Money laundering: With FATF’s nod, Modi govt may speed up anti-corruption drive
Virendra Pandit
New Delhi: In a highly significant development with potentially long-term consequences, the Financial Action Task Force (FATF)—the global watchdog that probes terror funding and money laundering—has asked India to improve due diligence on the bank accounts of politicians, government officials and their families, the media reported on Friday.
This report is significant as, in the run-up to the Lok Sabha elections this year, Prime Minister Narendra Modi had announced to accelerate the ongoing anti-corruption drive.
The FATF’s recommendation for stricter checks on the finances of politically exposed persons (PEPs) is part of the watchdog’s review of India’s anti-money laundering systems that began in 2023. The watchdog is due to publish its final report soon.
Under global rules, politicians, their families, and close associates are subject to checks on their bank accounts because of their potential susceptibility to bribery and corruption.
A FATF report recommended stringent monitoring of the source of funds in the accounts of domestic PEPs as well as requiring senior bank managers to approve any new accounts for them or their families.
India already implements strict banking checks on foreign political figures.
“There are areas where we need to improve which we will,” the report, quoting a senior finance ministry source, said.
Before the general elections that brought Prime Minister Narendra Modi back to power for a third consecutive term in June 2024, the government told parliament in December 2023 that it did not intend to put domestic political figures under stricter banking scrutiny, and that it would wait for the FATF’s report before making any changes.
Now that the FATF has green-signaled the move, the Modi government is likely to speed up the scrutiny of bank accounts of the suspected people.
The FATF in June said India had reached a high level of compliance in enforcing anti-money laundering laws. The government has five years to implement the recommended banking rules before the next review.
The FATF rated India as “compliant” and “largely compliant” on 37 out of the 40 parameters for enforcing anti-money laundering laws, the report said.
The three areas in which there is partial compliance include bank scrutiny of domestic political figures and oversight of the finances of non-profit organizations and non-financial businesses and professionals.
In June, New Delhi described the FATF’s evaluation as yielding an “outstanding outcome” but did not disclose any specifics.
An interim report, discussed at the FATF June meeting in Singapore, recommended that India expedite the prosecution of money laundering and terrorist financing cases while ensuring that non-profit organizations are not unfairly targeted.
