The Financial Action Task Force (FATF), in its latest mutual assessment report, highlighted that Indian agencies like the National Investigation Agency (NIA) and Enforcement Directorate (ED) have made significant seizures from proscribed terrorists under the Unlawful Activities (Prevention) Act (UAPA).
Additionally, assets related to terror financing and money laundering have also been seized. The report acknowledged India's exposure to a wide variety of terrorism threats, which include Islamic State and Al Qaeda-affiliated groups operating in Jammu and Kashmir, as well as insurgent movements in other regions of India.
“The NIA (National Investigation Agency) and the ED (Enforcement Directorate) have skilled and highly experienced investigators and in-house prosecutors to conduct complex financial investigation and identify money trails domestically and abroad, to support the investigation and prosecution of terrorist activity and TF [terror financing].
The State police are empowered to investigate State-wide TF offences, and there are specialised CT (counter-terror) authorities at the State level that investigate TF offences,”
The FATF commended the expertise of Indian agencies in conducting complex financial investigations to trace and seize assets linked to terrorism and money laundering. It noted that between 2018 and 2023, 48 cases related to terror financing (TF) were referred to the ED, which has the capacity to initiate money laundering investigations related to these crimes.
However, the report identified a bottleneck in the judicial system, citing that many terror-related cases have remained unresolved due to lengthy court processes and frequent adjournments. While the NIA and ED have pursued numerous TF investigations and prosecutions, the report suggests that state-level counter-terrorism authorities could benefit from additional capacity and resources to handle these cases more effectively.
Furthermore, the FATF cited several prominent terror financing cases, including the Hurriyat and Popular Front of India cases, and acknowledged that Indian agencies have wide-ranging access to financial information to aid in these investigations.
However, the need for legislative measures to expedite court proceedings and ensure timely case resolutions was also emphasized.
The Financial Action Task Force (FATF) is an intergovernmental organization established in 1989 to develop policies aimed at combating money laundering, terrorist financing, and other threats to the integrity of the global financial system. FATF sets international standards and promotes the effective implementation of legal, regulatory, and operational measures to fight these financial crimes.
FATF's primary objectives include:
Developing international standards: FATF creates guidelines and recommendations for countries to adopt in order to prevent money laundering and terrorism financing.
Monitoring compliance: It assesses member countries' efforts to comply with these standards and provides mutual evaluations through reports.
Identifying high-risk countries: FATF places countries on "black" or "grey" lists, depending on their lack of compliance with international standards. These designations alert the international financial community to increased risks of dealing with those countries.
Issuing sanctions: Countries that fail to comply with FATF's recommendations may face economic and financial sanctions, as well as reputational damage.
FATF currently has 39 members, including major economies like the United States, India, China, and the European Union. Its work is crucial for maintaining global financial stability and preventing the misuse of financial systems for criminal activities.
‘Many trials remained unconcluded’
Between 2018 and October 2023, the cases against 98 persons were concluded and 1,432 are pending. The report observed that a significant number of trials remained unconcluded since 2018.
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“The bottleneck as evident since 2019 appears to be attributed to the long court processes to hear terrorism and TF cases both for cases heard by the special courts (despite the increase in number of specialist courts since 2021) as well as TF cases heard at the State level, with frequent and long adjournments built into the trial process...,” it said,
adding that there were plans to provide in legislation measures to ensure that court cases were concluded in a timely manner.
The report listed certain demonstrative TF cases. Among them are the Hurriyat case (2017), Mangalore Blast case (2022), Popular Front of India case – in which money trail was linked to 300 accounts in 22 branches across 11 banks in different parts of country and over 150 people were arrested; – and terror financing involving Maoist activities.
“NIA and ED have access to a wide range of financial information and intelligence to support their TF investigations. They can obtain bank account information through FIU-IND (Financial Intelligence Unit-India) or directly from banks without the need for a court order. Where more complex financial investigation involving tracing and seizing of property is required for TF, ED is able to initiate a ML investigation... to draw upon their resources and expertise and extended seizure powers,” the report observed.
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