As regulators have stepped up enforcement activity for money
laundering offences, resulting in some eye-popping fines, it seems
a good time to review the obligations of accountants and accounting
firms under anti-money laundering legislation.
Like lawyers, the accounting profession is subject to the
Proceeds of Crime (Money Laundering) and Terrorist Financing
Act (PCMLTFA or the Act), the principal federal statute which
contains measures to detect and deter money laundering and
terrorist financing. The application of PCMLTFA to the legal
profession has been suspended pending the outcome of a constitutional challenge which has now been heard at the Supreme Court of Canada. Not so
with accountants; the Act applies today without exception to all
members of the profession. The Financial Transactions and Reports
Analysis Centre of Canada (FINTRAC) is the federal agency which
administers and enforces the Act, and FINTRAC can and does conduct
audits of accounting firms to assess compliance with the Act. (The
Act, the regulations made under the Act, and the policy statements,
guidance notes and notices issued by FINTRAC
are referred to herein as the "AML Rules".)
The application of the AML Rules and the mandated anti-money
laundering compliance procedures to accountants is relatively
narrow. They only apply when the accountant engages in the
following activities on behalf of an individual or an entity:
receiving or paying funds;
purchasing or selling securities, real property or business
assets or entities; or
transferring funds or securities by any means.
The easiest way to think about it is that the AML Rules are
engaged whenever the accountant or the firm is conducting client
facilitation activities for or on behalf of a client. They do not
apply with respect to the receipt of fees for professional
services. But, for example, if the accounting firm remits taxes to
CRA on behalf of a client, even as a "one-off", or
handles monies in connection with a mortgage financing, or a
purchase or sale of property, then the AML Rules will apply in
respect of those transactions.
Even if the level of client facilitation activity is very
limited, ad hoc or occasional, FINTRAC's expectation is that
the firm have a compliance program in place. Such a program
consists, at a minimum, of:
up-to-date and appropriate AML policies and procedures which
have been approved by a senior management;
the appointment of a compliance officer for AML;
a written risk assessment which documents the money
laundering/terrorist financing risks to the firm, with mitigation
measures that the firm has adopted with respect to the assessed
ongoing training on AML to firm members and employees (and
documented evidence of participation in such training programs);
an independent review of the effectiveness of the firm's
AML compliance program, at least every two years.
None of this has to be elaborate, but all of these elements are
expected to be present.
Following a period of outreach and education, FINTRAC is now
very firmly in enforcement mode. Accounting firms should not be
surprised to receive a letter from their local FINTRAC examiner
requesting copies of documentation evidencing compliance with the
AML Rules. Significant fines can be imposed if the FINTRAC review
discloses failure to comply; furthermore, FINTRAC can and will make
public disclosure, including on its web site, of entities found to be in
We have observed that while client identification and
verification procedures are generally well observed, many firms
have not kept their written policies and procedures up to date.
Also, we see firms that have not conducted satisfactory risk
assessments nor had the independent review completed as required.
We recommend that accounting firms take a moment to review their
AML compliance regimes to ensure that they reflect the most recent
amendments of the AML Rules.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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