New Delhi: The Financial Action Task Force (FATF), an anti-money laundering intergovernmental organisation, is asking if India, under the Narendra Modi government, is seeking to apply laws regarding the financing of organisations “overzealously” and therefore, “misusing local laws to crack down on non-profit organisations like Amnesty International and policy think tanks”, reports Bloomberg.FATF is a watchdog which oversees the implementation of legal, regulatory and operational measures to combat money laundering and terror financing. But Bloomberg reports, citing two officials close to the developments, that FATF is seeking to look at “the adverse impact India’s laws are having on the functioning of non-profit organisations and civil society groups”. A FATF team is to visit India in November and is slated to catch up with NGOs to make a close assessment of the situation, the report cites people in the know as saying. A review could be detrimental to India’s credibility.NGOs under pressureNGOs need to register and secure a license under the Foreign Contribution Regulation Act (FCRA) to be able to receive money from international sources, a process overseen by the Union home ministry (MHA).While the Modi government recently granted an FCRA licence to the Shri Ram Janmbhoomi Teerth Kshetra, the trust overseeing the construction of the Ram temple in Ayodhya, its approach to NGOs and groups not known to be directly under its control has been under the scanner. Amnesty shut down its offices in India in 2020 due to “constant harassment” from government agencies.Earlier, the Modi government revoked the Centre for Policy Research’s ability to raise foreign funds. The Delhi high court had to intervene to allow the New Delhi-based think-tank, considered one of the country’s finest, access to use 25% of FCRA funds.Since the BJP took office, the number of organisations with FCRA licenses has declined sharply and critics say the turn has been in the fortunes of NGOs known to be independent or not toeing the government line. The Wire has reported on the decline, which affects thousands of grassroots workers and organisations in the country. On January 1, 2022, the MHA said that nearly 6,000 organisations had lost their FCRA licenses. Before that, in December 2016, the FCRA licences of about 20,000 NGOs – out of about 33,000 that had this license – were cancelled for alleged violations of the Act.Bloomberg also reports that in a statement this week, the FATF said that it had started a “Mutual Evaluation process” and can’t comment on the actions India is taking. It said the group’s standards “are designed to ensure legitimate charitable activities are not disrupted or discouraged.”It’s unclear what action, if any, FATF would take should its examiners find that the Indian government abused its powers, reports Bloomberg.India’s democratic backsliding has been a matter recorded by several expert groups that study long-term trends in democracy globally. In 2021, V-Dem or Varieties of Democracy, categorised India not as a democracy but as an “electoral autocracy.” Freedom House listed India as “partly free.” India being the global ‘Internet shutdown capital’ has also damaged its reputation as a democracy. FATF in the newsFATF puts countries with weak terrorist financing and money laundering provisions on their ‘grey’ or ‘black’ lists. This amounts to restricting a country’s borrowing capabilities globally. Pakistan ȧs on the ‘grey’ list until recently. Intriguingly, the Modi government told the Supreme Court that former Enforcement Director Sanjay Kumar Mishra should continue in his position despite the court’s strictures because he was vital for India’s case for the FATF. The application read, “Union of India is compelled to approach the Supreme Court seeking extension of the tenure of Mr. Mishra up to October 15, 2023 in view of the ongoing FATF review which is at a critical stage.”The FATF, comprises 39 countries, including India, the US, Japan, France, the European Union and China. Russia’s membership was suspended on February 22, 2023.Bloomberg says that India’s foreign ministry and home ministry didn’t respond to requests for a response. It also notes that FATF’s evaluation, if it does happen, would be a first as there “is no precedent for a country that is overzealous in using its money laundering laws, as would be the case with India.”Last month The Wire reported that if it is established that the market regulator SEBI did not get to the bottom of allegations that the Adani Group round-tripped – the flow of money from and to tax havens – funds to boost its growth, India’s credibility at the FATF could be damaged.
