After Directors, Know Your Chartered Accountants: Government To Now Collect KYC Details Of CAs

The Union government is working on a proposal to collect ‘know your customer’ (KYC) details of companies, chartered accountants (CAs), cost accountants and company secretaries (CSs), reports The New Indian Express (TNIE).

“This is again another architecture where the third drive will run after the companies drive. Professionals will be screened and then registered into the system,” Corporate Affairs Secretary Injeti Srinivas, said.

This move is expected to prevent instances of corporate fraud, improve corporate governance and provide law enforcement agencies with a paper trail of financial transactions.

Noting that though the Companies Act, 2013 provided for comprehensive safeguards against financial scams, there were still implementation issues.

“If compliance is more like tick box and all, then you are not really having a strong foundation of corporate governance... Many of the big sorts of incidents that we have come across in the last year or two, these things are becoming very apparent,” the Secretary added.

Curbing black money

In June 2018, the government made it mandatory for all directors, even those who were disqualified, to complete the KYC process.

Explaining the rationale behind the move, Pavan Kumar Vijay, managing director of Corporate Professional, said: “There are some 11.5 lakh companies registered with MCA. Out of these, 80,000 are public limited companies and the rest are private limited companies, which require just two directors.

In many of these (private limited) companies, the proprietor of the company have made their driver, peon or cook as the director of the company to fulfil the regulatory requirements. Earlier, nobody cared to ask for their Aadhar or PAN. But now that this exercise has started many of such directors would cease to exist.”

Also Read: Waging War On Shell Companies: Finance Ministry Targets 30,000 Firms