In its 2010 report, FATF had raised serious concerns over lack of measures in place to avoid money laundering activities through the vast network of post offices in the country

India needs to take further steps to address the risks of possiblemoney laundering and terror financing activities through casinos, while its vast post office network has been ring-fenced from such vulnerability, the Financial Action Task Force (FATF) said today.

In its 46-page status report on India, the Paris-based inter-government body for anti-money laundering and countering financing of terrorism (AML/CFT) standards, said though the casino sector in the country has been brought under the Prevention of Money Laundering Act (PMLA), more needs to be done.

After deficiencies were pointed out by FATF in 2010, the Indian authorities set up a Casino Sector Assessment Committee to look into the issue and instructions were issued to the Sikkim and Goa governments to put in place remedial measures.

Subsequently, Goa and Sikkim issued required guidelines for casinos operating in those states.

'Extension of the PMLA to the casino sector is very recent and there is insufficient evidence of effective implementation,' FATF said, while adding that it is difficult to conclude as of now that preventive measures have been effectively implemented in India's casino sector.

With regard to the post offices, FATF said that AML/CFT compliance monitoring has been introduced for the first time for India Post's financial services business and an inspection programme was also commenced in April 2011.

In its 2010 report, FATF had raised serious concerns over lack of measures in place to avoid money laundering activities through the vast network of post offices in the country.

Subsequently, the Finance Ministry and the Department of Post had issued circulars and guidelines requiring India Post to comply with AML/CFT measures when doing financial business.

In April 2011, India reported to FATF that 6,154 post offices out of the 25,312 in the country had been inspected.

In January 2013, India further reported inspection of additional 5,297 post offices in the second part of 2012.

FATF also observed that India has addressed the concerns regarding the regulatory framework for 'politically exposed persons' and required steps have been put in place by financial sector regulators such as RBI, Sebi and IRDA.

With respect to the suspicious transactions reporting regime, the Financial Intelligence Unit has also enhanced its outreach programme to provide guidance to the financial sector on their reporting obligations, and has engaged in extensive compliance monitoring.

'The result has been a significant increase in the number of Suspicious Transaction Reports (STRs) filed both with respect to money laundering and terror financing, without any evidence that this constitutes defensive reporting.

'Approximately two-thirds of the STRs received are disseminated to law enforcement, intelligence agencies and the regulators,' FATF said.