The Financial Intelligence Unit: India’s Watchdog Against Financial Crime

The Financial Intelligence Unit (FIU) safeguards India’s financial system from money laundering and financial crimes. Established in 2003 under the PMLA, 2002, the FIU receives, analyses, and disseminates financial information to combat these activities.

The Role of the Financial Intelligence Unit

The FIU acts as the central intelligence agency for financial transactions in India. Here’s a breakdown of its core functions:

• Receiving Suspicious Activity Reports (SARs): Financial institutions and intermediaries, such as banks, insurance companies, and brokers, are mandated by law to report suspicious transactions to the FIU. These reports may include large cash deposits, unusual account activity, or transactions linked to individuals or businesses on watchlists.
• Analysis and Dissemination of Intelligence: The FIU analysts examine reported data for signs of financial crimes and disseminate this intelligence to law enforcement agencies, including the ED and CBI, to assist in their investigations.
• Maintaining a Central Database: The FIU maintains a comprehensive database of financial transactions and information reported by various entities. This database helps law enforcement track suspicious funds and identify criminal networks.
• International Cooperation: The FIU plays a crucial role in international cooperation on financial crime. It maintains channels of communication with FIUs in other countries to exchange information and coordinate investigations into cross-border financial crimes.

The Importance of the Financial Intelligence Unit

The FIU’s role is critical in preventing money laundering and other financial crimes from destabilising India’s financial system. By collecting, analysing, and disseminating financial intelligence, the FIU empowers law enforcement agencies to investigate and prosecute these crimes effectively.

Latest Judgement

In a recent landmark ruling, the Supreme Court upheld the FIU’s authority to freeze assets suspected of being linked to money laundering. This decision reinforces the FIU’s role in safeguarding the financial system.

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