are
trafficked through India for forced labor and commercial sexual
exploitation in the Middle East. Some Indians have been
investigated and convicted by foreign governments for human
trafficking. Over 500 guestworkers from India filed a class action
lawsuit in a U.S. court alleging that they were held in forced labor
in Texas and Mississippi.
The Government of India does not fully comply with the minimum
standards for the elimination of trafficking; however, it is making
significant efforts to do so. The Ministry of Home Affairs’ launched
the government’s “Comprehensive Scheme for Strengthening Law
Enforcement Response in India,” which seeks to improve India’s
overall law enforcement response to all forms of trafficking,
including bonded labor, and established at least 87 new Anti
Human Trafficking Units (AHTUs). The government also ratified
the 2000 UN TIP Protocol. The government took important law
enforcement steps by convicting several bonded labor offenders
with sentences between five and 14 years and improved rescue
and rehabilitation efforts for bonded laborers. Overall law
enforcement efforts against bonded labor, however, remained
inadequate, and the complicity of public officials in human
trafficking remained a serious problem, which impeded progress.
For full report click here
____________________________________________________
US State Dept Terrorism Report 2010
Overview: In 2010, India continued to see a reduction in the
number of deaths attributable to terrorist violence, as it ramped
up its counterterrorism capacity building efforts and increased
cooperation with the international community, especially the
United States. However, the loss of nearly 1,900 lives (civilian,
security forces, and terrorists) still made India one of the world’s
most terrorism-afflicted countries. Sustained violence in Kashmir
over a six-month period and attempted infiltrations from Pakistan
across the Line of Control remained serious concerns for the
Indian government. In May, an Indian court convicted and
sentenced to death the lone surviving attacker of the 2008
Mumbai terrorist attacks. A February bombing in Pune killed 17,
and a December improvised explosive device (IED) explosion in
Varanasi killed two people. The perpetrators for both attacks
remained at large at the end of the year.
The Maoists/Naxalites, whom Prime Minister Singh has called India’
s greatest internal security threat, were active in 2010, especially
in the eastern part of the country. They increasingly directed their
attacks at Indian security forces but also used IEDs to blow up
railways and other infrastructure projects. Indian security forces
successfully ensured security at a number of major events,
including the 2010 Hockey World Cup and the 2010
Commonwealth Games, without incident. Throughout 2010, Indian
authorities arrested numerous suspected militants, uncovered
several arms caches, continued to develop a new internal security
force, implemented improved border security measures mainly
along the Pakistani border, and tightened laws to counter terrorist
financing. In July, the U.S.-India Counterterrorism Cooperation
Initiative was signed, which set the stage for greater cooperation
on counterterrorism issues between the two governments.
2010 Terrorist Incidents: On November 22, the Government of
India reported that at least 577 civilians had been killed, while
more than 260 Special Forces personnel had also lost their lives
across the country due to Naxalite violence in 2010. During that
same period, at least 137 members of the Communist Party of
India (CPI)-Maoist (aka the Naxalites) were killed. Between
February 7 and February 9, the CPI-Maoist called a three-day
strike. Railway tracks were blown up, railway stations attacked,
bombs were placed on railway property, and railway officials were
assaulted. Terrorist attacks in 2010 included:
* On February 13, 17 persons, including two foreigners, were
killed and over 40 injured in a bomb blast in the popular German
Bakery near the Osho Ashram in Pune.
* On April 17, two crude bombs exploded in quick succession
outside the M. A. Chinnaswamy cricket stadium in Bangalore,
minutes before an Indian Premier League match was to begin,
leaving 15 persons injured and creating panic in the packed
venue. A third crude bomb was found near another gate to the
stadium.
* On May 17, an IED was used to blow up a civilian bus killing 15
civilians and 16 policemen/Special Police Officers (SPOs) and
injuring 12 civilians and an additional 16 policemen/SPOs in
district Dantewada, Chhattisgarh.
* On May 28, the Howrah-Kurla-Jnaneshwari Express train was
derailed after terrorists removed a portion of the track. The
derailment led to a collision with a goods train, leading to the
death of 147 persons and injuries to over 150. Maoist/Naxalites
were believed responsible for the derailment.
* On September 19, two gunmen on a motorcycle opened fire at
the entrance of Jama Masjid, a famous mosque and tourist site in
old Delhi, injuring two tourists from Taiwan.
