India Advocates Nuanced Regulation for NPOs Amid FATF Evaluation

India will adopt a nuanced approach towards at-risk non-profit organizations (NPOs), addressing concerns raised by the Financial Action Task Force. India received high ratings in several areas including international cooperation and financial intelligence but aims to improve its prosecution mechanisms for money laundering and terror financing cases.

India announced on Thursday that it will implement a nuanced approach to manage at-risk non-profit organizations (NPOs), responding to concerns highlighted by the Financial Action Task Force (FATF). The FATF's report has lauded India’s efforts in combating terror financing and money laundering.

Additional Secretary (Revenue) Vivek Agarwal from the Finance Ministry clarified that India excels in six immediate outcomes of FATF, which include risk assessment, policy coordination, international cooperation, financial intelligence, confiscation, and proliferation financing. However, India received a medium rating in areas such as the abuse of NPOs and the prosecution of terror financing and money laundering cases.

Agarwal emphasized that while there is minimal scope for NPOs to be misused for terror financing due to restrictions on cash donations, India prefers a risk-based regulation rather than an overarching restrictive one. He noted that India aims to engage better with NPOs to ensure compliance and transparency to mitigate misuse risks.