aml and atf legislation - on24 and atf legislation matthew mcguire ... is a professionally...
TRANSCRIPT
2
Our Objectives and Agenda
After the session, the CPA will... Agenda
be able to determine whether AML
obligations apply to their firm
(1) Canada’s national AML program, and
the role of professional accountants
(2) Determining whether AML obligations
apply to your accounting firm
(3) Determining whether your firm performs
activities that trigger requirements
recognize the changes to AML obligations
applicable to accountants, and update their
programs for complying with AML
obligations
(5) Changes to our AML obligations
(6) