As CPABC’s senior advisor, public interest, Jessica McKeachie oversees the regulatory body’s anti-money laundering (AML) and anti-corruption initiatives. In this, her fourth article on AML for CPABC in Focus, she and Martin Eady, CPA, CA, CPABC’s director of professional conduct, share some important regulatory updates.
With its mandate to protect the public, CPABC is responsible for establishing and enforcing the professional standards of its members, students1
and registered firms (registrants2
). Its duties also include working to combat money laundering. Anti-money laundering (AML) education and awareness campaigns are not new to CPABC—nor are the rules designed to prohibit any activities associated with money laundering. However, as money laundering risks evolve, so must the CPA profession.
CPABC has a comprehensive set of rules, the CPABC Code of Professional Conduct (CPA Code), which requires CPABC registrants to act in the public interest and uphold the public’s trust.3,4 This means registrants cannot have any involvement or association with illegal activity, including money laundering. In addition, to address the ongoing risk posed by criminals attempting to launder money by taking advantage of CPAs and their accounting services, CPABC continues to enhance its regulatory system.
Most recently, CPABC responded to recommendations made by the Commission of Inquiry into Money Laundering in British Columbia (Cullen Commission) by updating the CPA Code and the CPABC Bylaw Regulations with three changes specifically designed to aid in protecting the public and to enhance the ability of CPABC registrants to prevent, detect, and combat money laundering. These changes are:
- A new mandatory AML CPD requirement for all members, effective 2024 – Bylaw Regulation 600/2.1 (Continuing Professional Development Program: Basic Requirements);
- A new cash rule – Rule 411 (Cash transactions); and
- Amendments to guidance for Rule 102.4 (Matters to be reported to CPABC – Other regulatory bodies).
These changes are the first regulatory steps taken by an AML working group created by CPABC in response to the findings of the Commission of Inquiry into Money Laundering in British Columbia – Final Report. This working group was established to carefully review and act on the recommendations in the Cullen report where appropriate.
As you’ll recall, the Cullen Commission was a public inquiry established by the BC government to investigate and address issues related to money laundering in key sectors of BC’s economy. As detailed in the November/December 2022 issue of CPABC in Focus,5 Justice Cullen ultimately concluded that the federal AML regime is not sufficiently effective at detecting, combatting, or prosecuting money laundering in BC and recommended that the provincial government take a significantly more direct role to address the problem.
Cullen also noted that both regulated CPAs and unregulated accountants (non-CPAs) risk being used to facilitate money laundering because of the nature of their work—particularly if they provide financial and tax advice to clients, provide bookkeeping services, and/or perform financial transactions. Accordingly, he included 13 recommendations related to the accounting profession in the final report, 10 of which were directed at CPABC.
Here’s a closer look at CPABC’s three new amendments
New mandatory AML CPD requirement
As every CPA has an obligation to help combat money laundering in British Columbia, CPABC has introduced a mandatory continuing professional development (CPD) requirement for all members to complete AML-related education. This was deemed necessary to:
- Raise and enhance members’ awareness regarding money laundering and its risks;
- Assist the profession in detecting, preventing, and combatting money laundering; and
- Ensure that members understand the related obligations for CPAs under Canada’s Anti-Money Laundering and Anti-Terrorist Financing Regime.6
Effective January 1, 2024, Bylaw Regulation 600/2.1 (Continuing Professional Development Program: Basic Requirements) will require all members to take 1.5 hours of AML-related professional development (PD) by December 31, 2026.7 CPABC’s PD Program currently offers a number of free AML courses, and more options will be added to the program in 2024. Members will also be able to take AML courses offered by other PD providers and by their employers.
More information on the new CPD requirement is available online.
A new cash rule
Although society in general is shifting away from a reliance on cash, cash is still very prevalent in money laundering. Illegal activities such as drug trafficking and sales, human exploitation, and terrorism continue to be dominated by cash. As a result, the risk involved in cash transactions, especially large ones, is significant.
