The Role of CPAs in Combating Money Laundering and Financial Crime

The work of CPAs helps to lay the foundation of trust that our capital markets are built on, which is why the profession has a pivotal role to play in combating money laundering and financial crime.

Given the threats that money laundering and terrorist financing pose to both financial and nonfinancial institutions, as well as the public, it is crucial for CPAs to stay informed about these evolving risks, Canada’s anti-money laundering (“AML”) and anti-terrorist financing (“ATF”) regime, and CPAs responsibilities under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (“PCMLTFA”).

CPA Ontario Anti-Money Laundering and Anti-Terrorist Financing Data Collection

In July of 2024, CPA Ontario began collecting anti-money laundering (“AML”) and anti-terrorist financing (“ATF”) data from CPA firms through the Practice Profile Questionnaire. The requests for information refer to specific obligations as set out in the Proceeds of Crime (Money Laundering) and Terrorist Financing Act “PCMLTFA”) and associated Regulations.

Detailed information is available in the Practice Profile Questionnaire Walkthrough Guide. More information on the PCMLTFA, associated regulations and the Financial Transactions and Reports Analysis Centre of Canada (“FINTRAC”) can be found below.

What are the obligations of CPAs and CPA Firms?

FINTRAC is Canada's financial intelligence unit and anti-money laundering and anti-terrorist financing supervisor. Under the PCMLTFA, CPAs and CPA Firms must fulfill specific obligations, which include reporting to FINTRAC, when they engage in or carry out certain activities.

Obligations for CPAs include, but are not limited to, engaging in any of the following activities on behalf of a person or entity, or give instructions on behalf of a person or entity for:

• Receiving or paying funds or virtual currency
• Purchasing or selling securities, real property or immovables or business assets or entities; or
• Transferring funds, virtual currency or securities by any means.

Please note that these activities do not include those that are carried out in the course of an audit, a review or a compilation engagement.

Penalties for non-compliance

FINTRAC has the legislative authority to issue administrative monetary penalties (AMPs) to reporting entities that are found to be non-compliant with the PCMLTFA and associated Regulations.

For more information, please visit the FINTRAC website.

In addition to the requirements under the PCMLTFA and those imposed by FINTRAC, CPAs should be aware of the following developments which may impact their relationships with clients and their ongoing regulatory and compliance responsibilities:

Ontario Beneficial Ownership Information

Effective January 1, 2023, privately-held corporations in Ontario are required to maintain beneficial ownership information and to provide that information when requested by law enforcement, regulatory or tax authorities.  Public corporations and their wholly-owned subsidiaries are exempt from this requirement. More information can be found on the Ontario government’s beneficial ownership website.

PCMLTFA Review

The PCMLTFA is undergoing its five-year parliamentary review, as announced in Budget 2023.  To support this review, the Government of Canada held a public consultation that examined ways to improve Canada’s anti-money laundering and anti-terrorist financing (AML/ATF) regime and provided Canadians with the opportunity to provide their input. More information can be found on the Canadian government’s Department of Finance website.

To combat money laundering, terrorist financing, and sanctions evasion, Budget 2024 announced that the government intends to enhance the anti-money laundering (AML) and anti-terrorist financing (ATF) framework by proposing amendments to several key laws, including the Proceeds of Crime (Money Laundering) and Terrorist Financing Act, the Criminal Code, the Income Tax Act, and the Excise Tax Act. More information can be found in the 2024 Federal Budget.

Canada Business Corporations Act Requirements

Starting January 22, 2024, corporations established under the Canada Business Corporations Act are required to file information on individuals with significant control with Corporations Canada and to retain a copy within their corporate records.  More information can be found on Innovation, Science and Economic Development Canada website.

Staying informed and compliant with these updates is crucial for maintaining the integrity and trust in our profession. All CPAs in Ontario need to stay up to date on their obligations to help combat money-laundering and financial crime and protect the public.