Disrupting Illicit Finance: FATF Guidance Mandates Asset Recovery as a National Priority
SDG 16: Peace, Justice and Strong Institutions | SDG 17: Partnerships for the Goals
Institutions: Ministry of Finance | Enforcement Directorate | Central Bureau of Investigation (CBI) | Ministry of Personnel, Public Grievances and Pensions.
The Financial Action Task Force (FATF) Asset Recovery Guidance and Best Practices is a comprehensive, 340-page report released to intensify global efforts to trace, seize, and confiscate the proceeds of crime, recognizing that depriving criminals of their gains is as important as prosecuting them.
Crucially, the report mandates that jurisdictions must look beyond traditional prosecution and utilize tools like Non-Conviction Based (NCB) Confiscation—a legal mechanism to forfeit assets without needing a prior criminal conviction—to target and confiscate criminal assets. This shift is required because over 80% of jurisdictions are operating at low effectiveness levels in asset recovery, and the FATF aims to drive a tangible improvement in confiscating and returning criminal assets globally. The guidance covers all phases, from modern financial investigations and swift securing of assets to ensuring victims are compensated.
Strategic Shift: The core requirement is for jurisdictions to establish asset recovery as a national policy and operational priority. This means adopting a “follow the money” approach where financial investigations run parallel to criminal probes, reducing the incentive for illicit activities.
Low Global Success: Figures from INTERPOL and UNODC suggest a very low percentage of criminal assets are currently confiscated worldwide. The guidance is designed to bring a “tangible” improvement in confiscation and the return of criminal assets.
Broad Scope: The guidance covers all phases of the process, from modern financial investigations and swiftly securing assets, to safeguarding rights and ensuring victims are compensated.
Policy Relevance and Strategic Path Forward
This FATF guidance holds immense relevance for India by validating and highlighting the effectiveness of its existing legislative framework while also identifying clear areas for continual improvement and reform.
India as a Benchmark
The report explicitly praises India’s asset recovery regime and cites the Enforcement Directorate (ED) as a model agency.
PMLA Framework: India’s framework under the Prevention of Money Laundering Act (PMLA) is commended for enabling swift freezing, attachment, and confiscation of criminal proceeds even before conviction.
Victim Compensation: Several Indian case studies are featured, including one where the ED restored Rs. 6,000 crore to victims of an investment fraud and another where Rs. 538 crore was released to reimburse over 75,000 investors in a corporate bond scam. The report noted confiscated properties in another case were identified for the construction of a new airport for the public benefit.
Innovative Tools: FATF noted India’s use of value-based confiscation for assets siphoned overseas and the effective use of technology like blockchain analysis in virtual asset seizures.
Strategic Path Forward
Despite the praise, the guidance highlights global barriers that India must address to enhance effectiveness:
Streamline Judicial Processes: Address judicial backlog and delays in provisional freezing and asset seizure orders, which currently impede swift action and cross-border enforcement.
Enhance Data and Transparency: Mandate the publication of comprehensive, consolidated statistics on frozen, seized, and forfeited assets. This data is essential for assessing national risk, allocating resources, and improving accountability.
Strengthen Technical Capabilities: Invest in enhanced technical, forensic, and regulatory capabilities to tackle complex threats posed by virtual assets, nominee structures, and complex corporate ownership.
Boost Inter-Agency Coordination: Sustain efforts to improve regular and seamless information sharing between operational entities (ED, CBI, FIU-IND) to prevent operational silos and ensure strategic intelligence flows.
What is Financial Action Task Force? → The Financial Action Task Force (FATF) is the world’s leading inter-governmental policy body that establishes and monitors standards to combat financial crimes, primarily money laundering (ML) and terrorist financing (TF). Its core mission is to generate political will globally for legislative and regulatory reforms to protect the integrity of the international financial system. The FATF develops the FATF Recommendations, a comprehensive global framework, and assesses countries through peer reviews. India is a full member of the FATF and is obligated to implement all these standards, notably through domestic legislation like the Prevention of Money Laundering Act (PMLA).
Follow the full report here: Asset Recovery Guidance Best Practices