The Financial Action Task Force (FATF) global anti-money laundering watchdog has asked India to improve due diligence on the bank accounts of local politicians, government officials and their families, Reuters reported.
The recommendation for tougher checks on the finances of politically exposed persons (PEPs) is part of a FATF review of India’s anti-money laundering systems that began in 2023, the report added. The group 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 due to their potential susceptibility to bribery and corruption.
A FATF report shared with the government recommended more rigorous 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, the Reuters report said.
In December 2023, the government told the Parliament it did not intend to put domestic political figures under stricter banking scrutiny ahead of the general election.
In June, FATF concluded India had a “high level of technical compliance” with its standards to counter money laundering and terror financing and said New Delhi’s mechanisms for this are “achieving good results”.
The Mutual Evaluation Report of India, which was adopted in the FATF plenary held in Singapore between June 26 and June 28, places India in the ‘regular follow-up’ category, a distinction shared by only four other G20 countries. This marks a significant milestone in the nation’s efforts to combat money laundering (ML) and terrorist financing (TF).
The FATF rated India as “compliant” and “largely compliant” on 37 out of the 40 parameters for enforcing anti-money laundering laws, the sources 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 organisations and non-financial businesses and professionals.
In June, the government described the FATF’s evaluation as yielding an “outstanding outcome” but did not disclose any specifics.
The anti-terrorism watchdog said that India's anti-money laundering and counter terrorist financing regime achieving good results. It, however, said that the country needs to address delays relating to concluding of money laundering and terrorist financing prosecutions.