FATF report lauds ED for role in asset recovery, highlights PMLA, Fugitive Economic Offenders Act

An Andhra Pradesh investment fraud scandal where the ED and state Crime Investigation Department cooperated to recover Rs 60 billion (approx USD 690 million) for victims has been cited in the report as a prime example of practical success. Similarly, properties worth Rs 17.77 billion (around USD 204 million) were attached following a real estate scam, demonstrating India’s adept application of value-based confiscation when assets had been siphoned overseas, the report noted.

The report also noted the ED’s swift international collaboration, highlighted by the seizure of 268.22 bitcoins valued at Rs 1.3 billion (USD 29 million) linked to a drug-trafficking case pursued jointly with the United States.

Despite lauding the achievements, the FATF report flags challenges India faces in enhancing asset recovery. These include:

Legal and procedural complexity: Harmonising the enforcement across varied laws, jurisdictions, and conviction protocols remains challenging. Navigating judicial oversight requirements, balancing swift asset freezing with due process, and managing protracted litigations slow down effectiveness, the report said.

Inter-agency coordination barriers: While India demonstrates strong collaboration, the report points to occasional operational silos, rivalry, and inconsistent information-sharing, which impede seamless case- handling and strategic intelligence flows.

Data and transparency gaps: Like many countries, India lacks comprehensive, consolidated, and publicly available statistics on key asset recovery metrics, an essential tool for monitoring, policy design, and accountability.

Technical and investigative limitations: Growing challenges such as complex corporate ownership, nominee structures, and virtual assets require enhanced technical, forensic, and regulatory capabilities.

Funding and conflicts of interest: Financing investigation and prosecution through recovered assets holds benefits, but necessitates stringent safeguards against conflicts of interest or undue prioritisation of confiscation over justice.

Judicial and enforcement bottlenecks: Delays in provisional freezing and asset seizure orders, complexities in enforcing cross-border confiscation, and judicial backlog have been cited as impediments requiring reform.

The FATF’s new standards, the first substantial asset recovery reform in over 30 years, hold India’s framework up as a reference while underscoring the need for continual improvement. India’s policies on early financial investigations, use of technology like blockchain analytics and multi-agency coordination have set a high bar, but “comprehensive statistics, enhanced technical capabilities, and streamlined judicial processes” have been identified as priority areas.

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