Amnesty Says India Is Misusing FATF To Persecute Rights Defenders


Many rights organizations have had to cease working. 

Amnesty International has, in a briefing paper, accused the Indian government of misusing the Financial Action Task Force (FATF) to target civil society organizations and human rights defenders.

The briefing paper analyses the Foreign Contribution (Regulation) Act, Unlawful Activities (Prevention) Act and Prevention of Money Laundering Act and highlights the emblematic cases of the crackdown suffered by journalists, academics, human rights activists, and students under these laws since 2010.

Amnesty has called on the FATF and its member states to not allow these laws to further the clampdown on dissent in India “which has systematically eroded the rights to freedom of association and freedom of expression in the country.”

The FATF, of which India has been a member since 2010, is an intergovernmental body with 39 member states mandated to tackle global money laundering, terrorist financing and countering the financing of the proliferation of weapons of mass destruction. 

It advances its work through a set of recommendations – comprised of 40 internationally endorsed global standards, to guide national authorities’ implementation of “legal, regulatory and operational measures for combating money laundering, terrorist financing and other related threats to the integrity of the financial system.”

FATF also has a set of nine “Special Recommendations” and together its standards are often referred to as “40+9”. FATF Recommendation 8 requires that laws and regulations to combat money laundering and terrorism financing target only those Non-Profit Organisations (NPOs) that a country has identified “through a careful, targeted risk-based analysis” as vulnerable to terrorism financing abuse.

It also recommends that corrective measures must be focused and proportionate to avoid disrupting the legitimate activities of NPOs. 

Financial regulations that stifle the not-for-profit sector frequently violate the right to freedom of association and freedom of expression, as protected in International Human Rights Law (IHRL) and standards. 

In 2016, FATF published an updated interpretative note on Recommendation 8 considering the unintended consequences faced by the non-profit sector due to the battery of laws enacted by States to comply with the recommendation. 

India, however, underwent its last evaluation in 2010 and 2013, before the FATF issued the updated interpretative note.

In its 2013 mutual evaluation of India’s compliance with Recommendation 8, FATF highlighted that the Indian government does not undertake any review of the adequacy of domestic laws in the NPO sector or periodic reassessments on the sector’s potential vulnerabilities to terrorist activities. 

It also highlighted that the Indian government did not reach out to the NPO sector with a view to protecting it from abuse of terrorist financing and that only limited information is available on the identity of persons who own, control, or direct their activities.

It also flagged the measures India has in place to sanction violations of oversight measures by NPOs and that majority of NPOs are not registered with government agencies, including tax authorities.

Unfortunately, the Indian government has exploited the 2010 and 2013 FATF assessment report to tighten its arsenal of financial and counter-terrorism laws which are routinely used to target civil society organisations. This has resulted in a shrinking of civic space and a chilling effect on civil society. 

In response to FATF’s recommendation that India is not in full compliance with FATF’s standards on terrorist financing and money laundering, the Indian government has brought in laws including Foreign Contribution (Regulation) Act (FCRA), 2010 and its 2020 amendment, and the Prevention of Money Laundering Act (PMLA), 2002 and amendments to the Unlawful Activities (Prevention) Act (UAPA), 1967 without any consultation with civil society. 

These laws have hindered the legitimate human rights work of civil society actors and organisations, including Amnesty International, and enabled the government to attack them with smear campaigns.

Amnesty International believes that the Indian government has weaponized these laws to crack down on the legitimate human rights work of civil society. The enactment of these laws may also be an unintended consequence of FATF policy and practice, which requires a targeted risk-based approach and proportionate risk mitigation measures to be applied to countries’ anti-money laundering and countering the financing of terrorism (AML/CFT) risks.

India has introduced laws on regulating foreign contribution, preventing money laundering and amendments to the counter-terrorism law in response to the FATF assessments referred to above. These laws have also been amended multiple times without adequate public and legislative consultation. They subject NPOs to burdensome administrative requirements and leave their office- bearers and other independent human rights defenders vulnerable to the risk of arbitrary arrest and prolonged detention. 

The provisions also empower Indian authorities to suspend and cancel the registration of NPOs without adequate safeguards including judicial review. 

While Indian courts have largely upheld the validity of these laws under the Indian Constitution, various United Nations Special Rapporteurs (UNSRs) have raised concerns about the misapplication of these laws and specifically called for the repeal of FCRA and UAPA. 

These laws subject all NPOs in India drawing funds from foreign donors to common, disproportionate, oversight measures, including those at little or no risk of vulnerability to involvement in terrorist financing or money laundering. These measures also run contrary to the Indian Government’s own assessment of the perceived risk posed by the NPO sector as “low”.

The briefing paper analyses the FCRA, the UAPA and the PMLA and highlights the manner in which the Indian authorities have systematically targeted civil society, including by intimidation, harassment, investigation and prosecution on trumped up money laundering and terrorism related charges. 

