Shell companies cause widespread problems for enforcement and investigative agencies. Many money laundering and other illegal activities use shell companies as cover. The corporate affairs ministry has now found tools to crack this menace—artificial intelligence and data analytics. 

The ministry is revamping the MCA 21, an e-governance initiative of the Ministry of Corporate Affairs, which was started in 2006 to a more advanced version. This portal will be used for submitting filings under the company's law and also be used as a corporate data repository. Once started functioning, the portal would make it almost impossible for a shell company to survive, according to Corporate Affairs Secretary Injeti Srinivas. 

 "Surveillance about compliance will be on autopilot mode with artificial intelligence (AI) and data analytics," he said. Currently, the second version of MCA21 is running. The next version which uses data analytics will be operational by next year and would have zero tolerance for non-compliance.

Currently, there are 12 lakh active companies in India. These companies follow various regulatory requirements under the Companies Act. The Corporate ministry has started weeding out companies which are not following the rules for a long period. Along with this drive, Know Your Client(KYC) process for directors and companies has also effectively encouraged compliance.

With these initiatives compliance levels in terms of filings have crossed 80 per cent. With a new artificial intelligence-based system, this figure will be reaching 90 per cent according to Srinivas.