Background
Since 2001, CPAs and CPA Firms have been subject to the Proceeds of Crime (Money Laundering) Terrorist Financing Act (“PCMLTFA”) should they perform certain activities on behalf of a person or entity. Accountants have been assessed as a medium money laundering risk as part of the Department of Finance’s updated analysis of money laundering in Canada in 2025. Accountants may, knowingly or unknowingly, facilitate money laundering by carrying out certain transactions for clients. Accountants have been included in the Canadian AML regime since 2001, and it is important to be aware of the constantly evolving obligations to ensure compliance with the legislation.
The regime has identified certain activities, referred to as triggering activities, which include performing any of the following on behalf of a person or entity:
- The receipt or payment of funds or virtual currency.
- The purchase or sale of securities, real property, or business assets or entities.
- The transfer of funds, virtual currency or securities by any means.
- The giving of instructions in connection with any activity referred to in a) - c) above.
Summary of Obligations under the PCMLTFA
If you are performing triggering activities, you are subject to the following obligations from FINTRAC:
1. Compliance Program
Accountants who perform triggering activities are required to implement a comprehensive compliance program, which forms the foundation for meeting all regulatory obligations under the PCMLTFA. Importantly, there is no materiality threshold; even a single triggering activity, regardless of its value, requires the establishment of a compliance program. The five components of a compliance program can be found in detail here, and are summarized below:
- Appoint a compliance officer responsible for development, oversight, and maintenance of the compliance program.
- Develop and apply written compliance policies and procedures. Policies and procedures must cover the following aspects: compliance program, know your client, business relationship and ongoing monitoring, record keeping, transaction reporting, and ministerial directive requirements.
- Conduct a risk assessment of your business to assess and document the risk of a money laundering or terrorist activity financing offence occurring during all triggering activities you/your firm is engaged in. The Risk Assessment guidance can be found here.
- Develop and maintain a written, ongoing compliance training program for your employees, agents or mandataries, or other authorized persons. Institute and document a plan for the ongoing compliance training program and deliver the training (training plan).
- Institute and document a plan for a review of the compliance program for the purpose of testing its effectiveness, and carry out this review every two years at a minimum (two-year effectiveness review).
2. Know Your Client (“KYC”)
- Verify the identity of persons and entities:
- Accountants must verify the identity of persons or entities when performing triggering activities. When to verify the identity of persons and entities—Accountants.
- Accountants must verify the identity of persons and entities using the methods prescribed by the PCMLTFA and associated Regulations. Methods to verify the identity of persons and entities.
- Accountants must obtain and take reasonable measures to confirm the accuracy of beneficial ownership information for entities. Beneficial ownership requirements.
- Establish and monitor business relationships:
- Accountants are deemed to have established a business relationship with a client the second time they perform a triggering activity that requires the need to verify the identity of that client. Business relationship requirements.
- Accountants have ongoing monitoring requirements when a business relationship has been established with a client. Ongoing monitoring requirements.
3. Transaction Reporting
- The following are reports that accountants are required to submit to FINTRAC:
- Suspicious Transaction Reports (“STR”). Accountants must file an STR with FINTRAC whenever a completed or attempted transaction related to a triggering activity raises reasonable grounds to suspect involvement in money laundering or terrorist financing.
- Large Cash Transaction Reports (“LCTR”) and Large Virtual Currency Transaction Reports (“LVCTR”). When $10,000 or more in cash or virtual currency is received in a single transaction or series of transactions within 24 hours during a triggering activity, accountants must complete, retain, and file an LCTR or LVCTR with FINTRAC. These rules apply whether the funds were provided in one payment or multiple related payments.
- Listed Person or Entity Property Reports. Accountants must report to the RCMP and Canadian Security Intelligence Service (CSIS) when they know or believe they possess or control property owned by or on behalf of a listed terrorist or terrorist group. They must also file a Terrorist Property Report with FINTRAC at the same time.
4. Record Keeping
- Accountants are required to maintain the following records for a period of 5 years:
- Receipt of funds records for funds received over $3,000 as part of a triggering activity.
- Records of client verification.
- Records of business relationships and ongoing monitoring.
- Record of beneficial ownership, and reasonable measures taken to confirm accuracy of beneficial ownership information.
- Records of all reports submitted to FINTRAC.
- Detailed record keeping requirements for accountants can be found here.
5. Ministerial Directives
- Directives from Canada’s Minister of Finance are those that require accountants to apply countermeasures to transactions coming from or going to designated foreign jurisdictions or entities.
- Accountants are required to stay current and comply with Ministerial directives and transaction restrictions.
- Ministerial directives and transaction restrictions can be found here.
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