In order to allow the finance ministry to interface more decisively with foreign governments to retrieve black money stashed overseas, the government may bring all agencies involved, such as the Financial Intelligence Unit – India and the Financial Action Task Force Cell, under a unified command. Currently, they report to different departments and ministries. Unification would ensure that on the issue of dodgy capital flows, the government addresses the world and its myriad enforcement and intelligence agencies in a single, clear and authoritative voice. This would mesh well with the new global standard on international tax reporting agreed on by the G20 in July. Besides, this is yet another instance of the single-window strategy promoted earlier to improve the domestic investment climate and simplify the interface between government and the people. It only happens to be externally directed this time.
But nothing will improve unless the communications flowing through that window are more effective. Dealing with illegal capital flows is a subset of enforcement efforts across borders, an area in which, historically, the government’s attempts have been routinely baffled. Extradition requests in cases like the Bofors scandal and the Purulia arms drop have been the most visible failures, but other interactions have also come to embarrassing ends due to legal ineptitude, protocol errors and unrealistic expectations. For instance, the brouhaha over black money overseas reached its highest pitch in 2012 when then CBI director A.P. Singh had estimated that Indians were global leaders, having stashed $500 billion in illegal funds overseas.
