What is difference Between FIU and FAIU?
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Overview on Financial Intelligence Unit – India (FIU-IND)
- The Financial Intelligence Unit – India (FIU-IND) is the central agency responsible for monitoring, analyzing, and disseminating financial intelligence related to money laundering and financial crimes. It operates under the Ministry of Finance and reports directly to the Economic Intelligence Council (EIC).
- Set up by: Government of India, 18th November 2004. Central national agency for receiving, processing, analyzing, and disseminating information on suspicious financial transactions (SFTs). FIU unit reports to Economic Intelligence Council (EIC), headed by the Finance Minister.
- FIU-IND deals with domestic financial intelligence related to money laundering and tax evasion, collaborating with various enforcement agencies. However, FAIU is specifically tasked with foreign asset investigations and ensuring compliance with black money and tax laws, coordinating internationally.
Functions of Financial Intelligence Unit—India (FIU-IND):
- Collection of Information: Receives financial transaction reports from banks, financial institutions, and intermediaries, including:
- Cash Transaction Reports (CTRs)
- Non-Profit Organization Transaction Reports (NTRs)
- Cross-Border Wire Transfer Reports (CBWTRs)
- Purchase or Sale of Immovable Property Reports (IPRs)
- Suspicious Transaction Reports (STRs)
- Analysis of Information: Analyzes transaction data to identify patterns of financial crime, suspicious transactions, and money laundering activities. and uses data analytics and AI-driven tools to uncover complex fraud networks.
- Sharing of Information: Disseminates intelligence to Law enforcement agencies (ED, CBI, NIA, Income Tax Department), regulatory authorities (RBI, SEBI, IRDAI) and foreign financial intelligence units (FIUs) for international cooperation.
- Acting as a Central Repository: Maintains a national database of financial intelligence reports. and Helps in tracking financial frauds, tax evasion, and money laundering activities.
- Coordination & Collaboration : Works with national, regional, and global networks to strengthen anti-money laundering (AML) measures. and coordinates with organizations like the Financial Action Task Force (FATF) for compliance with global AML/CFT regulations.
- Research & Analysis : Monitors trends, typologies, and emerging risks in money laundering and financial crime. and Identifies vulnerabilities in financial institutions and regulatory frameworks.
Key Responsibilities of Financial Intelligence Unit – India (FIU-IND)
- Monitoring Suspicious Transactions: Collects Suspicious Transaction Reports (STRs) from banks, financial institutions, and intermediaries. and Tracks high-value cash transactions, money laundering, and tax evasion cases.
- Coordination with National & International Agencies: Works with Enforcement Directorate (ED), Central Bureau of Investigation (CBI), Income Tax Department, RBI, SEBI, and foreign FIUs. and Supports investigations related to money laundering, terrorist financing, and economic crimes.
- Regulatory & Compliance Enforcement: Ensures compliance with the Prevention of Money Laundering Act (PMLA), 2002. and Mandates reporting of high-value transactions from banks, insurance companies, and financial institutions.
- Global Cooperation: Collaborates with Financial Action Task Force (FATF), Egmont Group, OECD, and other international bodies to curb financial crimes.
- Significance of FIU-IND: Plays a key role in preventing financial crimes, ensuring transparency in transactions., also Strengthens India’s anti-money laundering (AML) framework. and Assists in identifying and curbing black money and illicit fund flows.
- Why is FIU-IND important?
- Prevents money laundering & terror financing.
- Supports law enforcement in investigating financial crimes.
- Ensures compliance with international AML/CFT standards.
- Protects India’s financial system from illicit activities.
Difference Between financial intelligence Unit & foreign asset investigations Unit
| Feature | Financial Intelligence Unit (FIU-IND) | Foreign Assets Investigation Unit (FAIU) |
|---|---|---|
| Background | Established to collect, analyze, and disseminate financial intelligence to combat money laundering, terrorist financing, and financial crimes. | Focuses on undisclosed foreign assets, income, and financial transactions, especially violations of tax and financial laws. |
| Key Focus | Suspicious Financial Transactions (SFTs) flagged by banks and financial institutions, including high-value cash transactions and unusual fund flows. | Investigating Indian taxpayers with unreported foreign assets, foreign bank accounts, offshore investments, and properties abroad. |
| Legal Framework | Operates under the Prevention of Money Laundering Act (PMLA), 2002 and reports to the Economic Intelligence Council (EIC), headed by the Finance Minister. | Operates under the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act (BMA), 2015 along with the Income Tax Act, 1961 (ITA). |
| Scope of Activities | – Collecting Suspicious Transaction Reports (STRs). – Sharing intelligence with ED, CBI, Income Tax Department, foreign FIUs, etc. – Investigating financial crimes within India. |
– Probing shell companies and tax haven accounts. – Enforcing tax evasion cases involving foreign assets. – Imposing penalties under BMA, 2015. – Seizing assets located in India related to foreign tax evasion. – Coordinating with OECD, FATF, and international financial bodies. |
FIU-IND Imposes INR 5.49 Crore Penalty on Paytm Payments Bank for PMLA Violations
- The Financial Intelligence Unit-India (FIU-IND) has imposed a monetary penalty of ₹5.49 crore on Paytm Payments Bank Ltd (PPBL) for violating its obligations under the Prevention of Money Laundering Act (PMLA), 2002, and the Prevention of Money Laundering (Maintenance of Records) Rules, 2005 (PML Rules).
- FIU-IND reviewed Paytm Payments Bank Ltd after receiving specific inputs from law enforcement agencies regarding certain entities engaged in illegal activities, including online gambling. The probe revealed that proceeds of crime from these illegal operations were being routed and channeled through bank accounts maintained with Paytm Payments Bank Ltd.
Regulatory violations identified:
- Failure to comply with AML (Anti-Money laundering) and CFT (counterfinancing of terrorism) norms.
- Non-compliance with Know Your Customer (KYC) safeguards for payout services and beneficiary accounts.
- Violations of various PML Rules, including:
- Rule 7(3) & Rule 2(1)(g) (failure in reporting obligations).
- Rule 8(2) read with Rule 3(1)(D) & Rule 2(1)(g) (failure in transaction monitoring).
- Rule 9(12) & Rule 9(14) (failure in KYC compliance).
Implications & Takeaways on Paytm Payments Bank for PMLA Violations
Payment banks must rigorously follow AML/CFT norms and KYC regulations to prevent misuse of financial channels.The penalty highlights increasing scrutiny on digital payment players and banks handling high-risk transactions. Entities using such banks for financial transactions should ensure compliance to avoid legal consequences.
FIU-IND’s Final Decision-on Paytm Payments Bank PMLA Violations
Show Cause Notice issued: Paytm Payments Bank was asked to respond to compliance failures. Written and oral submissions were considered. Violations were substantiated based on voluminous evidence. On March 1, 2024, FIU-IND imposed a penalty of ₹5.49 crore on Paytm Payments Bank Ltd under Section 13 of the PMLA. Official Press Release: Press Information Bureau (PIB)