Modi govt under FATF scanner over alleged 'misuse' of laws to target NGOs

By Sudhi Ranjan Sen

A global anti-money laundering body is poised to examine whether Indian government under Prime Minister Narendra Modi is misusing local laws to crack down on non-profit organizations, like Amnesty International and policy think tanks.

The Paris-based Financial Action Task Force, a 39-member watchdog that tackles money laundering and terrorism financing, is seeking to understand the adverse impact India’s laws are having on the functioning of non-profit organizations and civil society groups, according to two officials aware of the developments. They asked not to be identified as the discussions are private.

A team from the FATF is expected to visit India in November and meet representatives of non-profit organizations, including international ones, to get a first-hand understanding of the situation, the people said.

Under Indian laws, all non-profit organizations need a foreign contribution license to receive international donations, a process supervised federally by the Home Ministry.

Critics like Amnesty say Modi’s administration has, over the past few years, increasingly used these laws to stifle and deliberately hinder the work of thousands of non-government organizations and think-tanks, including Greenpeace. Amnesty shut its offices in India in 2020 due to what it called “constant harassment” from government agencies.

Earlier this year, the government revoked the Center for Policy Research’s ability to raise foreign funds. The New Delhi-based think-tank is regarded as one of the country’s finest, conducting grassroots research.

Concerns have grown in recent years about India’s commitment to democratic principles. In 2021, Varieties of Democracy, a monitoring institute based in Sweden, classified India as an “electoral autocracy.” Freedom House, a group that tracks the health of democracies worldwide, listed India as “partly free.”

The country has also slid in global press freedom rankings, slipping to 161 out of 180 countries surveyed earlier this year, as the government tightens its grip on the work of civil society groups and the media.

Evaluation Process

In a statement this week, FATF said it had started a “Mutual Evaluation process” and can’t comment on the actions India is taking. It said the group’s standards “are designed to ensure legitimate charitable activities are not disrupted or discouraged.”

It’s unclear what action, if any, FATF would take should its examiners find that the Indian government abused its powers.

FATF can place countries with weak terrorist financing and money laundering provisions on their ‘gray’ or ‘black’ list — which can restrict a country’s international borrowing capabilities. But there is no precedent for a country that is overzealous in using its money laundering laws, as would be the case with India.

India is a member of the FATF, comprising major economies such as the US, Japan, France, European Union and China.

India’s Foreign Ministry and Home Ministry didn’t respond to an email seeking comment.

The FAFT evaluation could create a political headache for Modi coming just months ahead of national polls scheduled for the first half of 2024, where he is hoping to clinch a third consecutive term in office.

In July 2022, the Indian government deleted the list of organizations whose licenses were canceled in the past few years from its website. It hasn’t since posted the data publicly.