Daily Current Affairs : 30-April-2024
India’s Financial Intelligence Unit (FIU) has lately introduced new alert signs to strengthen the combat against money laundering and terrorism financing. These measures are a part of the wider framework of anti-money laundering (AML) and counter-terrorism financing (CFT) efforts in the country. The guidelines are designed to enhance collaboration among diverse regulatory bodies and ensure compliance across specific sectors.
New Alert Indicators for Various Sectors
The FIU has identified particular sectors that require increased vigilance and has set out new alert signs for each. These indicators help in detecting suspicious activities that may relate to economic crimes. Here’s a breakdown of the sectors and their respective new signs:
Capital Markets
- Mis-usage of consumer funds by stockbrokers.
Depositories
- Identification of suspicious off-market transfers.
Insurance Sector
- Alerts for fraud instances that insurance companies encounter, analyzed from the AML/CFT perspective.
Online Payment Gateways
- Monitoring the rate of transactions to identify potential AML/CFT dangers.
Cryptocurrency Service Providers
- Directives to register with FIU and conduct enhanced due diligence in accordance with the “Travel Rule,” which requires sharing personal records of transaction members.
Credit Rating Agencies
- Timely reporting of Suspicious Transaction Reports (STRs) to the FIU.
- Identification of serious corporate frauds with implications for AML/CFT.
Debenture Trustees
- Requirement for periodic reports from issuers of debentures and taking suitable action in case of breaches.
Real Estate Agents
- Guidelines for STR reporting under the Prevention of Money Laundering Act (PMLA).
About the Financial Intelligence Unit (FIU)
FIU-IND was established in 2004 and functions as an independent body. It reports directly to the Economic Intelligence Council, which is headed by the Finance Minister. The main roles of FIU include:
- Receiving and analyzing information on suspicious financial transactions.
- Disseminating intelligence to relevant authorities.
- Coordinating with both national and international agencies to combat money laundering and terror financing.
In addition to its internal efforts, India engages specialized agencies like the Enforcement Directorate and the Central Bureau of Investigation. The country also collaborates internationally through memberships in organizations such as the Financial Action Task Force (FATF) and the Eurasian Group.
By implementing these new alert signs, the FIU aims to enhance the country’s defenses against financial crimes, fostering a safer economic environment for all.
Important Points:
- Introduction of New Alert Indicators: The Financial Intelligence Unit (FIU) of India has introduced new alert signs to combat money laundering and terrorism financing.
- Framework: These measures are part of India’s anti-money laundering (AML) and counter-terrorism financing (CFT) framework, enhancing collaboration among regulatory bodies.
New Alert Indicators by Sector:
- Capital Markets: Mis-usage of consumer funds by stockbrokers.
- Depositories: Identification of suspicious off-market transfers.
- Insurance Sector: Alerts for fraud cases encountered by insurance companies, analyzed from an AML/CFT perspective.
- Online Payment Gateways: Monitoring transaction speed to identify potential AML/CFT risks.
- Cryptocurrency Service Providers: Directives to register with FIU and conduct enhanced due diligence per the “Travel Rule.”
- Credit Rating Agencies: Timely reporting of Suspicious Transaction Reports (STRs) and identification of serious corporate frauds.
- Debenture Trustees: Requirement for periodic reports from issuers and appropriate actions in case of breaches.
- Real Estate Agents: Guidelines for STR reporting under the Prevention of Money Laundering Act (PMLA).
About FIU:
- Establishment: FIU-IND was established in 2004 as an independent body reporting to the Economic Intelligence Council.
- Key Functions:
- Receiving and analyzing information on suspicious financial transactions.
- Disseminating intelligence to relevant authorities.
- Coordinating with national and international agencies to combat money laundering and terrorism financing.
- Collaboration: Engages specialized agencies like the Enforcement Directorate and collaborates internationally through organizations like FATF.
- Goal: To enhance defenses against financial crimes and foster a safer economic environment in India.
Why In News
India’s Financial Intelligence Unit (FIU) has issued new alert indicators under the Prevention of Money Laundering Act (PMLA) for various sectors to combat money laundering and terrorism financing, aiming to strengthen the integrity of the financial system and enhance regulatory compliance.
MCQs about New Alert Indicators from India’s Financial Intelligence Unit
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What is the primary purpose of the new alert indicators issued by India’s Financial Intelligence Unit (FIU)?
A. To increase transaction speeds in financial markets
B. To promote cryptocurrency usage
C. To combat money laundering and terrorism financing
D. To improve customer service in the insurance sector
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Which sector is specifically monitored for the mis-utilization of client funds by stockbrokers?
A. Online Payment Gateways
B. Capital Markets
C. Real Estate Agents
D. Credit Rating Agencies
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What requirement was set for cryptocurrency service providers by the FIU?
A. To enhance customer service
B. To register with the FIU and conduct enhanced due diligence
C. To lower transaction fees
D. To limit the amount of cryptocurrency traded
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What role does the Financial Intelligence Unit (FIU) play in relation to suspicious financial transactions?
A. It approves all financial transactions in India.
B. It only investigates cases of tax evasion.
C. It receives, analyzes, and disseminates information on suspicious financial transactions.
D. It provides loans to businesses.
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