India

New Documents

The Reserve Bank of India published additional guidelines on compliance functions in banks and the role of the Chief Compliance Officer, including the development of an effective compliance culture and risk management program.

The governments of the United States and India issued a joint statement as part of the third U.S.-India Counter Terrorism Joint Working Group and Designations Dialogue, held Sept. 9-10, 2020.

Enforcement Actions

The Reserve Bank of India has imposed a monetary penalty of one lakh fifty thousand rupees against the Chhattisgarh, India- based bank for its failure to comply with guidelines on know-your-customer requirements pursuant to the Banking Regulation Act, 1949.

The Reserve Bank of India issued a monetary penalty of ₹2 lakh on the Mumbai, India-based entity for failing to comply with directions issued by the regulator on monitoring fraud.


Important Facts

  • The U.S. State Department labels India as a major money laundering country. India continues to face vulnerabilities, including informal financial networks that largely serve complex onshore and offshore corporate structures, and enforcement capacity constraints. Despite efforts by Prime Minister Narendra Modi to curtail illicit financial activity, the country still sees informal remittance systems used extensively to evade transaction charges and to conduct both legitimate remittances and money laundering. Transnational criminal organizations use offshore corporations and trade-based money laundering to disguise illicit funds and companies use trade-based money laundering to evade capital controls.  The most common money laundering methods include intermingling criminal proceeds with legitimate assets, purchasing bank checks with cash, routing funds through employees’ accounts, and complex legal structures. Illicit funds in India are also laundered through real estate transactions, gold purchases, charities, election campaigns, and educational programs. The illicit proceeds are most commonly derived from tax avoidance, corruption, narcotics trafficking, human trafficking, and illegal trade. The State Department report noted that India prioritizes crimes of tax evasion and counterfeit currency, while anti-money laundering and terrorist financing are lower priorities. India has comprehensive know-your-customer and suspicious transaction reporting (STR) requirements and uses enhanced due diligence for politically exposed persons. India’s current safe harbor provision only protects principal and compliance officers of institutions that file STRs, not all employees. India also has noted shortcomings in the criminalization of money laundering, and in its domestic framework for confiscation and provisional measures.
-Source: 2020 International Narcotics Control Strategy Report (INCSR)

Rankings

FATF i

Technical Effectiveness
Compliant : 5 High :
Largely Compliant : 25 Substantial :
Partially Compliant : 15 Moderate :
Non-Compliant : 4 Low :

BASEL i

Rank : 70/141
Score : 5.15/10

TRANSPARENCY INTERNATIONAL i

Rank : 80/180
Score : 41/100

Tax Justice Network i

Rank : 47/133
Score : 48/100