* On December 7, two persons including a woman and an 18-
month old child were killed and 30 injured in a blast in Varanasi,
Uttar Pradesh. The Indian Mujahedin claimed responsibility for the
blast.
Legislation and Law Enforcement: In January, a Delhi court
sentenced two Lashkar-e-Tayyiba (LeT) militants to seven years
of imprisonment for possession of the explosive RDX in
connection with a conspiracy to carry out a suicide attack at the
Indian Military Academy in 2005. In May, the Special Sessions
Court in Mumbai sentenced to death the lone surviving LeT
militant involved in the 2008 Mumbai terrorist attacks, Mohammad
Ajmal Amir Kasab.
Throughout the year, India worked to improve its counterterrorism
readiness. The Ministry of Home Affairs Annual Report 2009-2010
stated that in response to the November 26, 2008 Mumbai
terrorist attacks, Quick Reaction Teams have been set up in four
regional hubs (Mumbai, Kolkata, Chennai, and Hyderabad) with
1,086 trained personnel and an additional team on standby at the
Delhi airport, ready to deploy during an emergency.
The Indian government continued erecting fences along its
borders with Bangladesh and Pakistan.
Countering Terrorist Finance: The on-site visit for India’s Financial
Action Task Force (FATF) mutual evaluation concluded in
December 2009, and the report was adopted by the FATF plenary
in June 2010. At the FATF plenary, the FATF also granted India
full membership. India presented a detailed action plan covering
the period June 2010 to March 2012 to better meet FATF’s anti-
money laundering/countering terrorist finance standards. FATF
concluded that as of October 2010, India was on track with its
action plan. India’s Financial Intelligence Unit (FIU) is a member of
the Egmont Group and regularly shared information with foreign
FIUs over the Egmont Secure Web on terrorist financing cases.
Regional and International Cooperation: On July 23, the India-U.
S. Counterterrorism Cooperation Initiative was signed. This
initiative allows for greater information-sharing, and the sharing of
best practices in the areas of investigations, forensic science,
countering terrorist finance, cyber security, mass transit and rail
security, port and border security, and maritime security.
During his November visit to India, President Obama and Indian
Prime Minister Singh announced the establishment of the U.S.-
India Homeland Security Dialogue (HSD). The Indian Ministry of
Home Affairs and the United States Department of Homeland
Security will co-lead the HSD, which will provide a forum for
sustained U.S.-India engagement on homeland security issues to
facilitate security cooperation.
During the December 2010 visit of French President Nicolas
Sarkozy, France and India agreed to enhance their operational
cooperation to accelerate the process of extradition requests,
combat money laundering for terrorism, and enforce international
sanctions regime against terrorist organizations. Both countries
reinforced the importance of adhering to sanctions against al-Qa’
ida and the Taliban as established by UNSCR 1267.
Countering Radicalization and Violent Extremism: Countering
extremist ideology has become an important part of India’s
counterterrorism strategy. The Ministry of Home Affairs continued
its Surrender-cum-Rehabilitation policy, which encouraged
misguided youths and militants to surrender, while offering to
provide them rehabilitation and assistance in transitioning back
into the population. On February 7, Chief Minister of Assam Tarun
Gogoi informed Chief Ministers gathered for the Conference on
Internal Security that 14,913 militants had surrendered in Assam
since 1991. In November, the Manipur State government stated
that 128 youth who belonged to a communist party had
successfully completed a 90-day behavioral, spiritual, and
technical training program allowing them to be placed in reputable
companies like the TATA Group, LG, and Hitachi.
None applicable, however the UK government has had a stated
policy on exports to nuclear and nuclear-related end users in
India and Pakistan since March 2002. For further information
please click here.
____________________________________________________
Offshore Jurisdiction Blacklists:
Information unavailable.
____________________________________________________
US State Department Money Laundering Report - 2012:
India is a regional financial center, with a rapidly growing economy
and well-developed formal and informal financial systems. India’s
extensive informal economy and remittance systems, porous
borders, persistent corruption, and onerous tax administration
and currency controls contribute to its vulnerability to economic
crimes (including fraud, cyber crime, and identity theft), money
laundering, and terrorist financing. Tax avoidance and the
proceeds of economic crimes are the mainstays of money
launderers in India, but laundered funds are also derived from
narcotics trafficking and trafficking in persons, transnational
organized crime, illegal trade, and corruption. Transnational
criminal organizations use offshore corporations and trade-based
money laundering to conceal the proceeds of crime. Criminal
networks exchange high-quality counterfeit currency for genuine
notes, which facilitates money laundering.
