FATF and AML/CFT Compliance in India — Regulatory Guide

India joined FATF in 2010. Mutual Evaluations occur roughly every ten years; India's 2024 evaluation concluded with a 'Largely Compliant' overall rating. Strengths called out: law enforcement co-ordination and FIU-IND integration with the wider regulatory ecosystem. Areas flagged for improvement: beneficial ownership transparency and supervision of Designated Non-Financial Businesses and Professions (DNFBPs) such as real-estate agents and high-value-dealers. India's AML framework is layered: • PMLA 2002 (as amended) — primary statute • RBI Master Circular on KYC / AML — banks and NBFCs • SEBI AML/CFT Guidelines — intermediaries and registered participants • IRDAI AML / CFT Guidelines — insurers • PFRDA AML Guidelines — pension fund managers and CRAs Key AML controls expected of obliged entities: • Customer Due Diligence (CDD) at onboarding + Enhanced Due Diligence (EDD) for high-risk • Suspicious Transaction Reports (STR) to FIU-IND within 7 days of detection • Cash Transaction Reports (CTR) for cash > ₹10 lakh in 24 hours • Counterfeit Currency Reports (CCR) for any counterfeit notes encountered • Cross-Border Wire Transfer Reports (CBWTR) > USD 5,000 equivalent • Periodic re-KYC and ongoing transaction monitoring with risk-scoring FATF's 40 Recommendations (R.1–R.40) cover policy, AML measures, transparency, international co-operation, and DNFBP supervision. India's PMLA + regulator circulars together address all 40, with the gaps cited above being implementation rather than legislative.

• PMLA 2002 has 'predicate offence' coverage of all major Indian economic crimes
• FIU-IND's PROCEED platform automates STR/CTR ingestion across 35,000+ reporting entities
• Aadhaar-based eKYC dramatically reduces onboarding friction while preserving CDD rigour
• 2024 Mutual Evaluation positions India well for FATF Plenary participation and global capital flows

• Beneficial ownership transparency — MCA's UBO registry is patchy for small private companies
• DNFBP supervision (real estate, jewellers, lawyers) under-resourced vs FATF expectations
• Cross-border information exchange via Egmont Group still bottlenecked for tax-evasion-only cases
• Crypto-asset (VDA) AML rules issued in 2022 but enforcement uneven across exchanges

• FIU-IND issued ₹18.82 crore penalty on Binance (2024) for non-compliance with PMLA reporting
• Paytm Payments Bank curbs (Jan 2024) cited KYC/AML lapses among the trigger reasons
• Multiple Mauritius-route structures unwound post-2024 BEPS + UBO disclosure tightening

• Mandate real-time STR push for very-high-risk typologies
• Build a unified DNFBP register across MoF, MCA and state governments
• Issue a public action plan against the four FATF-flagged effectiveness gaps