ALL practicing chartered accountants in the country may now have to keep a close tab on their clients, as the accounting rule-maker , the Institute of Chartered Accountants of India (ICAI), is considering a proposal to devise a set of know your customer (KYC) norms to be followed by its members before taking up business.

All financial sector regulators already have KYC norms in place in line with the requirements stipulated by the country’s anti-money laundering law, the Prevention of Money Laundering Act.

The KYC norms seek detailed data on various aspects of the client including their source of wealth, an ICAI official said, requesting anonymity.

The move is aimed at allowing chartered accountants to effectively track whereabouts of their clients. It would help authorities in identifying dubious clients and their unscrupulous activities, on the basis of the data collected by chartered accountants. Data would cover aspects such as source of funds that are being used by the client.

Presently, chartered accountants do not undertake such an exercise and most business is carried out on good faith. Though some large firms do carry out some due diligence, but there is no common industry guideline or norm. The need for having a proper system of disclosures has been highlighted by the Satyam financial fraud, where the role of the auditors came under sharp scrutiny.

The ICAI has been at pains to safeguard the credibility of chartered accountants that suffered a severe jolt after the Satyam scandal. The present move will ensure that the ICAI itself will be able to closely track its member’s clients and identify any suspicious activities of individuals and companies.

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