India’s porous borders and location between heroin-producing
countries in the Golden Triangle and Golden Crescent make it a
frequent transit point for drug trafficking. Proceeds from Indian-
based heroin traffickers re-enter the country via bank accounts,
the hawala system, and money transfer companies.
India is also a significant target for both domestic and foreign
terrorist groups. Several indigenous terrorist organizations coexist
in various parts of the country; many are linked to external
terrorist groups with global ambitions. Terrorist groups often use
hawaladars and currency smuggling to move funds from external
sources to finance their activities in India. Indian authorities also
report they have seized drugs sold by India-based insurgents to
production and/or trafficking groups in neighboring countries.
High-level corruption both generates and conceals criminal
proceeds. Illicit funds are often laundered through real estate,
educational programs, charities, and election campaigns.
Companies use trade-based money laundering to evade capital
controls.
India licenses seven offshore banking units (OBUs) to operate in
Special Economic Zones (SEZs), which were established to
promote export-oriented commercial businesses, including
manufacturing, trading, and services (mostly information
technology). As of November 2011, there were 143 SEZs in
operation, with another 582 SEZs formally approved. Customs
officers control access to the SEZs. OBUs essentially function as
foreign branches of Indian banks, but with defined physical
boundaries and functional limits. OBUs are prohibited from
engaging in cash transactions, can only lend to the SEZ
wholesale commercial sector, and are subject to the same anti-
money laundering/counter-terrorist financing (AML/CFT)
provisions as the domestic sector.
For additional information focusing on terrorism financing, please
refer to the Department of State’s Country Reports on Terrorism,
which can be found here: http://www.state.gov/j/ct/rls/crt/
Do Financial Institutions engage in currency transactions related
to international narcotics trafficking that include significant
amounts of U.S. currency; currency derived from illegal sales in
the U.S.; or that otherwise significantly affect the U.S.: NO
Criminalization of Money Laundering:
All serious crimes approach or list approach to predicate crimes:
List approach
Legal persons covered: criminally: YES civilly: YES
Know-your-customer (KYC) rules:
Enhanced due diligence procedures for PEPs: Foreign: YES
Domestic: YES
KYC covered entities: Banks and merchant banks; insurance
companies; housing and non-banking finance companies;
casinos; payment system operators; authorized money changers
and remitters; chit fund companies; charitable trusts that include
temples, churches and non-profit organizations; intermediaries;
stock brokers; sub-brokers; share transfer agents; trustees,
underwriters, portfolio managers and custodians; investment
advisors; depositories and depository participants; foreign
institutional investors; credit rating agencies; venture capital
funds; collective schemes including mutual funds; and the post
office
Suspicious Transaction Reporting (STR) Requirements:
Number of STRs received and time frame: 20,698 from April 2010
to March 2011
Number of CTRs received and time frame: 8,687,107 from April
2010 to March 2011
STR covered entities: Banks and merchant banks; insurance
companies; housing and non-banking finance companies;
casinos; payment system operators; authorized money changers
and remitters; chit fund companies; charitable trusts that include
temples, churches and non-profit organizations; intermediaries;
stock brokers; sub-brokers; share transfer agents; trustees,
underwriters, portfolio managers and custodians; investment
advisors; depositories and depository participants; foreign
institutional investors; credit rating agencies; venture capital
funds; collective schemes including mutual funds; and the post
office
Money Laundering Criminal Prosecutions/Convictions:
Prosecutions: 36 from April 2006 to March 2011
Convictions: Zero
Records exchange mechanism:
With U.S.: MLAT: YES Other mechanism: YES
With other governments/jurisdictions: YES
India is a member of the Financial Action Task Force (FATF), as
well as two FATF-style regional bodies, the Asia/Pacific Group on
Money Laundering (APG) and the Eurasian Group on Combating
Money Laundering and Terrorist Financing (EAG). Its most recent
mutual evaluation can be found here: www.fatf-gafi.