It also highlights the emblematic cases of the crackdown suffered by journalists, academics, human rights activists, students, and political opponents who have faced the brunt of these laws since 2010. 

The financial regulations contained within the three acts discussed in this briefing cannot be viewed in isolation and need to be considered in the broader context of the misuse of counter-terrorism powers in India. 

These laws must not be allowed to further the clampdown on dissent in India which has systematically eroded the rights to freedom of association and freedom of expression, particularly targeting civil society actors and religious minorities.

In keeping with IHRL and FATF’s recommendations, these laws should be repealed or significantly amended, the Amnesty briefing paper said. 

Most importantly, NPOs must be consulted in FATF’s upcoming mutual evaluation of India and Indian authorities must ensure that the exercise of the rights to freedom of expression, association and assembly are effectively protected.

A prominent civil society activist told Amnesty International that the crackdown on NPOs under the FCRA takes place in India along three levels –

1)      ‘Random fire’, which includes arbitrarily suspending or cancelling the FCRA licences of grassroots organisations to create an atmosphere of fear and forced deference.

2)      Targeting institutions with an established global footprint and coercing them to shut down their Indian operations.

3)      Punishing individuals who have spoken out against the ruling government by deploying multiple investigating authorities to audit and raid the NPOs headed by or associated with them.

These practices of the Indian government are akin to the concept of ‘chilling effect’ recognized by the HRC that have resulted in NPOs halting certain activities or facing hardships in continuing their work, Amnesty said. 

Professor of European Law, Laurence Pech, has provided a working definition of the term by identifying three main prongs of a state’s desire to create and maintain a chilling effect. 

These include: 1) adoption of deliberately ambiguous legal provisions; 2) arbitrary enforcement of those provisions against critics of the authorities; and 3) adoption of disproportionate sanctions to discourage people from exercising their rights, thus limiting the need for future arbitrary enforcement of the relevant legal provisions whose lack of foreseeability is intentional.

These practices in the Indian context appear to dissuade NPOs from engaging in otherwise lawful conduct and activities to promote and defend human rights.

Further, the 2020 FCRA amendments have left NPOs working on promoting the rights of India’s most marginalised populations such as Dalits, religious minorities, and Adivasis particularly vulnerable to arbitrary closure of their organisations.

With over 20,000 NPOs facing a cancellation of their FCRA licences in the last ten years, the atmosphere of fear and uncertainty in the NPO sector is palpable with at least one NPO electing to opt out of the survey conducted by Amnesty International over fears of not having its FCRA licence renewed despite assurances of anonymity. 

Other NGOs are closing shop altogether, resulting in significant unemployment, while personnel face discrimination in banking and evening lodging rentals, as a result of the chilling environment caused by the over-regulation of the sector.

11 out of the 16 NPOs that responded to the survey or spoke with Amnesty International confirmed that they had been arbitrarily deprived of their FCRA licences through suspensions, cancellations, and non-renewals. 

These include internationally regarded and awarded NPOs who have either had to wrap up their operations in India or have had to rely entirely on domestic donations after no longer being allowed to use or receive foreign funds from their donor organisations.

The elimination of cross- border funding for many NPOs results in significant shortfalls and program closures – particularly for more sensitive areas of work (like gender, minority advocacy, or environmental issues), which are less likely to receive domestic support. 

While cancelling or suspending the FCRA licenses of the organisations, the authorities provided vague reasons or alluded to their human rights work. 

An NPO which provides pro-bono legal aid to marginalised and underprivileged communities had its licence cancelled after offering to represent inmates in jail on the grounds of ‘bringing disrepute to public institutions’.

An Indian arm of another globally reputed NPO while having its FCRA licence cancelled, also faced a police case on account of working ‘against public interest’, and for leveraging the support of its international donor organisation to renew its FCRA licence.

In a similar vein, another NPO which specialises in providing human rights education to children and documenting police atrocities told Amnesty International that it received four suspension orders consecutively over a period of four years from the Foreigners Division of MHA, citing that their activities are “likely to prejudicially affect the national interest”.

The clear message underscored by every NPO which responded to the survey is that the 2020 amendment to the FCRA has dealt the non-profit sector in India with a crippling blow. 

In 2021, the International Centre for Not-for-Profit Law (ICNL) reported that by 17 May 2021, eight months after the amendments were enacted, only approximately 3,600 of the 22,500 NPOs eligible to receive FCRA funds had confirmed that their State Bank of India accounts were operational, while another 5,000 were not clear whether their accounts were operational or not.

In July 2022, the Ministry of Home Affairs deleted the list of NPOs whose FCRA licenses had been cancelled in the past without any explanation and has not published this data publicly ever since.

P. K. Balachandran

P. K. Balachandran is a senior Indian journalist working in Sri Lanka for local and international media and has been writing on South Asian issues for the past 21 years.

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