CAs, CSs told to report all suspicious fund transfers

NEW DELHI: The government has asked chartered accountants, cost accountants and company secretaries to directly report to the home ministry cases of suspicious fund movements in an out of companies, as it looks to crack down on money laundering and terror funding.

The home ministry, through the ministry of corporate affairs, has asked the Institute of Chartered Accountants of India (ICAI), Institute of Company Secretaries of India (ICSI) and the Institute of Cost and Works Accountants of India (ICWAI) to ensure that their members report any instances of diversion of funds directly without any procedural formalities.

“If any suspicious fund movements come to the notice of the professionals, details of it along with full particulars of its clients should be reported within 24 hours,” said a senior government official.
Incidences should be reported directly to a designated e-mail as also be conveyed through fax to the home ministry, the official said, requesting anonymity. Such cases will be handled by a senior home ministry official, whose telephone number has also been shared.

The move is aimed at sensitising professionals of their responsibilities under Section 51A of the Unlawful Activities (Prevention) Act, which aims at preventing routing of terror funds through domestic firms.
Suspicious activities include cases where a dubious individual or entity approaching them for investing into financial instruments or immovable property or arrange for incorporating a company as a director, shareholder or partner.

The specific entities or individuals, which fall under the government’s radar finds mention in a ministry of external affairs order issued in July 2009. The list has names such as Al-Qaida, Taliban and their several fronts.
The move assumes significance at a time when India Inc passes through the annual audit season, which involves professionals such as CAs and company secretaries to audit the financials of companies and vet their management affairs. The government wants that the professionals act in a more responsible manner to report cases of corporate malafides as soon as they come to their notice, the official said.

India is preparing to join FATF, an inter-government body founded by the G-7 countries in 1989 for developing and promoting national and international policies to combat money laundering and terrorist financing. FATF is currently evaluating India’s preparedness for its membership, which will allow the country to gain access to real-time exchange of information on money laundering and terror financing.