org/dataoecd/60/56/45746143.pdf
Enforcement and implementation issues and comments:
India is strongly committed to implementing an effective AML/CFT
framework and has taken numerous steps to improve its AML/CFT
regime and bring it into compliance with international standards. In
2011, the Government of India (GOI) drafted amendments to the
Prevention of Money Laundering Act (PMLA) and the Unlawful
Activities (Prevention) Act that would expand the scope of India’s
AML/CFT regime to cover several designated non-financial
businesses and professions, including jewelers and real estate
firms. The draft amendments also would address deficiencies with
respect to the criminalization of money laundering and terrorist
financing and to confiscation and provisional measures, including
by making money laundering a stand-alone offense and allowing
authorities to attach property even if the predicate offense is not
proven.
In 2011, the financial services regulators issued an extensive
range of enforceable circulars improving customer due diligence
requirements, including with respect to customers and
transactions involving countries with “strategic AML/CTF
deficiencies.” In addition, the FIU enhanced outreach to the
financial sector on suspicious transaction reporting, revised the
cash and suspicious transaction reporting format for non-banking
financial companies, and streamlined an electronic reporting
format for CTRs and STRs, resulting in a significant increase in
the number of STRs filed with respect to both money laundering
and terrorist financing.
Despite these important steps, deficiencies remain. Since
Parliament has not yet approved the draft PMLA amendments,
India lacks both effective criminal asset forfeiture provisions and
conspiracy laws. Moreover, effective implementation of the current
law remains a significant concern. Despite increased law
enforcement resources, as of April 2011, there were still no
money laundering convictions or confiscations. Law enforcement
typically opens substantive criminal investigations reactively, after
an offense is discovered, and seldom initiates proactive analysis
and long-term investigations. At the prosecutorial level, there is
an appropriate focus on terrorist financing; however, this effort
has yet to be followed up convincingly by convictions and firm
case law. Furthermore, while the GOI has taken action against
certain hawala activities, these successes generally stem from
prosecuting primarily non-financial businesses that conduct
hawala transactions on the side.
Levels of training and expertise in financial investigations
involving transnational crime or terrorist-affiliated groups vary
widely among the federal, state, and local levels and depend on
the particular jurisdiction’s financial capabilities and perceived
necessities. U.S. investigators have had limited success in
coordinating the seizure of illicit proceeds with their GOI
counterparts. While intelligence and investigative information
supplied by U.S. investigators have led to numerous money
seizures, a lack of follow-through on investigational leads has
prevented a more comprehensive offensive against offenders and
related groups.
The GOI is taking steps to increase financial inclusion through
“small [banking] accounts”, but should consider further facilitating
the development and expansion of alternative money transfer
services, including mobile banking, domestic funds transfer, and
foreign remittances. Such an increase in lawful, accessible
services would allow broader financial inclusion of legitimate
individuals and entities and reduce overall AML/CFT
vulnerabilities, particularly in the rural sector, by shrinking the
informal network. The GOI also should establish a clear safe
harbor provision for those filing STRs in good faith.
In May 2011, India ratified both the United Nations Convention
against Corruption and the United Nations Convention against
Transnational Organized Crime.
____________________________________________________
US State Dept Narcotics Report 2012 (introduction):
India is strategically located between Southwest Asia (the Golden
Crescent) and Southeast Asia (the Golden Triangle), the two main
sources of illicit opium. The country's geographic location makes it
an attractive transshipment area for heroin bound for Europe,
Africa, Southeast Asia and North America. In addition, India is
authorized by the international community to produce licit opium
for pharmaceutical uses. Licit opium is grown in the states of
Madhya Pradesh, Rajasthan and Uttar Pradesh. India is also a
major chemical precursor producer, including acetic anhydride
(AA), ephedrine, and pseudoephedrine. India has become one of
the main sources of ketamine. Ketamine, a veterinary anesthesia,
is not under international control, and the number of significant
ketamine seizures at major airports, in sea containers and in
parcels continues to increase. India also manufactures organic
and synthetic licit opiate/psychotropic pharmaceuticals (LOPPS).
Destined for licit sales in markets around the world, these items
(raw opium, chemical precursors, ketamine, LOPPS) are
vulnerable to diversion, including through illegally operating
Internet pharmacies. Licit and illicit manufactured
opiate/psychotropic pharmaceuticals are often diverted in small
quantities to the U.S. as illegal "personal use" shipments. There is
also evidence that opium is grown illicitly in India, especially in the
northeastern regions.
