Money Laundering Current Affairs - 2020

Pakistan blacklisted by Asia-Pacific Group of FATF

The Asia Pacific Group (APG) of the Financial Action Task Force (FATF) has put Pakistan in Enhanced Expedited Follow Up List (Blacklist) for its failure to meet its standards. Decision in this regard was taken at FATF APG plenary meeting held in Canberra, Australia.

Reasons for blacklisting: FATF APG has found that Pakistan was non-compliant on 32 of 40 compliance parameters of terror financing and money laundering. On 11 effectiveness parameters of terror financing and money laundering, Pakistan was adjudged as low on 10. Moreover, Pakistan was not able to convince 41-member plenary to upgrade it on any parameter.

About Asia Pacific Group (APG)

It is Financial Action Task Force (FATF)-style regional body for Asia-Pacific region to develop policies to combat money laundering and terror financing. It is inter-governmental organisation founded in 1997 in Bangkok, Thailand.

Members: It consists of 41 member jurisdictions as its members. It also has number of observer jurisdictions and international/regional observer organisations.

Mandate: It is focused on ensuring that its members effectively implement international standards against money laundering, terrorist financing and proliferation financing related to weapons of mass destruction (WMDs).

Govt relaxes norms for Start-ups

The government has relaxed the norms under the definition of Start-Ups. The changes brought in are:

  • The investment limit of angel investors to seek exemption under the Income Tax Act, 1961 has been increased to Rs 25 crore from 10 Crore.
  • An entity shall be considered a start-up up to 10 years from its date of incorporation/registration instead of the previous period of 7 years.
  • An entity would be considered as a startup up to a turnover of Rs 100 crore as against the earlier limit of Rs 25 crore.

Exemptions Proposed

  • A start-up cannot invest in a building or land unless it is for its business or used by it for purposes of renting or held by it as stock-in-trade.
  • A start-up cannot offer loans or advances, other than those where lending money is part of its business.
  • A start-up cannot make any capital contribution to any other entity or invest in shares, car, any vehicle or mode of transport that costs more than Rs 10 lakh.

These exemptions were brought in to allay the fears of CBDT that start-ups could be used for money laundering or receive investment from shell companies for tax evasion.

The relaxations are in line with the government’s vision to promote the culture of entrepreneurship and ease of doing business in India.