Maravi

Fundanga bemoans involvement of accountants in money laundering

Fundanga bemoans involvement of accountants in money laundering
By Edwin Mbulo in Livingstone
Mon 26 Apr. 2010, 04:50 CAT

BANK of Zambia (BoZ) Governor Dr Caleb Fundanga says that it has been observed from recent court cases on abuse of office and corruption that professional entities such as law and accounting firms have been used as channels to launder some of the proceeds of crime.

And Dr Fundanga said that although the projections of Gross Domestic Product (GDP) for 2009 have been revised downwards to 4.3 per cent on account of the effects of the global financial and economic meltdown, preliminary data indicates that the economy posted a real GDP growth of 6.3 per cent compared to 5.7 per cent recorded in 2008.

Speaking during the Zambia Institute of Chartered Accountants (ZICA) annual ball at the Zambezi Sun Hotels on Saturday, Dr Fundanga said it was fair to say that in most organisations, where money was being laundered, an accountant was involved.

“As we discuss the harmonisation of various laws, I would like to bring up the issue of money laundering. The Prohibition and Prevention of Money Laundering Act (PPMLA), enacted in 2001 requires all persons, whether corporate or unincorporated, to comply with the provisions.

Although the Act does not impose specific obligations on accountants, they are expected to comply with its provisions. It has been noted from court cases on abuse of office and corruption that professional entities such as law and accounting firms have been used as channel to launder some of the proceeds of crime,” he said.

Dr Fundanga said the duties of accountants was to know the sources and application of the resources in their organisations.

“Therefore I don’t think it is unfair to say that in most organisations, where money is laundered, an accountant is involved. As we speak, the PPMLA is being reviewed, and it is expected that the amendments to PPMLA as well as the new law for the establishment of the Financial Intelligence Unit will impose some reporting requirements on accountants,” he said.

Dr Fundanga appealed to accountants to maintain the reputation of their profession by upholding ethical and professional standards as custodians of financial resources.
He added that there was also need to ensure that financial matters were prudently managed in organisations.

“We have seen an increase in reported cases of accountants involved in unlawful an practice which does not reflect well on the profession. Almost all key sectors of the economy recorded positive growth except for restaurants and hotels, which saw negative growth due to lower tourist and business travel arrivals during the financial crisis.

Annual overall inflation slowed down, reverting to single digit level of 9.9 per cent in December 2009 from 16.6 per cent recorded in December 2008, and was in line with the original end-year target of no more than 10 per cent. This outrun was attributed to the decline in both annual food and non-food inflation,” he said.

“In the external sector, Zambia’s external position is expected to remain favourable in 2010 due to the rebound of copper prices on the international market as well as the expected increase in copper production as soon as some mines increase production to full capacity and the resumption of production at some mines.”

He further added that the financial sector had remained resilient despite the adverse effects of the recent global financial crisis.

“Currently Zambians financial sector is characterised by high liquidity levels, reflecting tighter lending standards in the wake of lessons from the global financial crisis leading to marked decline in private sector lending. As a result the demand for the relatively risk free government securities yield rates and relatively low inflation experience since the beginning of the year should contribute to a decline in banks lending rates and thus stimulate borrowing by the private sector,” Dr Fundanga observed.

And International Federation of Accountants (IFA) president Robert Bunting said accountancy was a complicated job.

“We are charged by the Central Banks, governments, clients and investors to help render fair accountancy. As time passes, rendering fair accountancy has become complicated, our job has become complicated. It is easy to complain but we must remember that is what gives us the ability to master and better our sector. We have to educate ourselves,” he said.

And ZICA president Chintu Mulendema said that it was important to ensure that all accountants in Zambia were registered with ZICA, other than chartered accountants in business and public practice.

Labels: ACCOUNTING, CALEB FUNDANGA, CORRUPTION

posted by MrK @ 2:49 PM