The 2022 AML guide: what accountants need to know

With the marked increase in financial crime in recent years, it’s more important than ever for CPAs to be alert to the risks of money laundering (shapecharge/Getty Images)

The fight against financial crimes is ramping up globally. Here in Canada, the updates made to the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA) regulations over the past couple of years are now fully in effect. And the 2022 federal budget promised to move up the implementation of a publicly accessible registry of beneficial owners of Canada Business Corporations Act companies to 2023 from 2025.

We asked financial crimes expert and guide contributor Marc Tassé, CPA, about the rationale behind the guide and how CPAs can use it.

CPA CANADA: What was the aim behind the guide?
Marc Tassé (MT): Accountants and accounting firms carrying out activities covered by the (PCMLTFA) have an obligation to comply with the act and its regulations.

With that in mind, this guide has three main purposes: to help accountants and accounting firms determine if the updated AML/ATF obligations are applicable to their activities; to help them develop their AML/ATF program; and to help them better understand the AML/ATF regulator’s (FINTRAC’s) focus in compliance examinations and its enforcement methods, as well as the risks of non-compliance.

CPA CANADA: What has changed since the last version of the guide?
MT: The Financial Action Task Force (FATF) sets the global standards for anti-money laundering, anti-terrorism financing and proliferation financing. However, not all countries meet these standards, either in terms of effectiveness or technical compliance. In its assessment of Canada’s AML regime in 2016, the FATF identified strengths but also weaknesses in both of those areas.

Since 2016, Canada has taken steps to strengthen its legislation and regulations to better meet FATF standards. It amended our AML/ATF legislation and regulations several times, with a number of provisions coming into force  either on June 1, 2020 or June 1, 2021. These changes reflect Canada’s desire to better meet the international standards. And while there will undoubtedly be more changes in the future, the FATF has already recognized the progress made to date: in its October 2021 report it increased Canada’s compliance ratings.

CPA CANADA: What legislative updates are key for CPAs to keep in mind?
MT: The AML/ATF rules apply only to CPAs engaged in activities covered by the AML/ATF legislation. However, if your work veers into those areas, you not only need to know the rules, you need to make sure you comply with the requirements by having an appropriate compliance program in place, among other obligations.

It’s especially important to be familiar with the new requirements that came into effect on June 1, 2021. These updates strengthened Canada’s AML/ATF regime in the areas of compliance, knowing your client, record-keeping and reporting to FINTRAC.

CPA CANADA: Why do CPAs need to pay extra attention to AML/ATF right now?
MT: With the marked increase in financial crime in recent years and new technologies (such as cryptocurrencies) that are now being used by money launderers, it’s more important than ever for accountants to be aware of the evolving risks.

Also, given the war in Ukraine and the associated economic sanctions that must be observed, CPAs must watch out for affected parties who may try to evade the sanctions--which in turn could involve money laundering. It’s crucial for them to be informed of the relevant legislation, implement its requirements and ensure they know who they are dealing with.

CPA CANADA: What should CPAs keep in mind when using the guide?
MT: The best way to use the guide is to first determine if, in fact, you are engaged in the “triggering activities” that subject you to the AML/ATF legislation. If you are, then you should read the guide carefully and implement a compliance program, using its examples and checklists.

The guide itself does not constitute an AML/ATF program. Rather, it includes the key requirements for implementing an AML/ATF compliance program, knowing your client, and determining beneficial ownership as well as third parties involved in transactions. It also covers record-keeping, reporting to FINTRAC, sanctions for non-compliance and information about FINTRAC’s approach to examinations.

The guide has been updated with references to website links valid at the time of publication. CPAs should be cognizant of ongoing changes to the AML/ATF legislation and regulations and any revisions to FINTRAC guidance and other links provided.

KEEP UP TO DATE ON YOUR AML OBLIGATIONS

Refer to the newly updated AML guide to learn more about the changes to AML/ATF regulations and how the new rules affect CPAs.

Also, CPA Canada has a wealth of resources on subjects such as the risks of non-compliance, knowing your client and record-keeping and reporting.

Plus, find out how Canada has progressed in relation to FATF requirements and tune into our webinar on the latest AML developments.