India launched the Alliance of Reporting Entities in AML and CFT (ARIFAC) in June 2026, creating a first-of-its-kind national industry platform to strengthen the country’s defences against financial crime. The platform brings together banks, non-banking financial companies (NBFCs), payment system operators, insurance firms, securities intermediaries and virtual digital asset service providers under a unified compliance framework. ARIFAC operates as a private-sector initiative with the Financial Intelligence Unit India (FIU-IND) serving as its official observer, while its secretariat is jointly managed by the Payments Council of India (PCI) and the Fintech Convergence Council (FCC).
What Is ARIFAC?
ARIFAC stands for the Alliance of Reporting Entities in Anti-Money Laundering and Combating the Financing of Terrorism. It functions as a unified industry platform designed to improve coordination, knowledge sharing and compliance outcomes across all reporting entities regulated under the Prevention of Money Laundering Act (PMLA). The platform is entirely industry-led, with FIU-IND providing strategic guidance as an official observer.
The day-to-day operations of ARIFAC are managed by two industry bodies. The Payments Council of India (PCI) was formed in 2013 under the Internet and Mobile Association of India (IAMAI) to represent non-banking digital payment companies. The Fintech Convergence Council (FCC) was established in 2018, also under IAMAI, to bring together fintech firms across lending, wealth management, insurance and regulatory technology.
ARIFAC’s work is structured around five pillars:
- Capacity Building: Training programmes, professional certifications and workshops for compliance, risk management, audit and operations teams across all reporting entities
- Cross-Sectoral Collaboration: A shared platform where banks, NBFCs, fintechs, insurers and payment operators can exchange challenges, insights and solutions
- Regulatory Engagement: Structured dialogue with regulators including FIU-IND, the Reserve Bank of India, SEBI and IRDAI to improve understanding of supervisory expectations
- Typologies and Best Practices: Development of industry-wide guidance on transaction monitoring, sanctions screening, suspicious transaction reporting and enhanced due diligence
- Global Representation: Representing India’s reporting entity ecosystem at international forums and aligning domestic practices with evolving global standards
The alliance has also formed industry-led working groups focused on specific risks. These groups address enhanced due diligence for high-risk customers, mule account detection, digital banking vulnerabilities, cross-border information sharing, and risks associated with virtual digital assets. Each working group develops practical recommendations and best-practice frameworks for adoption across the financial sector.
Background: India’s Legal Framework for Combating Financial Crime
The Prevention of Money Laundering Act (PMLA), 2002 forms the core of India’s legal architecture to combat money laundering and terrorist financing. The Act came into force on 1 July 2005 and applies to banking companies, financial institutions, securities intermediaries and persons carrying on designated businesses or professions. Under the PMLA, every reporting entity is required to verify client identities, maintain records for a minimum of five years, and furnish prescribed transaction reports to FIU-IND.
The Financial Intelligence Unit India (FIU-IND) was established on 18 November 2004 as the central national agency responsible for receiving, processing, analysing and disseminating information relating to suspect financial transactions. It operates under the Department of Revenue, Ministry of Finance and reports directly to the Economic Intelligence Council headed by the Finance Minister. FIU-IND receives several types of statutory reports, including Cash Transaction Reports, Suspicious Transaction Reports, Cross Border Wire Transfer Reports, Non-Profit Organisation Transaction Reports and reports on purchase or sale of immovable property. It does not investigate cases directly but shares actionable intelligence with law enforcement agencies such as the Enforcement Directorate (ED).
India is a member of the Financial Action Task Force (FATF), the global standard-setting body for AML and CFT, having joined in 2010. In the FATF Mutual Evaluation of India published in September 2024, the country was placed in the “regular follow up” category, a distinction shared by only four other G20 countries. The evaluation acknowledged that India has achieved a high level of technical compliance and that its AML-CFT regime is achieving good results. However, it also identified areas for improvement, including the need to expedite money laundering and terrorist financing prosecutions and strengthen supervision in non-financial sectors.
Who Is Covered: Reporting Entities Under PMLA
ARIFAC brings together all categories of reporting entities regulated under the PMLA. This multi-sector participation is critical because financial crime does not respect institutional boundaries. A money launderer can move funds through a bank account, a payment wallet, an insurance policy and a cryptocurrency exchange in a single day.
| Category | Examples |
|---|---|
| Banks | Public sector banks, private banks, regional rural banks, small finance banks, payment banks |
| Non-Banking Financial Companies | Asset finance companies, loan companies, investment companies |
| Payment System Operators | Payment aggregators, prepaid payment instrument issuers, card networks |
| Securities Market Intermediaries | Stockbrokers, depositories, mutual funds, portfolio managers |
| Insurance Companies | Life insurers, general insurers, health insurers |
| Virtual Digital Asset Service Providers | Cryptocurrency exchanges, digital asset custodians, VDA brokers |
| Cooperative Institutions | Urban cooperative banks, state cooperative banks, district central cooperative banks |
By creating a single platform for all these entities, ARIFAC aims to close coordination gaps that criminals have historically exploited. A suspicious transaction flagged by a bank can now inform the monitoring parameters used by a payment operator or an insurance company through shared typologies and best practices.