India continues to be a main source of illicitly manufactured
amphetamines and methaqualone. Seizures of amphetamines by
law enforcement authorities continue to increase; seizures of
methaqualone have varied widely, from 2,382 kilograms in 2008,
33 kilograms in 2009, and zero kilograms in 2010. India is a party
to the 1988 UN Drug Convention.
For Full report, click here
____________________________________________________
US State Dept Trafficking in Persons Report 2011
(introduction):
(Tier 2)
India is a source, destination, and transit country for men, women,
and children subjected to forced labor and sex trafficking. The
forced labor of millions of its citizens constitutes India’s largest
trafficking problem; men, women, and children in debt bondage
are forced to work in industries such as brick kilns, rice mills,
agriculture, and embroidery factories. A common characteristic of
bonded labor is the use of physical and, in many instances,
sexual violence – including rape – as coercive tools, in addition to
debt, to maintain these victims’ labor. Ninety percent of trafficking
in India is internal, and those from India’s most disadvantaged
social economic strata including the lowest castes are particularly
vulnerable to forced or bonded labor and sex trafficking. Children
are also subjected to forced labor as factory workers, domestic
servants, beggars, agricultural workers, and, to a lesser extent, in
some areas of rural Uttar Pradesh, as carpet weavers.
Women and girls are trafficked within the country for the purposes
of forced prostitution. Religious pilgrimage centers and cities
popular for tourism continue to be vulnerable to child sex tourism.
Indian nationals engage in child sex tourism within the country
and, to a lesser extent, in other countries. Sex trafficking in some
large cities continued to move from red light areas to road side
small hotels, and private apartments. Women and girls from Nepal
and Bangladesh are also subjected to sex trafficking in India.
Maoist armed groups known as the Naxalites forcibly recruited
children into their ranks.
There are also victims of labor trafficking among the hundreds of
thousands of Indians who migrate willingly every year to the
Middle East and, to a lesser extent, the United States, Europe,
and other countries, for work as domestic servants and low-skilled
laborers. In some cases, such workers are lured from their
communities through fraudulent recruitment, leading them directly
to situations of forced labor, including debt bondage; in other
cases, high debts incurred to pay recruitment fees leave them
vulnerable to exploitation, conditions of involuntary servitude, and
physical and sexual abuse by unscrupulous employers in the
destination countries. Nationals from Bangladesh and Nepal are
trafficked through India for forced labor and commercial sexual
exploitation in the Middle East. Some Indians have been
investigated and convicted by foreign governments for human
trafficking. Over 500 guestworkers from India filed a class action
lawsuit in a U.S. court alleging that they were held in forced labor
in Texas and Mississippi.
The Government of India does not fully comply with the minimum
standards for the elimination of trafficking; however, it is making
significant efforts to do so. The Ministry of Home Affairs’ launched
the government’s “Comprehensive Scheme for Strengthening Law
Enforcement Response in India,” which seeks to improve India’s
overall law enforcement response to all forms of trafficking,
including bonded labor, and established at least 87 new Anti
Human Trafficking Units (AHTUs). The government also ratified
the 2000 UN TIP Protocol. The government took important law
enforcement steps by convicting several bonded labor offenders
with sentences between five and 14 years and improved rescue
and rehabilitation efforts for bonded laborers. Overall law
enforcement efforts against bonded labor, however, remained
inadequate, and the complicity of public officials in human
trafficking remained a serious problem, which impeded progress.
For full report click here
____________________________________________________
US State Dept Terrorism Report 2010
Overview: In 2010, India continued to see a reduction in the
number of deaths attributable to terrorist violence, as it ramped
up its counterterrorism capacity building efforts and increased
cooperation with the international community, especially the
United States. However, the loss of nearly 1,900 lives (civilian,
security forces, and terrorists) still made India one of the world’s
most terrorism-afflicted countries. Sustained violence in Kashmir
over a six-month period and attempted infiltrations from Pakistan
across the Line of Control remained serious concerns for the
Indian government. In May, an Indian court convicted and
sentenced to death the lone surviving attacker of the 2008
Mumbai terrorist attacks. A February bombing in Pune killed 17,
and a December improvised explosive device (IED) explosion in
Varanasi killed two people. The perpetrators for both attacks
remained at large at the end of the year.
