India's position in FATF: Financial astuteness will be crucial as India aspires to become a $5 trillion economy. In a move towards this direction, India has bagged an elevated status on the global FATF (Financial Action Task Force) rating bringing it up to the level of France, Italy, and the UK in terms of compliance. FATF is a global watchdog on money laundering and terror financing. It was formed in 1989.

Sources in the Ministry of Finance on Tuesday said that India has moved up several notches in its ranking on the FATF assessments. This was the country's second enrollment for evaluation and, has managed to bag 32 points out of 40 on compliance parameters. While this has brought India together with France, Italy, and the UK, surprisingly many developed countries like the USA and Canada have fallen short of meeting all the requirements to qualify in the top bracket, leaving them with scope for improvement. India is the only country with a complex economy among the G-20 nations that is said to have achieved the high level of compliance that has deemed it the status of ‘Regular Follow Ups’. Most other countries aspiring for the prized FATF tag have ended up under the Enhanced Follow-Ups category, which is a level lower.

FATF follows a rigorous system of Mutual Evaluation. The results of the evaluation system have a significant impact on the reputation of a country’s financial system in the world.

“Having a high FATF score, naturally means that India would have a stronger voice and a global statement when it comes to matters like terror funding. India has a strong stand of financial hygiene and we want to maintain that even as we grow as a nation,” a senior official said.

Financial growth cannot happen at the cost of financial security and India has to switch to high gear when it comes to financial astuteness to match global standards, the official said. Two major concerns before the government currently are maintaining strong regulatory norms as well as driving financial inclusion. However, regulatory measures would not come in the way of the burgeoning fintech industry.

“We will keep the interests of the industry in mind and we want to keep a balance between growth and regulation; however at the same time, we will not compromise on financial astuteness,” the official said.

“Stability of the economy is determined by the stability of the financial framework of the country. Good ratings lead to lower borrowing costs. Also with Indian bonds now being secured by other countries, a clean financial system, adds to our value,” the official said.

The FATF report is slated for a global release on September 19. The fifth round of FATF global assessments will commence in October this year.