FIU lab that parses currency declaration forms, transactions to spot laundering, terror financing

New Delhi: The Financial Intelligence Unit (FIU) has created a smart lab that mines data from currency declaration forms furnished by individuals landing in India.

The lab also examines complex banking and financial data of an entity to study possible money laundering and terrorist financing instances.

The 'strategic analysis lab' (SAL) was created by the federal financial intelligence agency in 2021 to prepare typologies for the "ever evolving" financial landscape, research and analyse data for improvement of intelligence generation and "effectively" counter economic crimes.

The 2023-24 report of the FIU said the SAL has its own "specialised' human resources having access to the latest analytical tools and technologies.

The report accessed by PTI said airports and land custom stations share the data of currency seizure and declarations made in the currency declaration form (CDF) with it.

The data consists of the name of the person, date (of arrival), passport number, currency and the amount declared at the time of filing CDF, it said.

"The CDF data is analysed by FIU to identify most frequent individuals who have declared foreign currency on arrival," the report said.

This data is also checked for matches of individuals in FIU database of suspicious transaction reports (STRs), cash transaction reports (CTRs), and cross-border wire transfer reports (CBWTRs), which is "further enhanced by open source information available on persons of interest." The analysis is then shared with the law enforcement agencies and other intelligence agencies for action, the report said.

The agency conducted a similar analysis to check the "financially significant" non-profit organisations, or NPOs, at "risk of misuse," and those that avail exemption from paying income tax, and violate the Foreign Contribution Regulation Act (FCRA) to obtain unauthorised funds.

The analysis helped, it said, identify NPOs with "significant" cash deposits and withdrawals, marred with anomalies in cash flow patterns.

The report said it received STRs that flagged NPOs engaged in suspicious transactions and CBWTR data and when they were "cross-referenced" with FCRA data it threw up the names of the NPOs that received foreign funds without proper registration, thus violating the FCRA provisions.

The agency then shared the information with probe agencies.

A 'fund flow analysis tool' is also part of the lab which is designed to "examine" bank statements from multiple financial institutions.

"The tool provides detailed account-level summaries, identifying key individuals or entities involved in debit and credit transactions and highlights the highest-value transactions and the most frequently used transaction modes for both debits and credits," it said.

The FIU said that as there is a lack of standardised bank statement formats across different institutions, the tool addresses the challenge by making the data uniform.

The tool uses computer programming languages like Python and Flask for "graphical visualisation of time-series data, allowing analysts to track and visualise the flow of funds between accounts in a more intuitive way." The FIU was set up in 2004 under the Union Finance Ministry.