The Maoists/Naxalites, whom Prime Minister Singh has called India’
s greatest internal security threat, were active in 2010, especially
in the eastern part of the country. They increasingly directed their
attacks at Indian security forces but also used IEDs to blow up
railways and other infrastructure projects. Indian security forces
successfully ensured security at a number of major events,
including the 2010 Hockey World Cup and the 2010
Commonwealth Games, without incident. Throughout 2010, Indian
authorities arrested numerous suspected militants, uncovered
several arms caches, continued to develop a new internal security
force, implemented improved border security measures mainly
along the Pakistani border, and tightened laws to counter terrorist
financing. In July, the U.S.-India Counterterrorism Cooperation
Initiative was signed, which set the stage for greater cooperation
on counterterrorism issues between the two governments.
2010 Terrorist Incidents: On November 22, the Government of
India reported that at least 577 civilians had been killed, while
more than 260 Special Forces personnel had also lost their lives
across the country due to Naxalite violence in 2010. During that
same period, at least 137 members of the Communist Party of
India (CPI)-Maoist (aka the Naxalites) were killed. Between
February 7 and February 9, the CPI-Maoist called a three-day
strike. Railway tracks were blown up, railway stations attacked,
bombs were placed on railway property, and railway officials were
assaulted. Terrorist attacks in 2010 included:
* On February 13, 17 persons, including two foreigners, were
killed and over 40 injured in a bomb blast in the popular German
Bakery near the Osho Ashram in Pune.
* On April 17, two crude bombs exploded in quick succession
outside the M. A. Chinnaswamy cricket stadium in Bangalore,
minutes before an Indian Premier League match was to begin,
leaving 15 persons injured and creating panic in the packed
venue. A third crude bomb was found near another gate to the
stadium.
* On May 17, an IED was used to blow up a civilian bus killing 15
civilians and 16 policemen/Special Police Officers (SPOs) and
injuring 12 civilians and an additional 16 policemen/SPOs in
district Dantewada, Chhattisgarh.
* On May 28, the Howrah-Kurla-Jnaneshwari Express train was
derailed after terrorists removed a portion of the track. The
derailment led to a collision with a goods train, leading to the
death of 147 persons and injuries to over 150. Maoist/Naxalites
were believed responsible for the derailment.
* On September 19, two gunmen on a motorcycle opened fire at
the entrance of Jama Masjid, a famous mosque and tourist site in
old Delhi, injuring two tourists from Taiwan.
* On December 7, two persons including a woman and an 18-
month old child were killed and 30 injured in a blast in Varanasi,
Uttar Pradesh. The Indian Mujahedin claimed responsibility for the
blast.
Legislation and Law Enforcement: In January, a Delhi court
sentenced two Lashkar-e-Tayyiba (LeT) militants to seven years
of imprisonment for possession of the explosive RDX in
connection with a conspiracy to carry out a suicide attack at the
Indian Military Academy in 2005. In May, the Special Sessions
Court in Mumbai sentenced to death the lone surviving LeT
militant involved in the 2008 Mumbai terrorist attacks, Mohammad
Ajmal Amir Kasab.
Throughout the year, India worked to improve its counterterrorism
readiness. The Ministry of Home Affairs Annual Report 2009-2010
stated that in response to the November 26, 2008 Mumbai
terrorist attacks, Quick Reaction Teams have been set up in four
regional hubs (Mumbai, Kolkata, Chennai, and Hyderabad) with
1,086 trained personnel and an additional team on standby at the
Delhi airport, ready to deploy during an emergency.
The Indian government continued erecting fences along its
borders with Bangladesh and Pakistan.
Countering Terrorist Finance: The on-site visit for India’s Financial
Action Task Force (FATF) mutual evaluation concluded in
December 2009, and the report was adopted by the FATF plenary
in June 2010. At the FATF plenary, the FATF also granted India
full membership. India presented a detailed action plan covering
the period June 2010 to March 2012 to better meet FATF’s anti-
money laundering/countering terrorist finance standards. FATF
concluded that as of October 2010, India was on track with its
action plan. India’s Financial Intelligence Unit (FIU) is a member of
the Egmont Group and regularly shared information with foreign
FIUs over the Egmont Secure Web on terrorist financing cases.
