Upgrade of India’s Financial Intelligence Unit (FIU) with Advanced Technology to Combat Money Laundering and Terrorism Financing

India’s Financial Intelligence Unit (FIU) has taken a significant step in the fight against money laundering and terrorist financing by operationalising an advanced 2.0 version of its information technology system. This upgraded system is equipped with artificial intelligence and machine learning tools to enhance its capabilities in analyzing and disseminating suspicious transaction reports flagged by banks and financial institutions.

According to a recent report for the 2022-23 fiscal year, the volume of data being sent to the FIU for analysis has been increasing, necessitating the upgrade of the technological backbone. The FIU was established in 2004 to combat money laundering and terrorism financing under the Prevention of Money Laundering Act.

The new system, known as FINnet 2.0, is designed to improve the efficiency of collecting, processing, and disseminating financial intelligence. It leverages emerging technologies to enhance analytical competencies, improve data quality, and strengthen compliance monitoring and security measures.

One of the key features of FINnet 2.0 is its ability to generate risk scores for individuals, businesses, and reports, allowing for the identification of high-risk cases for immediate action. The system also uses advanced analytics, artificial intelligence, and machine learning tools to stay ahead of developments in anti-money laundering efforts.

In addition, the new system incorporates natural language processing and text mining tools to analyze textual inputs and prioritize cases based on risk analytics. It comprises three sub-systems: FINGate for information collection, FINCore for analytics, and FINex for disseminating financial intelligence reports to law enforcement agencies.

The report highlights the importance of data security and confidentiality in handling sensitive financial information. Measures such as end-to-end encryption, controlled access, and identity management solutions have been implemented to ensure the security of the upgraded IT system.

Overall, the operationalisation of FINnet 2.0 represents a significant milestone in India’s efforts to combat financial crimes and strengthen its anti-money laundering and counter-terrorism financing capabilities.