As part of the annual risk assessment process, companies have also requested details on investments in non-fungible tokens or other crypto assets.
In at least two of the companies – Deloitte and PwC – partners have been asked to disclose investments as small as 10 in such assets, people with knowledge of the matter said. Companies fear a conflict of interest if partners or a family member have purchased crypto assets, insiders have said.
“Most of these investments are made by executives and young associates, as most of the older ones stick to traditional investments such as equity and real estate,” said a senior partner at one of the companies. “But we want to be honest, because many of our projects involve working directly with the Reserve Bank of India (RBI) and the government.
Take the case of a young tech partner of a large company who bought cryptocurrency to learn how the system works. “It’s not like I invested millions – I bought a few cryptocurrencies to understand the technology and how it works so that we have better clarity when we are working on blockchain projects. Disclose everything and the company actually told me to stay away from stablecoins, ”he said.
Stablecoins are cryptocurrencies whose value is derived from an underlying asset – dollars or gold in most cases.
Insiders say that while executives are urged to disclose crypto investments, the focus is mostly on partners. There are approximately 1,600 associates in the Big Four who run certain service functions such as consulting, tax or auditing.
Until now, partners were asked to disclose all of their liabilities and assets every year. These include investments such as stocks, mutual funds, and now cryptocurrency.
PwC has asked every employee, including their associates, to disclose cryptocurrency investments. “Everyone has to put these transactions in the common database,” said a senior executive.
“In our business, we have to submit bank statements. So let’s say a partner bought crypto assets but didn’t disclose them. And if that happens, it could cause problems,” said a tax partner of a big company. .
No bar on crypto investments
None of the companies, however, specifically asked any of their employees or partners to refrain from investing in cryptocurrencies.
In one case, an executive was interviewed after discovering that her husband may have purchased cryptocurrencies worth around 10,000 in July of this year.
“The compliance department found out. The executive was asked to pay a fine of 25,000 yen for not disclosing this information,” said a person with direct knowledge of the matter.
In all large companies, the compliance department consists of 100 to 150 people who are responsible for verifying that partners are making full disclosures.
“It’s better to disclose everything because otherwise there are different degrees of penalties where level 1 is just a warning but level 4 is a dismissal offense,” another partner told ET. An email sent to the Big Four on Saturday did not receive a response. In some cases, the compliance department even requires partners not to take out mortgage loans from certain banks, as it could even lead to a conflict situation, the tax partner said.
For example, after a senior partner of one of the big four companies was chosen as CEO, he was asked to liquidate some mutual fund investments while the company was working for the management company of active.