Financial Intelligence Unit to track money flow ahead of Lok Sabha polls

India's Financial Intelligence Unit (FIU) is keeping a close eye on large cash deposits and withdrawals from cooperative banks ahead of the 2024 Lok Sabha elections. Accounts linked with politically exposed persons are being tracked to check the flow of black money in elections.

The agency had identified 12 cooperative banks for failure to report such transactions during the recently-held assembly elections in five states, ET has learnt.

This time the agency is coordinating the operation with a dedicated team of 600 officers from income tax, customs, Directorate of Revenue intelligence (DRI), Enforcement Directorate and other enforcement agencies

"While most banks are compliant, cooperative banks still have some loopholes, which are being fixed and closely monitored," a senior official told ET, adding that show-cause notices were sent to cooperative banks where there was a lag in reporting such transactions.

Typically, the Election Commission coordinates with income tax, customs, local police and other enforcement agencies to check the flow of illegal cash, liquor and gold during elections.

The commission will continue with the process in the upcoming general elections as well. But with scrapping of electoral bonds, there is greater apprehension about the flow of black money during this election, officials said.

They said that a dedicated team will work on risk profiling and quick information sharing. It will also track UPI and cryptocurrency transactions and accounts in cooperative banks and post offices.

"There will be tighter scrutiny this year of cooperative banks and UPI transactions, especially of accounts linked with politically exposed persons and political influencers. We will be using technology in a big way," said one of the officials cited above.

On February 15, the Supreme Court had struck down the electoral bonds scheme of 2017, holding it unconstitutional and had asked banks to reveal the name of donors.

The election expenditure is capped at ₹95 lakh for a parliamentary constituency and ₹40 lakh for an assembly constituency. But the actual expenditure can go up to ₹ 40 crore in a parliamentary constituency and ₹5 crore in an assembly constituency, as per some estimates.