India faces ‘disparate’ range of terror threats from ISIS, Al Qaeda groups, warns FATF report

India is facing threats of terrorist financing from groups active in Jammu & Kashmir, according to a report by the Financial Action Task Force (FATF) released on Thursday.

The Paris-headquartered body said, “India’s main sources of money laundering originate from within, from illegal activities committed within country.” It added that the country faced “disparate” range of terror threats, most significantly from ISIL (Islamic State or ISIS) or AQ-linked groups (Al Qaeda) active in and around Jammu and Kashmir.

The global watchdog in its latest report rated India “moderately” effective on its parameter of “money laundering investigation and prosecution”.

‘Money laundering convictions affected by constitutional challenges’
The FATF report said that money laundering convictions in India over the past five years have been affected by constitutional challenges and an overwhelmed court system. India’s courts face huge backlogs, leaving many cases pending for years, it said.

The Enforcement Directorate seized assets worth €9.3 billion ($10.4 billion) from suspected financial criminals over the past five years, the report said, but confiscations following convictions amounted to less than $5 million. “It is critical India addresses these issues in view of accused persons waiting for cases to be tried and prosecutions to be concluded,” it said.

‘Indian laws effected against money laundering but prosecution needs improvements’
The FATF report acknowledged that India has implemented an effective anti-money laundering (AML) and combating financing of terror (CFT) system. However, it called for “major improvements” in prosecuting money laundering and terror financing cases.

The report also said that there is need for better protection of the non-profit sector from terror abuse.

The 368-page report, adopted at FATF’s June plenary, is the first review of India’s anti-money laundering and terror financing efforts since 2010. Following an on-site visit last November, India has been placed in the “regular follow-up” category, along with the only four other G20 nations. The next evaluation is set for 2031.