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.
The top mandarins in the North Block behave in very strange manner (though not without ulterior motives)! It is quite novel an idea to require the professionals to report direct to the govt. on suspicious fund movements, though it is too late in the day, but the top bureaucrats in the IAS are fully aware that the same professionals also know which side of the bread has butter and who indeed are their “pay masters”! It is of course a different matter as to whether the govt. is empowered to do so and, if so, under the provisions of which Act of parliament, but there have been professionals who rose to manipulate their way to the top, for instance, of the ICAI, merely because of their known ability/clout to “fix” things with the FINMIN, CBDT, CBEC, Min. of Corporate Affairs, ROCs, field offices in the IT deptt., etc., CLB, Settlement Commissions, IRDA, RBI, etc., have themselves been parties to numerous fraudulent settlements/money transfers, money laundering, bogus accounting and the like. And that precisely is why they get national awards, get themselves appointed to prestigious PSU Boards, Bank boards, taken-over tainted co. boards, etc., etc. And they are seen hobnobbing even today with all sorts of tainted people-tainted in bogus/fraudulent bank transactions, hawala/money laundering cases, transfer/postings of corrupt officers (who are in such persons’ payrolls), stamp paper scams, tuition school scams, bogus university/engg./med. college scams, and even the now raging IPL scam. The govt is perhaps not aware that many honest IRS officers had suggested to the CBDT and the Chief Election Commission (in their capacity as Expenditure Observers)that the Income Tax Act needed suitable amendments to provide that, not only the source of money introduced in the a/cs, but also the final destination of funds shall also be open to investigation during assessment proceedings (and the results brought to the notice of the Govt.). But, sine the IAS is not ready to accord that position to the IRS, these suggestions were deliberately and with ulterior pecuniary and other nefarious motives ignored. It is perhaps high time the govt (i.e., the Hon’ble Minister of Finance/PM) gathers courage to overrule the IAS and bring about suitable amendments to the IT Act empowering the Deptt. of IT to delve into this murky and dangerous area of funding drug/immoral/arms trafficking all over the world. But a PM, who as FM had declined to empower the IT deptt to call for information from banks, may ultimately again accept defeat at the hands of thre bureaucratic perpetrators of all crimes in India. Let us see who indeed wears pants in this govt.!
The Govt. should come out with a notification / amendment in law for declaring the Secret Reserves of the Company through Notes as are being shown the Contingent Liabilities. one of the major item of Secret Reserve is Real Estate being owned or is on retal basis wite company. they are being disposed off through cheque and cash element. the cash element goes to the promotors / management and the sufferrers are mostly the shareholder who also owns the Secret Reserves. Dwindling of Secret Reserves should be viewed seriously and properly questioned. in case thispoint is considered for further enlargement , olease intimate me also to participayte in the meeting / discussions on this topic. Thanks