Welcomed by law enforcers, the agency will strengthen powers to confiscate funds gained through criminal activity. And there is no getting away from the fact that the proposals threaten the bond of professional confidentiality.
But in truth the government has been chipping away at professional confidentiality agreements for years. And rightly so. Trust has to be earned and deserved on both sides – confidentiality has to be overridden in circumstances where illegal activity is suspected.
Yesterday’s proposal takes this further. It extends indictable offences and it is this accountants fear will be a final nail in the coffin of client confidentiality.
The drivers are clear. Law enforcers have grown fed up with accountants and lawyers who they say fail to report anything like the level of illegal activity that they encounter through their clients. They may or may not be right.
This drive for openness is in the spirit of the times. Arthur Levitt’s SEC did not quite deliver his threat to force Big Five firms to hive off consulting arms. But he followed through on his desire to ensure the perception of firms’ independence matches what the firms themselves have maintained is the reality.
As the profession showed in its dealings with Levitt, cooperation with regulators often results in an compromise that satisfies all parties.
Maybe it’s time to try that approach again.
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