Why ARIFAC Was Needed
The launch of ARIFAC comes at a time when financial crime in India has grown increasingly sophisticated. Several trends have driven the need for a coordinated industry response.
Enforcement Action Is at Record Levels
The Enforcement Directorate attached assets worth over ₹81,000 crore under the PMLA in FY 2025-26 alone, a record for any single year. This was more than fifteen times the cumulative attachment value recorded during the first decade of PMLA enforcement between 2005 and 2014. The agency conducted 2,892 searches during the same period, nearly double the previous year. At the same time, the number of new money laundering investigations rose 39 per cent, with 1,080 Enforcement Case Information Reports (ECIRs) filed in FY 2025-26.
New and Emerging Risks
Traditional bank frauds and real estate related money laundering have declined due to sustained enforcement and systemic reforms such as the Insolvency and Bankruptcy Code and RERA. However, new threats have emerged. The ED’s annual report explicitly identifies cryptocurrency frauds, cyber enabled financial crimes, terror financing, narcotics trafficking and multi jurisdictional shell entities as the new focus areas. These crimes often involve layered cross-border transactions, dark web enabled laundering and mule account networks.
The Reserve Bank’s Annual Report for 2025-26 shows that financial institutions reported over 10,000 fraud cases involving ₹48,000 crore. While the volume of digital payment frauds has declined due to improved controls, the value of frauds in the advances category has risen sharply.
Global Standards Are Evolving
The FATF Mutual Evaluation of 2024, while broadly positive about India’s framework, called for faster prosecution of money laundering and terror financing cases. It noted that between 2018 and 2023, the ED secured convictions in only 28 money laundering cases despite a sharp increase in investigations. The evaluation also flagged the need for better implementation of targeted financial sanctions and improved risk profiling of customers. By building industry wide compliance capacity and standardising practices, ARIFAC directly addresses several of these recommendations.
The Digital Asset Challenge
The rapid growth of virtual digital assets has created a new channel for money laundering that requires specialised expertise. While VDASPs in India are now regulated under the PMLA, the sector’s compliance maturity varies widely. ARIFAC’s working group on virtual digital asset risks will help develop standardised due diligence and transaction monitoring frameworks for this emerging sector.
The Way Forward
ARIFAC represents a significant shift in how India’s financial sector approaches compliance. Instead of each institution building its defences in isolation, the platform enables collective action through shared intelligence, common standards and coordinated capacity building.
The platform’s five pillar structure ensures coverage across training, collaboration, regulatory engagement, knowledge management and global alignment. Over time, this is expected to improve compliance maturity across the financial sector, reduce the information asymmetry between large and small reporting entities, and help India meet its international commitments under the FATF framework.
At the institutional level, FIU-IND serves as the central financial intelligence agency, PCI and FCC manage the platform’s secretariat, and sectoral regulators including the RBI, SEBI and IRDAI set AML-CFT standards for their respective domains. The PMLA 2002 and the broader FATF framework provide the legal and international context for ARIFAC’s operations.
Key Takeaways
- ARIFAC (Alliance of Reporting Entities in AML and CFT) was launched in June 2026 as a national industry platform to strengthen India’s anti-money laundering and counter-terrorism financing framework.
- The platform operates under the strategic guidance of FIU-IND as an official observer, with its secretariat managed by the Payments Council of India (PCI) and the Fintech Convergence Council (FCC).
- ARIFAC covers all reporting entities regulated under the Prevention of Money Laundering Act (PMLA), 2002, including banks, NBFCs, payment operators, insurers, securities intermediaries and virtual digital asset service providers.
- FIU-IND was established in November 2004 under the Department of Revenue, Ministry of Finance as the central agency for receiving and analysing suspect financial transaction reports.
- The FATF Mutual Evaluation of India (2024) placed the country in the “regular follow up” category and acknowledged its high technical compliance while recommending faster prosecution of financial crime cases.
- The Enforcement Directorate attached assets worth over ₹81,000 crore under PMLA in FY 2025-26, a record high, reflecting the growing scale of anti-money laundering enforcement in India.
