Imtiaz Gul

While continuously focusing on  Pakistan ahead of the  Financial Action Task Force (FATF) annual plenary at Paris,  New Delhi successfully managed to defer the 10-yearly review by FATF of India’s money laundering and terrorist financing regime in September-October 2020. The apparent motive was to deflect from India’s own poor performance and paint Pakistan negatively wherever possible through a motivated campaign before and during the FATF plenary.

Despite multiple lacunas in its financial system, India, because of its economy and large population, has thus far evaded real FATF scrutiny – largely for political reasons.

But probably not any more. Here is why!

Anthony Wayne, the US Assistant Secretary of State for Economic and Business Affairs recently told the Senate Banking Committee that ‘In India, two accounts belonging to terrorist individuals/entities have been identified, but the Government of India has not frozen any assets to date. It is aware of the UN 1267 Committee List, however’, Wayne noted that India’s Prevention of Money Laundering Act `criminalises money laundering and requires banks and other financial institutions and intermediaries to report individual transactions valued over US$ 23,000 to the financial-investigation unit’, says a September 30 article in Modern Diplomacy (

The aforementioned article goes on to state that the World Bank estimated a capital flight of Rs 50 to 100 crore in four fertilizer plants projects via Italian firm Snam Projetti….… the Indian government paid no regard to the recommendations adopted by the Financial Action Task Force on money laundering, set up in July 1989 by the Paris summit of the seven most developed countries.  The conventional money-laundering techniques (smurfing, cover companies, etc.) are used to the hilt in India.  The average amount stashed away from India during 2002-06 is US$27.3 billion (about 136,466 crores), the author reckons.

Another recent report by the International Consortium of Investigative Journalists also blew the lid off the suspicious financial transactions by Indian banks, public and private sector companies.

The ICIJ report based on Financial Crimes Enforcement Network (FinCEN) files “represents less than 0.02% of the more than 12 million suspicious activity reports that financial institutions filed with FinCEN between 2011 and 2017.”Similarly, a Conflict Armament Research study had confirmed that seven Indian companies were involved in the supply chain of over 700 components including fuses or detonating cords used by the Islamic State to construct improvised explosive devices. Even the Sri Lanka blasts were linked to terrorists hiding in the Indian Southern States. As an eyewash, India arrested Islamic State moles. To bypass banking channels, even gold and diamond are `legal tender’ for money laundering.“The ICIJ report is just the tip of the iceberg. Its revelations are based on `only  0.02% of the more than 12 million suspicious activity reports that financial institutions filed with FinCEN between 2011 and 2017’.

The US banks who filed reports include Deutsche Bank Trust Company Americas, BNY Mellello, Citibank, Standard-Chartered, and JP Morgan. 

“ The reasons mentioned in the reports include `high-risk jurisdiction for money laundering or other financial crimes, adverse media or public information on the client’, unidentified parties, and the fact that source of funds and purpose of the transaction could not be ascertained’. Not only the banks but also the public and private sector companies were the culprits. They include Hindustan Aeronautics Limited, Bhushan Steel Limited, Bharti Airtel, and Essar.

As reported also many other news outlets including the Indian Express and daily Dawn,  as many as 44 Indian banks – including State  Bank of India,  Punjab National Bank, Canara Bank, HDFC Bank, Kotak Mahindra Bank, Axis Bank, and Indus Ind Bank –  also figured in over 2000 transactions, linked to Indian entities, valued at over US$ 1 billion (Rs. 7, 369 crores) between 2011 to 2017. Fed by officials, the Indian media has been involved in a viciously noisy campaign to paint Pakistan negatively, in an attempt to influence the outcome of the plenary decision on whether to keep or eject the country from its grey list.

Isn’t it time for FATF to also turn its gaze to India and Gulf states including Dubai and Abu Dhabi, both of which attract a lot of laundered money both from India as well as several European countries?

Synopsis of India Media reporting on Pakistan

Below is a glimpse of how the Indian media has been in overdrive as far as its FATF-related reporting on Pakistan is concerned.

Indian Media reporting on Pakistan and FATF

  •             Pakistan unlikely to exit FATF grey list: Times of India (October 21, 2020)
Imran Khan
  •             Pakistan’s fate at FATF hangs in the balance: Times of India (October 20, 2020)
  •             Pakistan fails to fulfill 6 key mandates of FATF, no action against Massood Azhar, Hafiz Saeed: Times of India (October 18, 2020)
  •             Pakistan unlikely to exit FATF’s grey list, manages to avert being blacklisted: The Print (October 21, 2020)
  •             Terror-haven Pakistan likely to stay put in FATF ‘grey list’ amid mega political upheaval: Report: TimesNowNews (October 21, 2020)
  •             Pass For Terrorists, Proxy Outfits To Cost Pak At Watchdog Meet: Sources: NDTV (October 21, 2020)
  •             Pakistan will not be able to escape FATF grey-list : Afghan lawmaker: (October 21, 2020)
  •             Terror-state Pakistan likely to remain in FATF ‘grey list’ as it fails to act against Islamic terrorist groups: Opindia (October 21, 2020)
  •             Pakistan unlikely to exit FATF grey list: eastern mirror (October 21, 2020)
  •             Pakistan unlikely to exit FATF grey list: The Shillong Times (0ctober 22, 2020)
  •             Ahead of FATF meet, Pakistan continues blind eye on LeT, JeM, Haqqani Network: (October 21, 2020)
  •             Pakistan failed to dismantle terrorist financial infrastructure despite warnings: newkerala (October 20, 2020)
  •             FATF Plenary From Today: Pakistan Likely to Continue in ‘Grey List’ Over Inaction Against Terrorists Masood Azhar, Hafiz Saeed: (October 21, 2020)

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