While the work of CPAs in public practice is not normally cash intensive, CPABC understands from its survey of members that cash transactions do occur occasionally.8
To assist in minimizing the risk—both to the public and to CPAs—CPABC has added a new cash rule to the CPA Code that limits members in public practice and registered firms from accepting more than $3,000 in cash in a single client matter: Rule 411 (Cash transactions).9 Here are three important highlights from the guidance to Rule 411:
- Guidance 1: “Registrants must take care to avoid the risk of accepting cash that has been obtained or derived from the criminal acts of an unscrupulous client or from other undeclared sources of income. Although it is acknowledged that cash is legal tender, the risks associated with cash transactions are significant and members or registered firms are encouraged to carefully consider all cash transactions and whether a more secure transaction process is possible.”
- Guidance 5: “…cash receipts are considered in aggregate and over the entire life of the client matter. That means that not all the cash has to come in on the same day. The distinction between ‘client’ and ‘client matter’ is also important since one may have a client with several distinct client matters. Members or registered firms must track the cash received on each distinct client matter.”
- Guidance 6: “In the event that a registrant in public practice receives cash in excess of $3,000 the member or registered firm must:
- make no use of the cash,
- return the cash, or if that is not possible, the same amount in cash, to the payer immediately, and
- promptly report to CPABC the details of the transaction.”
Note: Rule 411 makes exceptions for the payment of professional fees or reimbursement of disbursements or expenses in connection with the provision of accounting services.
Amendments to guidance for Rule 102.4
Rule 102.4 of the CPA Code (Matters to be reported to CPABC – Other regulatory bodies) requires that registrants must notify CPABC after having been found guilty of a failure to comply with the requirements of another regulatory body where the matter involves acting in a professional capacity.10 In his final report, Justice Cullen questioned whether CPABC registrants were required to inform CPABC of any adverse findings from the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) and recommended amending the CPA Code to add clarity.
In response to Cullen’s recommendation, CPABC amended the wording to the guidance of Rule 102.4 to further explain registrants’ reporting obligations—this meant clarifying the definition of what “having been found guilty” means, and explicitly stating that AML agencies are considered “regulatory bodies” for the purposes of the rule.
Further action pending
The work of CPABC’s AML working group is ongoing. Further actions will be announced soon to help CPABC registrants better understand and address AML concerns in British Columbia. Stay tuned for updates.
Need more guidance?
CPABC’s professional standards advisors are also here to help. You can consult them for confidential guidance to ensure that you stay compliant with the CPA Code and the CPABC Bylaws when navigating difficult situations. Contact our advisors by email.
Looking for more AML resources?
- Visit CPABC’s AML-dedicated website to find links to important resources, such as CPA Canada’s Guide to Comply with Canada’s Anti-Money Laundering and Anti-Terrorist Financing (AML/ATF) Legislation. The guide helps CPAs minimize personal and corporate risks about money laundering and reporting, so they can:
- Determine if AML obligations are applicable to their activities;
- Learn about the requirements to comply with their obligations; and
- Understand FINTRAC’s enforcement methods and the risks of non-compliance.
- Visit CPABC’s PD website to find a variety of relevant courses.
- Visit the main website to access the CPA Code, which contains detailed guidance on how the rules should be applied.
Jessica McKeachie is CPABC’s senior advisor, public interest. Martin Eady is CPABC’s director of professional conduct. This article originally appeared in the November/December 2023 issue of CPABC in Focus.
1 In this article, “students” refers to candidates in the CPA Professional Education Program.
2 “Registrants,” as used in the CPABC Code of Professional Conduct (CPA Code), refers to members, students (candidates in the CPA Professional Education Program), and registered firms. The CPA Code does not apply to students enrolled in the CPA preparatory courses; however, these students are expected to exhibit ethical behaviour.
3 See Rule 213 (Unlawful activity) of the CPA Code.
4 CPA Code, Preamble (5).
7 For a candidate or applicant who is admitted as a member after January 1, 2024, the requirement will have to be fulfilled within the three-calendar-year period that commences with the calendar year of their admission.
9 This amount aligns with the reporting obligations for cash transactions set out by the Financial Transactions and Reports Analysis Centre of Canada, Canada’s primary AML regulator.
10 This includes entering into a settlement agreement with the regulatory body.