Originally published on National Herald
The Financial Action Task Force (FATF) has released its Mutual Evaluation Report (MER) on India after a 14-year gap, presenting a complex picture of the country’s efforts to combat money laundering and terrorist financing. While FATF commends India for its “high level of technical compliance” with most standards, it simultaneously raises significant concerns about the country’s regulation of the non-profit sector and the implementation of anti-terror laws.
FATF’s evaluation highlights a critical disconnect between India’s technical compliance and the practical application of its laws. The task force specifically calls out India for non-compliance with its standards in regulating the non-profit sector, particularly in relation to Recommendation 8. This recommendation requires countries to adopt a risk-based approach, targeting only those non-profit organizations (NPOs) identified as vulnerable to terrorism financing abuse. However, India’s approach has been criticized as overly broad, potentially infringing on legitimate civil society activities.
The report also sheds light on the concerning use of laws such as the Foreign Contribution (Regulation) Act (FCRA), Unlawful Activities (Prevention) Act (UAPA), and the Prevention of Money Laundering Act (PMLA). These laws, ostensibly enacted or tightened in response to FATF recommendations, have become tools for suppressing dissent and targeting civil society organizations. FATF urges India to address the delays in concluding prosecutions under UAPA and PMLA, noting the low conviction rates and high pendency of cases.
Despite these critical observations, India’s finance ministry has chosen to focus on the positive aspects of the report, celebrating an “outstanding outcome” while overlooking FATF’s recommendations for improvement. This selective interpretation raises questions about India’s commitment to addressing the identified shortcomings, particularly as the cancellation of FCRA licenses for NGOs continues even after the review.
FATF’s report serves as a crucial wake-up call for India to reassess its approach to regulating the non-profit sector and implementing anti-terror laws. With another review scheduled in three years, the Indian government faces pressure to conduct adequate risk assessments, implement more focused and proportionate measures, and put an end to politically motivated prosecutions. The international community, through FATF, is clearly signaling that true governance lies in balancing security concerns with the protection of civil liberties and legitimate dissent.
