Canada AML for Accountants: FINTRAC Rules and Triggers

In Canada, an accountant is not covered by anti-money laundering (AML) law because of a job title. Accountants and accounting firms become "reporting entities" under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act when they carry out certain activities for clients, and from that point they answer to the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC). This guide explains which activities trigger the rules, which work is excluded, what a covered firm has to do, and when to verify a client's identity. It is based on FINTRAC's guidance for accountants and FINTRAC's identity verification guidance for accountants. FINTRAC's accountant page was last updated in June 2024, so check FINTRAC's website for newer changes before you rely on this page. It is general information, not legal advice.

When does an accountant become a reporting entity?

According to FINTRAC, accountants and accounting firms are covered when they do any of the following on behalf of a person or entity, or give instructions for them:

• receive or pay funds or virtual currency;
• buy or sell securities, real property, immovables, business assets or entities; or
• transfer funds, virtual currency or securities by any means.

FINTRAC explains that "giving instructions" means directing the movement of funds. Advice, such as recommendations, does not count. Receiving fees alone does not trigger the obligations, and the duties apply even if the work is voluntary. So an accountant who advises a client to buy a business is not covered for that advice alone, but one who sends the payment on the client's instructions is.

What work is excluded?

FINTRAC lists three exclusions. Work done in an audit, review or compilation engagement under the CPA Canada Handbook is excluded. So are accountants who are authorised to monitor or run the business affairs of an insolvent or bankrupt person, or who are authorised to act under a security agreement. Accountants acting as employees are generally exempt, except that the duty to submit suspicious transaction reports applies to both the employee and the employer if the employer is a reporting entity.

The result is that a firm may be covered for part of its work and not for the rest. Map your services against the list of triggering activities and keep a note of your reasoning.

What a covered firm must do

FINTRAC says accountants "must implement a compliance program". The wider obligations it lists are:

• Know your client. Verify identity, establish business relationships and carry out ongoing monitoring, find beneficial owners, make third-party determinations, and decide whether a client is a politically exposed person or head of an international organisation.
• Reporting. Suspicious transaction reports are submitted "as soon as practicable". Listed person or entity property reports are submitted "immediately". Large cash transaction reports are required for receipts of $10,000 or more in cash in a single transaction, and large virtual currency transaction reports apply to receipts of $10,000 or more in virtual currency. A 24-hour rule applies to both, and there are also reports of suspected sanctions evasion.
• Record keeping. Keep transaction and client identification records.
• Penalties. FINTRAC can issue administrative monetary penalties for non-compliance.

If your firm also works in the UK or Ireland, you will recognise the shape of this regime from our guide to suspicious activity reports, although the triggers, thresholds and forms differ.

When to verify identity

FINTRAC's guidance for accountants gives these triggers and timings:

• Large cash or virtual currency. Verify the identity of each person or entity from whom you receive $10,000 or more in cash or virtual currency in a single transaction, at the time of the transaction.
• Receipt of funds. Verify identity when you receive funds of $3,000 or more. For a person, verify when the transaction takes place. For a corporation or other entity, you have 30 days after the transaction date.
• Suspicious transactions. Take reasonable measures to verify identity regardless of amount, before sending the suspicious transaction report.

There are exemptions. For example, no verification is needed when cash or funds come from a financial entity or a public body, or a person acting for one. Reasonable measures are not required for a suspicious transaction if you have already verified identity and have no doubts, or if verifying would alert the client that you are filing a report. The guidance does not explain how to verify, so use FINTRAC's separate methods guidance.

Beneficial ownership

FINTRAC's glossary defines beneficial owners as individuals who own or control 25% or more of a corporation's shares or of another entity, and says the ultimate owner must be an individual and not another entity. Our guide to ultimate beneficial ownership for accountants explains how to trace and record ownership through layers of companies and trusts.

A starter checklist

1. List every service you provide and mark any that involve receiving, paying or transferring funds, or buying or selling securities, property or businesses for a client.
2. Decide whether you are a reporting entity, and keep a written note of the decision.
3. If you are, build a compliance program with a named person responsible, written policies, a risk assessment and training.
4. Set a rule that cash or virtual currency of $10,000 or more is flagged the same day.
5. Agree who decides whether to file a suspicious transaction report, and how that is recorded without tipping off the client.

For more guides across jurisdictions, start with our AML and KYC guides hub, and see our CPD courses for training.

Frequently asked questions

Are Canadian accountants always covered by FINTRAC rules?

No. They are covered when they receive or pay funds, buy or sell securities, property or businesses, or transfer funds on behalf of a client, or give instructions to do so.

Does audit work count?

Work done in an audit, review or compilation engagement under the CPA Canada Handbook is excluded.

Does giving advice trigger the rules?

Not on its own. FINTRAC says that advice, such as recommendations, does not count as giving instructions.

What is the cash reporting threshold?

A large cash transaction report is required for receipts of $10,000 or more in cash in a single transaction, and the same figure applies to virtual currency.

Who enforces the rules?

FINTRAC, which can issue administrative monetary penalties for non-compliance.