Regional and International Cooperation: On July 23, the India-U.
S. Counterterrorism Cooperation Initiative was signed. This
initiative allows for greater information-sharing, and the sharing of
best practices in the areas of investigations, forensic science,
countering terrorist finance, cyber security, mass transit and rail
security, port and border security, and maritime security.
During his November visit to India, President Obama and Indian
Prime Minister Singh announced the establishment of the U.S.-
India Homeland Security Dialogue (HSD). The Indian Ministry of
Home Affairs and the United States Department of Homeland
Security will co-lead the HSD, which will provide a forum for
sustained U.S.-India engagement on homeland security issues to
facilitate security cooperation.
During the December 2010 visit of French President Nicolas
Sarkozy, France and India agreed to enhance their operational
cooperation to accelerate the process of extradition requests,
combat money laundering for terrorism, and enforce international
sanctions regime against terrorist organizations. Both countries
reinforced the importance of adhering to sanctions against al-Qa’
ida and the Taliban as established by UNSCR 1267.
Countering Radicalization and Violent Extremism: Countering
extremist ideology has become an important part of India’s
counterterrorism strategy. The Ministry of Home Affairs continued
its Surrender-cum-Rehabilitation policy, which encouraged
misguided youths and militants to surrender, while offering to
provide them rehabilitation and assistance in transitioning back
into the population. On February 7, Chief Minister of Assam Tarun
Gogoi informed Chief Ministers gathered for the Conference on
Internal Security that 14,913 militants had surrendered in Assam
since 1991. In November, the Manipur State government stated
that 128 youth who belonged to a communist party had
successfully completed a 90-day behavioral, spiritual, and
technical training program allowing them to be placed in reputable
companies like the TATA Group, LG, and Hitachi.
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
|
| Further Tables |
|
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
*Please note that FATF deems that a country has significant aml deficiencies if any
of the 'Core' Recommendations, R1, R5, R10, R13, SRII, or SRIV are rated either
Partially of Non-Compliant. These are marked in red.
For FATF to remove a country from the regular follow-up process, it has to be rated
Compliant or Largely Compliant in the above mentioned Core Recommendations
and the following Key Recommendations: -
R3, R4, R23, R26, R35, R36, R40, SRI, SRIII, SRV
Please also note that any risk assessment should take into consideration all
follow-up reports.
of the 'Core' Recommendations, R1, R5, R10, R13, SRII, or SRIV are rated either
Partially of Non-Compliant. These are marked in red.
For FATF to remove a country from the regular follow-up process, it has to be rated
Compliant or Largely Compliant in the above mentioned Core Recommendations
and the following Key Recommendations: -
R3, R4, R23, R26, R35, R36, R40, SRI, SRIII, SRV
Please also note that any risk assessment should take into consideration all
follow-up reports.
| INDIA |
| KnowYourCountry |
|
|
Key Findings from last Mutual Evaluation Report
The AML/CFT regime in India is relatively young. The Prevention of
Money Laundering Act, 2002 (PMLA) came into force in 2005 and was
amended in 2009. The Unlawful Activities (Prevention) Act, 1967 (UAPA)
was amended in 2004 to criminalise, inter alia, terrorist financing. The
UAPA was further amended in December 2008 to broaden its scope and
to bring the legislation more in line with the requirements of the United
Nations Convention for the Suppression of the Financing of Terrorism
(FT Convention).
Money laundering (ML) methods are diverse. India has several
mechanisms in place for domestic co-ordination and co-operation at
both the policy and operational levels to identify new and emerging
trends and to formulate appropriate responses.
India continues to be a significant target for terrorist groups and has
been the victim of numerous attacks. There are no published figures of
terrorist cells operating in the country.
Since mid-2009, India has increased its focus on money laundering and
the use of the ML provisions. However, there are still some important
and in some instances, long-standing legal issues, such as the threshold
condition for domestic predicate offences, that remain to be resolved.
Effectiveness concerns are primarily raised by the absence of any ML
convictions.
India’s serious commitment to combating terrorism in all its forms must be
acknowledged. From a law enforcement perspective, this commitment is
reflected in an active pursuit of the financial aspects of terrorism. At the
prosecutorial level, an appropriate focus on FT can be observed.
