This article adds context to the application of Rule 219 (Client identification and verification) of the CPABC Code of Professional Conduct (the CPA Code), emphasizing its role in supporting Canada’s anti-money laundering (AML) and anti-terrorist financing framework. It also highlights the importance of “know your client” procedures, explains when rules 219.1 and 219.2 apply, and outlines the verification expectations for specified services and transactions.
Rule 219 complements member obligations to comply with all laws in accordance with Rule 213 (Unlawful activity), including the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA). Members are responsible for reviewing and adhering to all requirements under the PCMLTFA, and to those of the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC).
The importance of knowing your client
As outlined in the CPA Code, members must exercise due diligence in understanding the nature and background of their clients. Know your client (KYC) procedures are essential for identifying potential risks associated with money laundering, terrorist financing, fraud, and other illicit activities. As noted above, the procedures outlined in the CPA Code support Canada’s AML regime, including the PCMLTFA and FINTRAC. By implementing robust KYC practices, members ensure that services are provided in a manner consistent with legal and ethical standards, thereby upholding the integrity of the profession, safeguarding the public interest, and protecting themselves and their clients.
Applicability of rules 219.1 and 219.2 and associated verification procedures
Rule 219.1 (Requirement to identify client) applies when a member is engaged to perform specified services. As per the definitions for Rule 219 and the related guidance, the term “specified services” refers to:
a) Advice respecting a specified transaction;
b) Advice respecting the use of corporations or other legal entities; or
c) Private-sector bookkeeping services.
The scope of specified services is intentionally broad, reflecting the principle that members should be aware of the identity of every client for whom they provide professional services. While there is no explicit requirement under Rule 219.1 to obtain and record formal identification, members must exercise professional judgment and ensure that they have no reason to doubt the accuracy or legitimacy of the client information provided.
By contrast, Rule 219.2 (Requirement to verify client identity) applies when a member is involved in specified transactions. As per the definitions, “specified transactions” refers to:
a) Receiving or paying funds or virtual currency;
b) Purchasing or selling securities, real property, or business assets or entities;
c) Transferring funds, virtual currency, or securities by any means; or
d) Giving instructions in connection with any activity referred to in the points above.
These specified transactions may occur in the course of delivering specified services and trigger additional obligations under both the CPA Code and Canada’s AML regime. In such cases, members are required to verify the client’s identity using methods approved by FINTRAC and make reasonable inquiries regarding the source of funds involved in the transaction. The verification process may include, but is not limited to, obtaining and recording government-issued identification.
Definition of private sector bookkeeping
For the purposes of Rule 219, private sector bookkeeping refers to the provision of bookkeeping services to clients that do not operate within the public sector. This includes, but is not limited to:
- Privately owned entities;
- Publicly traded companies (e.g., those listed on the Toronto Stock Exchange); and
- Not-for-profit organizations.
In contrast, public sector entities are those defined as government bodies or organizations that are directly controlled by a government authority and are not considered private sector.
More information available
Visit CPABC’s AML webpage for more information on your AML obligations. For more information on your FINTRAC obligations, visit fintrac-canafe.canada.ca, click “Obligations and guidance,” and choose “Accountants” in the “Sector-specific guidance” section.
This article was originally published in the March/April 2026 issue of CPABC in Focus.
