Govt reviews legal framework to remove gaps
NEW DELHI : The government is reviewing the country’s legal framework to identify gaps that financial offenders could exploit for laundering money, with possible tweaks in rules and regulations expected over the next few weeks, two people familiar with the development said. The focus is to ensure the legal system stands the scrutiny of the Financial Action Task Force (FATF) recommendations. India is undergoing a peer review by the UN body, which assesses the technical compliance of its recommendations and the effectiveness of a country’s anti-money laundering and anti-terror financing framework.
“We are a diverse country with a huge amount of financial transactions every year. The focus of the government’s review is on how robust is the enforcement of the legal framework," said one of the two people on the condition of anonymity. India’s economy, which is expected to reach a size of ₹301 trillion in 2023-24 in nominal terms, has over 1.5 million active companies and more than 267,000 active limited liability partnerships (LLPs) now.
Countering tax evasion and the laundering of such funds through complex transactions has been a priority for the government. Various departments and probe agencies now share intelligence to detect circuitous transactions that do not have any economic substance and may be used for money laundering. The previous country review of India’s regulatory framework was conducted in 2010, after which FATF revised its standards.
A key area of the FATF review is the transparency in beneficial ownership of assets, said the second person. In the latest rule change, the corporate affairs ministry on Saturday stepped up the reporting requirements of LLPs to bring more transparency to beneficial holdings. In
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