However, this effort has not yet been convincingly followed up by
convictions and firm case law.
India has progressively expanded and strengthened its preventive
measures for the financial sector, which now apply to all but one of the
financial activities required to be covered under the FATF standards.
However, several preventive provisions need to be brought more closely
into line with the FATF standards, and overall, more time is needed
before all requirements are substantially implemented.
With the exception of casinos (which operate only in the State of Goa),
the Designated Non Financial Businesses and Professions sectors are
not subject to the PMLA and are not regulated and supervised for
AML/CFT purposes.
Key recommendations made to India include the need to:
- address the technical shortcomings in the criminalisation of both
money laundering and terrorist financing and in the domestic framework
of confiscation and provisional measures;
- broaden the CDD obligations with clear and specific measures to
enhance the current requirements regarding beneficial ownership;
- improve the reliability of identification documents, the use of pooled
accounts, PEPs, and non-face-to-face business; ensure that India Post,
which recently became subject to the PMLA, effectively implements the
AML/CFT requirements;
- enhance the effectiveness of the STR reporting regime; enhance the
effectiveness of the financial sector supervisory regime and ensure that
India Post is adequately supervised;
- ensure that the competent supervisory authorities make changes to
their sanctioning regimes to allow for effective, proportionate and
dissuasive sanctions for failures to comply with AML/CFT requirements;
and
- extend the PMLA requirements to the full range of DNFBPs, and
ensure that they are effectively regulated and supervised.
The AML/CFT regime in India is relatively young. The Prevention of
Money Laundering Act, 2002 (PMLA) came into force in 2005 and was
amended in 2009. The Unlawful Activities (Prevention) Act, 1967 (UAPA)
was amended in 2004 to criminalise, inter alia, terrorist financing. The
UAPA was further amended in December 2008 to broaden its scope and
to bring the legislation more in line with the requirements of the United
Nations Convention for the Suppression of the Financing of Terrorism
(FT Convention).
Money laundering (ML) methods are diverse. India has several
mechanisms in place for domestic co-ordination and co-operation at
both the policy and operational levels to identify new and emerging
trends and to formulate appropriate responses.
India continues to be a significant target for terrorist groups and has
been the victim of numerous attacks. There are no published figures of
terrorist cells operating in the country.
Since mid-2009, India has increased its focus on money laundering and
the use of the ML provisions. However, there are still some important
and in some instances, long-standing legal issues, such as the threshold
condition for domestic predicate offences, that remain to be resolved.
Effectiveness concerns are primarily raised by the absence of any ML
convictions.
India’s serious commitment to combating terrorism in all its forms must be
acknowledged. From a law enforcement perspective, this commitment is
reflected in an active pursuit of the financial aspects of terrorism. At the
prosecutorial level, an appropriate focus on FT can be observed.
However, this effort has not yet been convincingly followed up by
convictions and firm case law.
India has progressively expanded and strengthened its preventive
measures for the financial sector, which now apply to all but one of the
financial activities required to be covered under the FATF standards.
However, several preventive provisions need to be brought more closely
into line with the FATF standards, and overall, more time is needed
before all requirements are substantially implemented.
With the exception of casinos (which operate only in the State of Goa),
the Designated Non Financial Businesses and Professions sectors are
not subject to the PMLA and are not regulated and supervised for
AML/CFT purposes.
Key recommendations made to India include the need to:
- address the technical shortcomings in the criminalisation of both
money laundering and terrorist financing and in the domestic framework
of confiscation and provisional measures;
- broaden the CDD obligations with clear and specific measures to
enhance the current requirements regarding beneficial ownership;
- improve the reliability of identification documents, the use of pooled
accounts, PEPs, and non-face-to-face business; ensure that India Post,
which recently became subject to the PMLA, effectively implements the
AML/CFT requirements;
- enhance the effectiveness of the STR reporting regime; enhance the
effectiveness of the financial sector supervisory regime and ensure that
India Post is adequately supervised;
- ensure that the competent supervisory authorities make changes to
their sanctioning regimes to allow for effective, proportionate and
dissuasive sanctions for failures to comply with AML/CFT requirements;
and
- extend the PMLA requirements to the full range of DNFBPs, and
ensure that they are effectively regulated and supervised.
| Last Updated: 16 April 2012 |