The FATF praised India's precious metals and stones sector for its potential but warned of money laundering and terrorist financing risks. With 175,000 dealers nationwide and the GJEPC having 9,500 members, growth opportunities exist. The report stressed the need for better risk management and data collection. It called for a detailed action plan and increased vigilance against criminal exploitation. India's cultural ties to these assets were acknowledged, highlighting the sector's economic significance and the importance of regulatory enhancements.
The Financial Action Task Force (FATF) recently highlighted the immense potential of India's precious metals and stones trade, while also underscoring the need for enhanced vigilance against money laundering and terrorist financing risks. In its latest mutual evaluation report for India, the Paris-based global body emphasized the sector's susceptibility to misuse due to its ability to facilitate the movement of substantial funds discreetly.
With approximately 175,000 dealers of precious metals and stones across the country, the sector's scale is significant. However, the Gems and Jewellery Export Promotion Council (GJEPC), the apex body for the industry, has only 9,500 members, indicating room for growth and formalization within the sector.
To engage in gem trade in India, being a certified GJEPC member and possessing tax registration are obligatory. Despite the sector's prominence, the report identified gaps in understanding and managing risks associated with money laundering, especially concerning smuggling and trading in precious metals and stones, as well as human trafficking.
The report emphasized the importance of gathering comprehensive data and insights from both domestic and international sources to bolster risk assessments related to precious metals and stones trafficking and associated money laundering risks.
Furthermore, the FATF stressed the need for a more nuanced action plan with clear priorities and benchmarks to fortify responses. It recommended heightened scrutiny on cross-border criminal networks potentially exploiting the sector, urging authorities to remain vigilant in combating fraud, smuggling, and money laundering.
Recognizing India's deep cultural affinity for precious metals and stones, the report acknowledged the sector's integral role in Indian tradition and economy. India, being a significant consumer, importer, and exporter of gold and gems, boasts a thriving industry contributing substantially to its GDP.
As India's authorities continue to nurture this vital sector, the FATF's guidance serves as a roadmap for fortifying regulations, enhancing cooperation, and mitigating risks. By fostering a robust framework that aligns with international best practices, India can safeguard the integrity of its precious metals and stones industry while fostering sustainable growth and compliance.
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