This non-authoritative guidance was drafted by CPA Ontario to provide CPAs with insight into the potential impact of anti-money laundering (AML) and anti-terror financing (ATF) provisions contained in Bill C-2, The Strong Borders Act.
The Strong Borders Act (Bill C-2) passed its first reading on June 3. If it receives royal assent, the legislation will introduce a more stringent compliance environment to combat money laundering and terrorist financing. Given their role in the anti-money laundering (AML) and anti-terrorist financing (ATF), CPAs in compliance and executive roles need to understand the implications for their organizations and their clients.
What are the Proposed Changes?
Heavier Administrative Monetary Penalties (AMPs): The Strong Borders Act would increase Administrative Monetary Penalties (AMPs), with serious violations now carrying a penalty of up to $4 million for an individual and up to $20 million for very serious violations by an entity.
What it means for CPAs: Heavier AMPs reinforce the need to ensure robust internal controls, proactive due diligence, and continuous monitoring is in place. Compliance officers, CFOs, or partners in accounting firms designated as “reporting entities” need to be aware of these increased financial penalties.
Expanded Enrolment Requirements: Every person or entity referred to in section 5 of the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA) would be required to enroll with the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC).
What it means for CPAs: Team members in compliance and executive roles must determine whether their firms or clients fall under these enrolment requirements. This involves ensuring compliance with FINTRAC registration, managing ongoing renewal processes, and reviewing their AML programs.
The public accessibility of the enrolment roll means increased transparency, which firms and their clients should be aware of and factor into their public relations and risk management strategies.
Restrictions on Cash Transactions and Anonymous Accounts: The Strong Borders Act would introduce explicit prohibitions, for certain entities, on accepting cash payments of $10,000 or more in a single transaction, third-party cash deposits, and the opening of anonymous accounts.
What it means for CPAs: New restrictions on cash transactions will impact CPAs in compliance roles working in cash-heavy industries including hospitality, retail, financial services and real estate. Those charged with compliance should carefully review their policies accordingly.
New Privacy and Information Sharing Provisions: The Act would introduce new provisions on personal information, including the use of collected information and disclosure without consent, while facilitating greater information sharing between federal bodies.
What it means for CPAs: Balancing compliance with stringent AML/ATF requirements and the privacy obligations under PIPEDA may require updates to privacy policies, data handling protocols, and advising clients on the lawful collection, use, and disclosure of personal information.
CPAs who are involved in forensic accounting or advising financial institutions may also be required to engage more directly with law enforcement and FINTRAC.
Mandatory Compliance Agreements: The Strong Borders Act would significantly overhaul the compliance agreement process under the PCMLTFA by making it mandatory. Any person or entity subject to an AMP would be required to enter into a compliance agreement with FINTRAC.
What it means for CPAs: The shift to a mandatory compliance agreement regime would mean non-compliance can now trigger an escalating series of enforcement actions, culminating in severe penalties and public disclosure if a compliance order is breached.
CPAs in compliance roles will be instrumental in negotiating agreements, ensuring their clients meet the terms, and mitigating the risks associated with non-compliance orders. The public nature of compliance orders adds reputational risk, making proactive compliance and engagement with FINTRAC critical.
Conclusion:
By exercising professional judgment when interacting with clients, proactively taking steps to not associate with unlawful activity, and acting in a manner which maintains the good reputation of the profession, CPAs have an important role to play in safeguarding Canada’s financial system. It’s why CPAs, particularly those in compliance positions and partners in accounting firms designated as “reporting entities,” need to be aware of how the proposed amendments in Bill C-2 would change risk exposure, compliance responsibilities and professional practice.
These proposed legislative changes also create new professional opportunities for CPAs in risk management advisory services, training and education and further specialization in financial crime prevention. CPAs should understand how the Strong Borders Act could potentially impact their work, their organizations and their clients.
Originally published by CPA Ontario.
