Look to rope in insurance councils in the proposed panel.
India's self-regulating organisations from banking, asset management, stock market and insurance industries plan to form a group to step up co-ordination and vigil to track and prevent money laundering and funding of terrorist activities, according to officials of two of these bodies.
Representatives of the Association of Mutual Funds of India and the BSE Brokers Forum were part of the first round of discussions held last week. They plan to rope in the Life Insurance Council and general insurance councils as well.
Sally Scutt, chairperson of the UK's joint money laundering steering group, shared his experience at the meeting, said a senior executive with an Indian mutual fund.
India is a growing economy and with the boundaries of business fast disappearing, its economy will be exposed to a much wider global business environment, according to a report on money laundering and terrorist financing prepared by John Mathews, senior vice-president, HDFC Mutual Fund.
"It will be a good idea to form such a panel as all entities are operating in silos with the regulator concerned issuing guidelines separately,'' said a senior official of the Indian Banks' Association. "The adoption of uniform reporting formats will be useful."
Many sectors in India, like banking, are already exposed globally. While growth was inevitable and imperative, the underlying risks that came with such global inclusion were substantial, it said.
The group will aim at understanding the risks involved and interacting closely with the Financial Intelligence Unit (FIU), local regulators and trade associations representing the various sectors of the Indian financial services.
FIU was set up by the government in November 2004 and reports directly to the Economic Intelligence Council headed by the finance minister. The responsibilities of FIU include collecting, analysing and sharing of information, acting as a central repository and coordinating with local and overseas agencies involved in anti-money laundering activities.
In June this year, India became the 34th country to join the Financial Action Task Force (FATF). This helps it track the money behind terrorist activities and its banks to grow overseas. Indian banks were earlier facing barriers in expanding overseas as they did not meet the FATF standards on anti-money laundering and terrorist financing.
"Alongside India's membership of FATF, the country is now being accepted into a substantive role in critical global bodies such as the Financial Stability Board, the Basle Committee on Banking Supervision, the International Organization of Securities Commissions, and the G-20, among others. These roles require new kinds of policy capabilities from the Indian side,'' the report said.
