Risk Indicators
- FATF/EU Blacklist/Greylist (Lower Concern)
- Terrorism Financing (Medium Concern)
- US Dept of State INCSR
- Proliferation Financing
- Corruption
- Criminality
- Resilience & Governance
- Financial Transparency
- Offshore Finance Centres
- Sanctions
Background
India’s long history reaches from the Indus Valley civilization through the Maurya and Gupta eras, the spread of Islam, and the Mughal Dynasty before European and British dominance reshaped the subcontinent. Independence in 1947 followed sustained nonviolent resistance associated with Mohandas Gandhi and Jawaharlal Nehru, amid partition violence and the creation of India and Pakistan. Economic reforms beginning in 1991, a large youth population, and India’s strategic location have strengthened its global role, even as poverty, corruption, environmental degradation, and business constraints remain significant.
India’s present security environment is defined most sharply by its relationship with Pakistan, including the Kashmir dispute, terrorism, recent military escalation, and concerns surrounding U.S. sanctions on Pakistani missile-linked entities. Relations with Bangladesh and Nepal have become more politically complex, while instability in Myanmar and China’s expanding regional influence add pressure along India’s wider borders. Border disputes with China, shifting partnerships across South Asia, and sanction-evasion networks involving China and Central Asia further complicate India’s regional calculations.
AML & Terrorist Financing
India is not subject to FATF enhanced monitoring, and its framework—anchored by the Prevention of Money Laundering Act and supported by FIU-IND, the RBI, SEBI, and the Enforcement Directorate—shows substantial formal alignment with international standards. Key exposure areas include domestic fraud and cyber-enabled crime, corruption, drug trafficking, complex corporate and informal financing structures, virtual assets, and the use of real estate, precious metals, charities, and trade channels, while reporting and supervision remain uneven across some non-financial sectors. Terrorist-financing authorities, including the NIA and ED, demonstrate sophisticated investigative capabilities and asset-seizure tools, but prosecution delays, pending cases, uncertainty affecting smaller reporting entities, and risk-calibration concerns in the NPO sector leave important practical questions around effectiveness.
Sanctions
India is not currently subject to broad international sanctions, although the UK maintains a stated policy concerning exports to nuclear-related end users in India and Pakistan, while India implements applicable UN Security Council measures. U.S. authorities, including OFAC and the Department of the Treasury, have sanctioned Indian companies and nationals linked to alleged Russia-related evasion networks involving aviation parts, dual-use technology, and military-industrial supplies. European measures have also reached India, notably the designation of Nayara Energy under the EU’s 18th Russia sanctions package, while General License 133 provided a temporary channel for Russian crude deliveries to India.
Criminality
India faces extensive criminal activity across human trafficking, arms and drug trafficking, extortion, environmental offenses, counterfeit goods, ransomware, and increasingly sophisticated financial crime, with criminal networks sometimes intersecting with political, official, and private-sector interests. Although measures such as the Central Vigilance Commission, Lokpal framework, and Comptroller and Auditor General audits provide formal safeguards, bribery reports involving basic services, uneven state-level ombudsman coverage, unoperationalized whistleblower protections, and limited investigative independence point to persistent corruption risks.
Reports
India faces expanding challenges from illicit drugs, human trafficking, and terrorism, including diversion risks linked to its pharmaceutical sector, bonded labor across multiple industries, technology-enabled exploitation, and threats from groups such as ISIS, LeT, JeM, and CPI-Maoist. Responses involving the Narcotics Control Bureau, Railway Protection Force, National Investigation Agency, and strengthened U.S.-India cooperation show notable activity, while staffing constraints, uneven victim services, case backlogs, border vulnerabilities, and gaps in prosecution and regulation remain significant concerns.
Industry/Product Sector Risk
India’s financial and designated non-financial sectors present a varied risk landscape, with banking, retail payments, money remittance, foreign exchange, real estate, trade finance, and virtual assets standing out amid a broader economy where cash and informal channels remain significant. Supervisory frameworks led by the RBI, SEBI, IRDAI, and other authorities coexist with vulnerabilities involving cyber-enabled fraud, trade-based laundering, corruption, tax and customs offences, opaque ownership, and cross-border value movement. Further detail extends into the distinct exposure of Goa and Sikkim’s casino activity, MTSS and hawala-like remittance chains, gems and jewellery, politically exposed persons, public works, telecommunications, and conflict-linked non-profit financing.
Economy & Investment Climate
India’s large, rapidly expanding economy is being propelled by infrastructure, digitalization, and manufacturing initiatives, with agencies such as DPIIT, Invest India, and the RBI supporting investment and financial development. Significant opportunities coexist with regulatory complexity, protectionist measures, energy constraints, informality, and ongoing challenges involving data localization, intellectual property, land, and dispute resolution.
Cryptocurrency Regulations
India permits cryptocurrency ownership and trading without recognizing it as legal tender, while the Ministry of Finance, RBI, SEBI, and FIU-IND continue shaping an evolving framework around digital assets. Under the PMLA, VASPs face registration, KYC, Travel Rule, and suspicious-activity reporting obligations—with 31 providers registered—alongside a 30% tax on gains, 1% TDS, and unresolved questions around tokens, ICOs, and GIFT City asset tokenization.
Get full access
The information on this page is a brief summary. Get access to EDD country reports, all risk category scores and customisable weightings for 245 jurisdictions.