Karma works in mysterious ways. For years on end, India has called on the Global Terror Finance Watchdog to dangle the sanctions sword over its rivals in the name of state-sponsored terrorism. This time, however, it was New Delhi’s turn to have a taste of its own medicine when shrill alarm bells pointed to a well-organised circuit operating across the length and breadth of India crowdfunding for their own designs. But while the Modi Administration may try hard to wave their hands in the air and plead for sheer helplessness, with some bizarre connections to Pakistan, it would be downright impossible for them to dismiss abounding concerns over misuse of FATF regulations in biased stifling of freedom of expression and crackdown against nonprofit organisations in what some may call selected weaponisation. The authorities are said to blatantly disregard FATF standards, particularly Recommendation 8, which requires the laws and regulations to target only those non-profit organisations identified through a careful, targeted “risk-based” analysis as vulnerable to terrorism financing abuse. On the other hand, glaring loopholes have deliberately been created in the system for the blue-eyed nefarious outfits to carry on with their agenda-peddling.
Said to be in compliance with FATF recommendations, India passed laws and legislative amendments, including the Prevention of Money Laundering Act (PMLA) and the Foreign Contribution (Regulation) Act (FCRA). Now while the Enforcement Directorate has been empowered to freeze accounts, seize properties and issue detentions (in most cases, without judicial authorisation) to those who dare dissent, something is clearly rotten in the rest of Denmark. Despite a large chunk of the pie belonging to real estate and people who deal in precious metals/stones (formally categorised as Designated Non-Financial Businesses and Professions (DNFBPs)), there appears no noteworthy transparency in their operations or adherence to Indian Anti-Money Laundering/Countering Financing of Terrorism obligations. Tackling illicit financial flows is important, especially for a country that keeps tooting its horn to its membership of the watchdog body. But does it actually stay true to its commitments when most of its DNFBPs cite complex terminologies, linguistic differences and cumbersome procedures to push responsibility to ensure transparent dealings off their shoulders?
This time, however, it was New Delhi’s turn to have a taste of its own medicine when shrill alarm bells pointed to a well-organised circuit operating across the length and breadth of India crowdfunding for their own designs.
Spread all over India, the high-end real-estate sector (worth USD 263.37 billion) is littered with reports of frauds/ scams, unauthorized money pooling, stashing of illicit money, price manipulation, and incorrect valuation, which are all perfect ingredients to stir the money laundering broth. Going by the statistics compiled by ED, the real estate sector accounts for 35 per cent of the cases of money laundering. However, these complaints and the phenomenal growth of the sector are not deemed a good enough reason for the state to ascertain the actual number of real estate agents.
Just as worrisome is the opaqueness in the trade of precious metals and stones where extreme emphasis is placed on cash-intensive transactions. Is it really hard to believe the brewing illegal trade in one of the main gold capitals of the world where almost a third of the gold from here, there and literally everywhere is making merry through its borders? Every now and then, newspaper reports quote the influence of questionable income playing cards with goldsmiths, which lay the foundation of large-scale money laundering and tax evasion. Illicit gold enters the country; gets absorbed into the legal market with unimaginable ease, and is rebranded to be re-exported as jewellery.
Although New Delhi seems content in its tried and tested argument of looking over the ungovernable scale of its informal sector. The authorities usually complain that it is extremely difficult for DNFBPs to verify the identities of their customers and authenticate the source of their funds. But, when replete instances of crackdowns by some honest-to-their-job investigators on diamond and gold merchants who operate in connivance with dirty public officials fail to prompt the government to put its house to order, these distress calls begin to lose their oomph. India is in no position to poke holes in legislation passed by other countries as they attempt to curb the menace when it is yet to push the proverbial genie of corruption back inside the bottle. According to a report submitted by the Comptroller and Auditor General of India, the government needs to realise its failure in addressing the criminal abuse of the gem and jeweller sector in India. No matter how many international agreements India may have signed to build a facade of its commitment towards global security, there is a glaring absence of effective cooperation.
If the FATF membership was actually as significant for India in its quest to become a major player in international finance as it proclaims, shouldn’t it have tried its best to clean up its own backyard instead of orchestrating politically motivated attacks on other countries? Now that it is time for India to be put under the scanner as the independent inter-governmental body is ready to check the global transparency system apart from evaluating anti-money laundering laws and terror financing and see for itself the worth of Prime Minister Narendra Modi’s huffing and puffing, a peculiar sense of uncertainty seems to have gripped the country. Instead of plugging all the loopholes that allow black money to be routed in the garb of transactions and claims, they believe elitist propaganda would hand them the clean chit.
The writer is a freelance columnist