From Compliance to Conviction: How India Can Lead the Fight Against Money Laundering with Swift Action

India's battle against money laundering and terrorist funding has received significant global attention, especially with the Financial Action Task Force (FATF) placing the country under “regular follow-up.” While India has made impressive strides in financial compliance and digital payments, there remains a critical backlog of money laundering cases that need swift resolution. Terror groups exploiting non-governmental organisations (NGOs) for funding activities pose an urgent threat that requires decisive measures. Here's what India must do to step up the pace of these cases and safeguard national security.

Address the Backlog: Strengthening Judicial Infrastructure??

One of the pressing challenges highlighted by the FATF is India’s slow court process, with many money laundering cases stuck in prolonged trials. A swift solution lies in dedicated financial courts or fast-track divisions within existing judicial systems, exclusively handling financial crime cases. Additionally, inducting more prosecutors and equipping them with specialised training will streamline trials, ensuring timely convictions and penalties for offenders.

Digitisation of case management can also play a pivotal role. Automating the filing and tracking of money laundering cases will prevent bottlenecks, reduce paperwork, and ensure seamless coordination between enforcement agencies and the judiciary.??

Tackling NGOs: A Risk-Based Approach??

Due to less stringent monitoring and loopholes in financial reporting, NGIs are vulnerable to misuse of terror funding. To counter this, the government should implement a risk-based framework for oversight, focusing on NGOs, charities, and other non-profits involved in high-cash transactions. FATF also suggests conducting targeted outreach to NGIs, helping them recognise how they could be unknowingly exploited for terrorist activities.

?By enhancing transparency and monitoring within the non-profit sector, authorities can spot suspicious transactions early. Initiatives like compulsory reporting of large donations and regular audits will act as a deterrent to those intending to misuse these institutions.

Effective Implementation of Cash Restrictions??

The FATF points out that India needs to improve the enforcement of cash restrictions, particularly among dealers in precious metals and stone. This sector is often exploited for money laundering due to the ease of converting illicit funds into valuable assets. India must increase surveillance and inspections in these industries, ensuring strict adherence to cash transaction limits.

?Authorities should also integrate these sectors into the digital economy by promoting cashless transactions. Incentivizing the adoption of digital payment systems will discourage cash hoarding and create a transparent financial trail, making it harder for illicit funds to flow undetected.

Coordinated Action Across Agencies??

India's size and institutional complexity make collaboration between multiple agencies essential. Effective coordination between enforcement bodies such as the ED, financial intelligence units, and the judiciary can prevent delays in case closures. Setting up inter-agency task forces that meet regularly to share information and align efforts will enhance the efficiency of investigations and prosecutions. Additionally, India should enhance international cooperation, especially in tracking fugitives and recovering illicit assets held abroad. Expediting extradition processes for individuals will serve as a strong message and demonstrate India’s commitment to curbing financial crimes.

Public Awareness and Transparency??

Building a risk-aware culture among citizens and businesses is essential to reduce vulnerabilities. Authorities can launch public awareness campaigns to educate businesses on anti-money laundering (AML) compliance and encourage people to report suspicious activities. Whistleblower mechanisms with robust protection frameworks will further empower individuals to act without fear of retaliation.

Transparency is another critical factor. Publishing regular updates on the status of major money laundering cases will maintain public trust and demonstrate that the government is actively working to curb illicit finance.

Conclusion??

India has achieved remarkable progress in financial compliance, digital inclusion, and international cooperation, but the fight against money laundering and terrorist funding is far from over. Faster case resolutions, stronger oversight on NGIs, cash restriction enforcement, and cross-agency collaboration are the need of the hour. With proactive measures and timely action, India can not only safeguard its financial system but also set an example for the world in tackling illicit finance.