Anti-Money Laundering: CPAs Can Help to Disrupt Financial Crimes
Originally Published by CPA Ontario: February 21, 2025 - LINK
Criminals and terrorists are getting increasingly sophisticated about exploiting anti-money laundering vulnerabilities around the world. As a result, several Canadian agencies and international organizations have committed to robust international cooperation to combat money laundering.
One such entity is the Financial Action Task Force (FATF) — a global money laundering and terrorist financing watchdog. It sets international standards that aim to prevent these illegal activities and the harm they cause to society.
Canada has been a member of FATF since 1990 and is one of over 200 countries and jurisdictions around the world that have committed to implement the FATF Standards. Canada was last evaluated in 2016 and is scheduled for its 5th round of mutual evaluations during 2025.
Achieving global implementation of the FATF Standards relies on a strong global network of FATF-Style Regional Bodies (FSRBs), in addition to the 40- member bodies. Through its nine FSRBs, the FATF brings together a global network of 205 jurisdictions that have each committed at the highest political level, to implementing the FATF Recommendations. FATF and FSRBs conduct peer reviews on an ongoing basis to assess how effectively their respective members' AML/ATF measures work in practice, and how well they have implemented the technical requirements of the FATF Recommendations. The nine FSRBs have an essential role in promoting the effective implementation of the FATF Recommendations by their membership and in providing expertise and input in FATF policy-making.
CPAs Can Support Global AML Efforts Here in Canada
CPAs are uniquely positioned to contribute to anti-money laundering and anti-terrorist financing efforts by safeguarding financial systems from illegitimate money, or by preventing such funds from entering. CPAs can help protect Canada’s financial systems and disrupt financial crimes by:
- Exercising professional judgement when interacting with clients;
- Proactively taking steps to not associate with activity that they know, or should know, to be unlawful (Rule 213 of the CPA Code of Professional Conduct “Code”); and
- Acting, at all times, in a manner which will maintain the good reputation of the profession and serve the public interest (Rule 201 of the Code).
Balancing a CPAs Obligations
Rule 201 of the Code provides guidance on a variety of factors that may pertain to a CPA’s obligation to maintain the good reputation of the profession and serve the public interest.
If there is a loss of trust in the client or inducement by the client to perform illegal, unjust or fraudulent acts, the CPA may find themselves in a difficult position. They will have to exercise their professional judgment and balance the requirements of Rule 213 with those of Rule 208, which imposes certain obligations regarding preserving the confidentiality of information concerning client (or former client) affairs.
In these circumstances, a CPA or CPA Firm may want to obtain independent legal advice.
When and How to Report Financial Crimes
In the course of their professional lives, CPAs may become aware of financial crimes caused by individuals not regulated by CPA Newfoundland and Labrador. If there are client confidentiality or conflict of interest considerations at play, a CPA may want to consult with their legal advisor prior to reporting to one of the agencies below.
Financial Transactions and Reports Analysis Centre of Canada (FINTRAC)
Providing voluntary information about suspicions of money laundering or about the financing of terrorist activities; and/or about suspected non-compliance with the Proceeds of Crime (Money Laundering) and Terrorist Financing Act.
Canadian Anti-Fraud Centre (CAFC)
Reporting fraud and cybercrimes.
Canada Revenue Agency (CRA) Leads Program
Reporting suspected Tax or Benefit Cheating in Canada.
Royal Canadian Mounted Police (RCMP) detachment or to your police of jurisdiction
Reporting financial crimes.
“Know Your Client”: FINTRAC Client Verification Guidance
CPAs and CPA Firms have “Know Your Client” obligations under the PCMLTFA and associated Regulations when they carry out certain activities on behalf of a person or entity, or give instructions on behalf of a person or entity in respect of:
- Receiving or paying funds or virtual currency;
- Purchasing or selling securities, real property or immovables or business assets or entities; and
- Transferring funds, virtual currency or securities by any means.
CPAs must verify the identity of persons and entities for certain activities and transactions using verification methods prescribed by the PCMLTFA. Verifying the identity of a person or an entity removes the anonymity from financial transactions and is one of the most important ways to protect Canada’s financial system from money laundering and terrorist financing activities.
To assist with this work, CPAs and CPA Firms should reference the series of videos published by FINTRAC:
Additional Resources
IFAC Response to FATF
The International Federation of Accountants (IFAC) is the global organization for the accountancy profession. IFAC’s membership is comprised of over 180 professional accountancy organizations in more than 135 jurisdictions, representing millions of professional accountants. In its response to the Financial Action Task Force’s (FATF) Public Consultation on Financial Inclusion, IFAC announced that it supports global AML efforts. Read IFAC’s response here.
OSFI and FINTRAC
Learn more about how The Office of the Superintendent of Financial Institutions (OSFI) and the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) work together.
FINTRAC News
Subscribe to FINTRAC’s mailing list for notifications about new web content.
Canada's Anti-Money Laundering and Anti-Terrorist Financing Regime
Learn about the Strategy for 2023-2026.
Other AML/ATF Publications
Anti-Money Laundering Reporting Requirements for CPAs and CPA Firms (Regulatory Standard Edition: October 2024 | Published: November 18, 2024)
The Role of CPAs in Combating Money Laundering and Financial Crime (Regulatory Standard Edition: August 2024 | Published: August 20, 2024)