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Accountants and accounting firms must fulfill specific obligations under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA) and associated Regulations to help combat money laundering and terrorist financing in Canada. This means that you have obligations if you are a chartered accountant, a certified general accountant or a certified management accountant. You also have obligations if you are an accounting firm which is defined as an entity engaged in the business of providing accounting services to the public that has at least one partner, employee or administrator that is an accountant.
Accountants and accounting firms are subject to the PCMLTFA when they engage in any of the following activities on behalf of any individual or entity, or give instructions on behalf of any individual or entity in respect of:
- receiving or paying funds;
- purchasing or selling securities, real properties or business assets or entities; or
- transferring funds or securities by any means.
You are subject to the requirements described further below when you engage in these activities, regardless of whether you receive fees or have a formal letter of engagement to do so. In other words, even if you carry out these activities on a voluntary basis, you are subject to the requirements of the PCMLTFA.
If you are paid for your accounting services, the receipt of the professional fees does not trigger associated obligations under the PCMLTFA.
When you give instructions for any of the triggering activities, it means that you actually direct the movement of funds. By contrast, when you provide advice to your clients, it means that you make recommendations or suggestions to them. Providing advice is not considered to be giving instructions.
- Example of giving instructions: “Based on my client’s instructions, I request that you transfer $15,000 from my client’s account, account number XXX, to account number YYY at Bank X in Country Z.”
- Example of providing advice: “For tax purposes, we recommend that you transfer your money into a certain investment vehicle.”
If you are an employee of an accountant or accounting firm, the requirements described further below are the responsibility of your employer, except with respect to reporting suspicious transactions and terrorist property, which is applicable to both you and the employer.
Accountants and accounting firms are responsible for providing FINTRAC with certain transaction reports, for implementing a compliance program and for keeping records that may be required for law enforcement investigations. Their obligations under the PCMLTFA and associated Regulations are described below.
Compliance program
A comprehensive and effective compliance program is the basis of meeting all of your obligations under the PCMLTFA and associated Regulations. During a FINTRAC examination, it is important to demonstrate that the required documentation is in place and that employees, agents, and all others authorized to act on your behalf are well trained and can effectively implement all the elements of your compliance program. A senior officer must approve the compliance program and the compliance officer must have the necessary authority to carry out the requirements of the program. You must:
- Appoint a compliance officer responsible for the implementation and oversight of the compliance program;
- Develop and apply written compliance policies and procedures that are kept up to date and approved by a senior officer;
- Apply and document a risk assessment, including mitigation measures and strategies;
- Develop and maintain a written training program for employees, agents, and others authorized to act on your behalf; and
- Review your compliance program (policies and procedures, risk assessment and training program) every two years for the purpose of testing its effectiveness.
See Compliance program requirements, the Risk-based approach guide and the Risk-based approach workbook for accountants for more information on these obligations.
Know your client
As an accountant or accounting firm, you must verify the identity of clients for certain activities and transactions according to the Proceeds of Crime (Money Laundering) and Terrorist Financing Regulations (PCMLTFR). Part of knowing your client includes following the methods to identify clients, as well as conducting certain additional activities as listed below:
- When to identify individuals and confirm the existence of entities – Accountants;
- Methods to identify individuals and confirm the existence of entities;
- Business relationship requirements;
- Ongoing monitoring requirements; and
- Third party determination requirements.
Reporting
Accountants and accounting firms are required to complete reports about certain transactions and property and submit them to FINTRAC. Financial transaction reports are critical to FINTRAC’s ability to analyze transactions in order to develop financial intelligence that is disclosed to law enforcement and partner agencies. Therefore, the quality of your reporting will be reviewed by FINTRAC in examinations.
Suspicious transactions: Within 30 days of determining that there are reasonable grounds to suspect that a transaction or an attempted transaction is related to the commission or attempted commission of a money laundering or terrorist financing offence, you must submit a suspicious transaction report (STR). The following STR guidance pieces explain how to identify and report STRs and all three should be read together. See What is a suspicious transaction report?, Reporting suspicious transactions to FINTRAC and Money laundering and terrorist financing indicators – Accountants.
Terrorist property: When you know that property in your possession or under your control is owned, controlled by or on behalf of a terrorist or a terrorist group, you must submit a report without delay. You must also submit a report to the Royal Canadian Mounted Police (RCMP) and the Canadian Security Intelligence Service (CSIS). See Guideline 5: Submitting Terrorist Property Reports.
Large cash transactions: When you receive $10,000 CAD or more in cash (including taxes or other fees) either in a single transaction or in multiple transactions within a 24-hour period, you must submit a report within 15 calendar days. See Guideline 7A: Submitting Large Cash Transaction Reports to FINTRAC electronically and Guideline 7B: Submitting Large Cash Transaction Reports to FINTRAC by paper.
If you have a computer and an internet connection, you must submit all reports to FINTRAC electronically, except Terrorist Property reports, which can only be submitted on paper.
Record keeping
You are responsible for keeping certain transaction and client identification records. These records are to be kept in such a way that they can be provided to FINTRAC within 30 days if required to do so. See Record keeping for accountants for details.
Penalties for non-compliance
Non-compliance with Part 1 or 1.1 of the PCMLTFA may result in criminal or administrative monetary penalties.
Glossary
FINTRAC has created a Guidance glossary that defines certain terms used throughout its guidance documents.
Original Source: https://www.fintrac-canafe.gc.ca/re-ed/accts-eng