The Financial Action Task Force (FATF), an international regulator focused on combating money laundering, has advised India to enhance its oversight of bank accounts belonging to local politicians, government officials, and their families. This recommendation is part of a broader FATF review of India's anti-money laundering measures, which started in 2023. The final report is expected to be released soon.

According to global standards, politicians and their close associates are subject to rigorous financial checks due to their potential vulnerability to corruption and bribery. The FATF's report suggests that India should implement stricter monitoring of funds in the accounts of politically exposed persons (PEPs) and require senior bank managers to approve new accounts for these individuals and their families.

India already enforces stringent checks on foreign political figures' accounts. However, the FATF's latest recommendations highlight the need for similar measures for domestic PEPs. Sources familiar with the FATF's recommendations, who requested anonymity, indicated that the FATF has not yet responded to media inquiries about the report.

A senior finance ministry official acknowledged the need for improvements and stated that the government is committed to addressing these areas. Last December, before the general elections that saw Prime Minister Narendra Modi return to power, the government informed parliament of its intention to wait for the FATF's final report before implementing stricter banking scrutiny for domestic political figures.

The FATF's June evaluation noted that India achieved high compliance with anti-money laundering laws, with the government having five years to adopt the recommended banking regulations before the next review. India was rated "compliant" and "largely compliant" on 37 out of 40 parameters for enforcing these laws.

The FATF's report identified partial compliance in three areas, including bank scrutiny of domestic political figures, oversight of non-profit organizations, and regulation of non-financial businesses and professionals. An interim report from the FATF's June meeting in Singapore recommended that India speed up the prosecution of money laundering and terrorist financing cases while ensuring fair treatment of non-profit organizations.

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