INDIA BUSINESS WORLD - APRIL 2007
The Month that was ...

INDIA TO JOIN GLOBAL FIGHT AGAINST MONEY LAUNDERING

INDIA will share information on money laundering with other countries such as the US, the UK, Canada and Australia. Joining the global fight against money laundering, New Delhi is set to become a part of the international organization of financial intelligence units, the Egmont Group.

The government is likely to take a proposal in this regard to the Union Cabinet soon. The move is aimed at curbing drug money, kickbacks and funding of terrorist activities. In the case of India, hawala and smuggling are the menaces that need to be tackled due to involvement of terror groups active in Kashmir, the north-east and Naxal-dominated regions.

Money laundering rackets such as hawala usually involve foreign operatives and tracking them requires support from intelligence agencies of other countries. Officials said the recent case involving a stud farm owner in Pune has highlighted the need to tackle cross border transactions more carefully.

As of now, Indian authorities find themselves on a weak footing as they are often unable to elicit information on laundering activities or suspicious banking data from various countries as India's Financial Intelligence Unit (FIU) does not have a MoU with its counterparts in most countries. Hence, the push to join the Egmont Group and share information with key countries.

The Egmont Group - that now has 101 countries as its members - was established in 1995. It came about as a result of efforts by intelligence agencies in a few countries that decided to establish an informal group for cooperation between specialized agencies called FIUs on money laundering. Since the decision was taken at the Egmont Palace in Brussels, the group came to be known by the name. All those who wish to become a member of the organization have to meet certain requirements.

Some of the agencies that are members of the group include Austrac of Australia, FinCEN of the US, and Fintrac of Canada and Serious Organized Crime Agency of the UK.

India will enter into MoUs with the FIUs of other countries to facilitate flow of information. The country established an FIU in 2004 that collects data on suspicious or unusual financial transactions. The MoU will be based on the model agreement developed by the Egmont Group.