Our efforts to combat money laundering and the financing of terrorism have been customized to attack criminal and terrorist organizations through their financial operations. The strategy has been aimed at depriving them of the means to act and gain knowle
Financial Action Task Force is an intergovernmental organization and its motto is to fight against money laundering. It was formed in 1989 by G7 countries. Its secretariat is situated in Paris. In October, 1989, it expanded its operation to include the financing of terrorism. It brings together legal, financial & law enforcement experts to achieve national legislation and regulatory Anti Money Laundering.FATF membership consists of 34 countries and two regional organizations.
It works in collaboration with a number of international bodies and organizations. These entities have observer status with FATF, which does not entitle them to vote, but permits full participation in its activities. (Financial Intelligence Unit) FIU is responsible for receiving, analyzing, and transmitting disclosures on suspicious transactions to the competent authorities. In India, it was set up by the Government of India on 18th November 2004 as the central national agency. FIU is also accountable for coordinating and strengthening efforts of national and international intelligence, investigation and enforcement agencies in pursuing the global efforts against money laundering and related crimes. It is an independent body reporting directly to the Economic Intelligence Council (EIC) headed by the Finance Minister.Roll of FATF: Main functions of FATF are as under-:1. FATF has made 40 rules on money laundering and 9 Special rule for terrorist financing. FATF assesses each member country against this rule. Countries seen as not being sufficiently compliant with such regulation are subjected to financial sanctions. 2. Monitoring members? advancement in implementing anti-money laundering measures.3. Reviewing and reporting on money laundering trends, techniques and countermeasures. 4. Promoting the adoption and implementation of anti-money laundering standards worldwide.Roll of FIU: Roles of FIU are given below:-1. FIU performs as the fundamental point for receiving Cash Transaction reports (CTRs) and Suspicious Transaction Reports (STRs) from various reporting entities & analyzes received information in order to uncover blueprints of transactions suggesting suspicion of money laundering and related crimes.2. This body Shares information with national enforcement agencies, national regulatory authorities and foreign Financial Intelligence Units.3. It establishes and maintain national data base on cash transactions and suspicious transactions on the basis of reports received from reporting entities.4. It brings together and strengthens collection and sharing of financial intelligence through an effective national, regional and global network to combat money laundering and related crimes. Moreover, it monitors and identifies strategic key areas on money laundering trends.FATF put forward following steps for controlling Money Laundering & Terrorist Financing:- Under the guidance of FATF, attentiveness accomplished by all financial institutions and non-financial businesses, including lawyers, and records to be kept for five years. FATF directs financial institutions to develop modus operandi such as internal policies, designed to combat money laundering and terrorist financing.There should be enhanced regulation, supervision and guidance offered to financial institutions and non-financial businesses and professions, in their compliance with the rules of FATF. Pay attention towards criminalization of the financing of terrorism, terrorist acts and terrorist organization and confiscation of terrorist assets.The international co-operation and mutual legal assistance to ensure prompt and effective criminal investigations and prosecutions of suspected terrorist financing. FIU has following tools to combat money laundering & terrorist financing: All cash transactions of the value of more than rupees ten lakhs or its equivalent in foreign currency. All series of cash transactions integrally connected to each other which have been valued below rupees ten lakhs or its equivalent in foreign currency where such series of transactions have taken place within a month. All transactions involving receipts by non-profit organizations of value more than rupees ten lakh, or its equivalent in foreign currency.All cash transactions where forged or counterfeit currency notes or bank notes have been used as genuine or where any forgery of a valuable security or a document has taken place facilitating the transactions.All suspicious transactions whether or not made in cash.Current position of Money Laundering & Terrorist Financing in India: Recently, CBI has been impounded seventy crores cash from the office of a private company at Connaught Place. This huge money was brought through Money Laundering. Popularly it is known as hawala. In India, Money Laundering is common phenomenon. Shri S. K. Jain, a businessman of Madhya Pradesh was arrested for running a hawala racket in 1995. In this case, 5 minister of then Prime Minister Narshima Rao led government were involved. In recent times, the Swiss banking association made a big revelation by saying that Indians hold 1.4 trillion US dollars in black money out of their 2.15 trillion dollars deposit.
Moreover, there are some other well known ?slush parks? like St Kitts, Antigua, Bahamas, Isle of Man and Liechtenstein that reproduce such property multiple.Now a day, SIMI and Indian Mujahideen are getting funds from Pakistan via Nepal & Bangladesh by the help of Money Laundering. Their members are also opening accounts in rural, urban and metro centers in India without any problem. The bomb blasts in Delhi, Ahmedabad and Mumbai are some of examples of terrorists? attacks. The list is endless. The central and state, governments seem to have failed in preventing these blasts. As we know, for any kind of terrorist activities; money is needed and in India, money is easily available to terrorists by Money Laundering.Indian bankers are aware of this vicious circle.
However, they at all times, stay behind under the pressure of annual budget allotted to them from the management. Even they remain silent while bulk deposit is being deposited by terrorists, corporate entitles, corrupt officials & politicians, whereas Reserve Bank of India?s guideline is explicit in this matter. Even RBI has issued circulars to all nationalized and private banks wherein details of all active terrorist organizations have been given. This is indeed pathetic stipulation, because by the help of bankers terrorist activities in India are flourishing.Conclusion: The Prevention of Money-Laundering Act, 2002 came into effect on 1 July 2005. Section 12 (1) prescribes the obligations on banks, financial institutions and intermediaries to furnish information related to suspicious transactions. Further, Fighting against financing terrorism is essential to the integrity of financial systems. It may be possible by implementing know-your-customer principles and reporting suspicious transactions. Our efforts to combat money laundering and the financing of terrorism have been customized to attack criminal and terrorist organizations through their financial operations. The strategy has been aimed at depriving them of the means to act and gain knowledge of how their financial networks and methods work in order to prevent any future operations.
The adopted measures by FATF & FIU which mentioned above are intended to provide counter-measures against money laundering and terrorist financing, together with international co-operation. To attain the maximum degree of effectiveness, all agencies involved need to increase their own effectiveness and to cooperate with each other. It follows that each component of the system needs to be assessed in terms of its efforts to achieve what is expected of it, even if it is only one part of the whole system.