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Posted 18 Nov 2024

2 min read

Reserve Bank of India issued ‘Internal Risk Assessment Guidance’ for Money Laundering/Terrorist Financing Risks’

Key Focus of guidelines

  • Focus on a data driven quantitative approach to  frauds.
  • Stress on the risk-based framework in its entirety with compliance, due diligence, and continuous monitoring.

Relevance of Guidelines

  • Increasing Incidents: RBI Annual Report 2023-24 shows that the total number of fraud cases jumped from 13,564 in 2022-23 to 36,075 in 2023-24.
  • Loss to global GDP: The United Nations Office on Drugs and Crime estimates that between $800 billion and $2 trillion is laundered globally each year, which is 2–5% of the global GDP.

Risks associated to financial system with ML/TF

  • Political: Weakening countries and affecting stability.
  • Security: Internal and external, terrorism and terrorist financing threats, including related to ISIL or Al Qaeda.
  • Economic: Credit Frauds with bank's money used for illegitimate activities thereby circumventing finances for other economic sectors. 
  • Social: Affecting the social harmony, communal tensions, crimes.

Initiatives taken for ML/TF

  • Global
    • The International Convention against Transnational Organized Crime (2000; the Palermo Convention)
    • FATF anti-money laundering and counter-terrorist financing (AML/CFT) framework
  • India
    • The Prevention of Money Laundering Act, 2002 (PMLA)
    • Financial Intelligence Unit (FIU-IND), Enforcement Directorate (ED)
    • Foreign Exchange Management Act, 2000, (FEMA)
  • Tags :
  • Money Laundering
  • Terrorist Financing
  • FATF
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