India to generate over 1 million suspicious transaction reports – researchers
16 Jan 2018

Government programmes such as demonetisation and enhanced tax surveillance are driving up the number of suspicious transaction reports (STRs) being generated in India, researchers say.

The number of STRs produced has gone up from a little over 20,000 in FY 2011 to over a 100,000 in FY 2016, and reached nearly 500,000 in FY 2017, said BIS Research.

This number is set to hit 1,046,283 in FY 2018, it said.

Such trends will also likely boost the ant-money laundering (AML) software market in India, as will “a proactive attitude from within the government , banks and other institutions.”

Satendra Kumar, Principal Consultant, BIS Research, said: “Following the trail of deposits into bank accounts would require automated monitoring due to the massive number and volume of these transactions. This will drive greater usage of anti -money laundering software and technology in India and abroad.”

India’s demonetisation programme was introduced in November 2016, when Indian Prime Minister Narendra Modi outlawed 86% of bank notes in the country overnight with the aim of getting rid of illicit cash.

Demonetisation, which has been strongly criticised, was characterised by winding bank queues and dire cash shortages, impacting ordinary individuals and businesses alike.

However, Modi’s BJP party said the decrease in currency circulation has helped transform India into a less-cash economy and so reduce the flow of black money, and India has made huge ‘leaps’ in digital payments.

The Modi government has also implemented tax reforms, specifically the Goods and Services Tax in 2017, aimed at cutting red tape and increasing revenue.

It is also hoped it will make it harder for people to evade tax.

However, the programme, under which goods and services fall under four basic rates of 5%, 12% 18% and 28%, has been criticised for being confusing and cumbersome for small and medium businesses.

Despite these issues, BIS Research said: “India has taken giant strides in the last few years to combat money laundering, driven by technology adoption and a more positive policy environment.”

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India Anti-Black Money day: Was demonetisation worth the hassle?

Aadhaar: kyc silver bullet or constitutional misadventure?

India: Demonetisation had ‘drastic’ impact on monetary conditions – RBI top official

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