“The global financial watchdog significantly calls for ‘priority actions’, one of which is to ensure India’s civil society is not unnecessarily harassed and intimidated under the pretext of money-laundering or terrorism-financing

The ‘Financial Action Task Force’ (FATF) in its Mutual Evaluation Report pulls up the Indian government on the risk to abuse that the non-profit sector faces in India, said Amnesty International today. It also flags the delay in prosecutions in India under its money laundering and anti-terrorism laws.

The report published today, based on the fourth round of India’s evaluation on its measures to tackle illicit financing, highlights the ‘critical’ need to ‘taking a risk-based and educative approach with non-profit organisations.’

“The global financial watchdog significantly calls for ‘priority actions’, one of which is to ensure India’s civil society is not unnecessarily harassed and intimidated under the pretext of money-laundering or terrorism-financing.  While the Indian Government may harp only on the positives in the FATF’s report on India, they can’t conveniently downplay how they have been rapped for their partial compliance with measures to protect the legitimate activities of the non-profit sector,” said Aakar Patel, chair of board at Amnesty International India.

The Indian Government… have been rapped for their partial compliance with measures to protect the legitimate activities of the non-profit sector.

Aakar Patel, chair of board at Amnesty International India

The report shows that India is only ‘partially compliant’ against FATF recommendation 8 which requires that laws and regulations to combat money laundering and terrorism financing target only those non-profit organisations that are identified – through a careful, targeted “risk-based” analysis – as vulnerable to terrorism financing abuse.

Three points of importance flagged in the report by FATF include the inability of India’s Income Tax department to demonstrate that its monitoring and outreach prioritised the 7500 non-profit organizations identified to be at-risk of terrorism financing abuse.

Secondly, the FATF also notes that the burdensome registration and audit requirements that non-profits in India have to undergo are not “always risk-based or implemented based on consultations with [them] to avoid negatively impacting their work”.

Thirdly, the FATF acknowledges that the 2020 amendments to the Foreign Contribution (Regulation) Act (FCRA) were implemented without adequate consultation with non-profits. Thereby, “impacting their activity or operating models”. The Indian government has shut down foreign funding for thousands of civil society groups using FCRA with over 20,600 non-governmental organizations losing their licenses to receive foreign funding in the past decade, many of them groups that have long promoted human rights in the country.  

In addition, the report also highlights the delay in prosecutions under Unlawful Activities (Prevention) Act (UAPA) and Prevention of Money Laundering Act (PMLA) were “resulting in a high number of pending cases and accused persons in judicial custody waiting for cases to be tried and concluded”. Such delays illustrate the possibility that  these laws are being misused to clamp down on human rights defenders by ensuring that the criminal proceedings characterized by stringent bail provisions, prolonged detention, and lengthy investigation act as punishment.

Among the proposed ‘Priority Actions’ the watchdog recommends India should ensure a risk-based approach, including by conducting a more focused, coordinated outreach to non-profit organizations on their Terrorism Financing risks. FATF also recommends India to address the delays in concluding prosecutions under UAPA and PMLA considering high rate of arrests and low rate of conviction under these laws.    

The Indian Government must take seriously the priority actions recommended by the FATF report and calibrate its actions to stop the witch-hunt of non-profit organizations, human rights defenders and activists who dare to dissent.

Aakar Patel

Previously, Amnesty International’s research documented how the FATF’s recommendations have been abused by the Indian authorities including by bringing in draconian laws in a coordinated campaign to stifle the non-profit sector. These laws are in turn used to bring terrorism-related charges and, amongst other things, to prevent organizations and activists from accessing essential funds. 

“Amnesty International has consistently flagged how these laws have been weaponized by authorities to target, intimidate, harass and silence critics. In consultation with the non-profit sector, the government needs to put in place measures that are focused, proportionate and not overbroad by bringing laws like FCRA and UAPA in line with international human rights standards. The Indian Government must take seriously the priority actions recommended by the FATF report and calibrate its actions with a risk-based approach to stop the witch-hunt under India’s anti-terror and money-laundering laws of non-profit organizations, human rights defenders and activists who dare to dissent,” said Aakar Patel.