Day 52 – Q. 4. What are the new methods used for money laundering and terrorist financing as highlighted in FATF’s 2025 update? How can India improve its efforts to tackle these threats at both national and global levels? (250 words, 15 marks)

Q. 4. What are the new methods used for money laundering and terrorist financing as  highlighted in FATF’s 2025 update? How can India improve its efforts to tackle these  threats at both national and global levels? (250 words, 15 marks) 

Introduction 

Money laundering is the process of making illegal proceeds appear legal. As per FATF’s 2025  update, evolving technologies and globalized finance are enabling new laundering and  terrorist financing methods, challenging India’s national and international enforcement  systems. 

Body 

New Methods Identified by FATF (2025) 

1. Use of Cryptocurrencies and Virtual Assets: Terror groups use virtual currencies for  anonymous cross-border transfers. 
2. Trade-Based Money Laundering (TBML): Mis-invoicing and over/under-invoicing in  international trade hide illicit funds. 
3. Crowdfunding Platforms: Misused for  raising funds under humanitarian pretexts.
4. Shell Companies and Complex Ownership  Structures: Layering ownership across  jurisdictions to obscure sources.
5. Smurfing via Digital Wallets: Splitting  transactions into small amounts through  mobile wallets or prepaid cards.

India’s National Efforts to Tackle These  Threats 

1. Strengthening Enforcement Directorate  under PMLA: Empowering the ED to track,  seize and prosecute laundered assets.
2. FIU-IND Monitoring: Financial Intelligence Unit analyses suspicious transaction reports  from banks and financial institutions. 
3. Digital KYC and Aadhaar Integration: Ensures customer due diligence across platforms.
4. Crackdown on Illicit Crypto Exchanges: Recent ED actions against unregulated exchanges  show rising vigilance. 
5. Amendments to Unlawful Activities (Prevention) Act (UAPA): Enables designation of  individuals and freezing of assets linked to terrorism. 

India’s Global Engagements and Cooperation 

1. Active FATF Participation: India supports global standards and regularly updates  compliance frameworks. 
2. Bilateral Treaties and Information Exchange: Agreements with nations to trace and  repatriate black money. 
3. Membership in Egmont Group: Enhances global cooperation among FIUs for intelligence  sharing. 

Conclusion

India must combine strict laws like PMLA with global coordination and technological  surveillance. As global norms evolve, India’s proactive participation and adaptive  enforcement will be key to countering financial crimes.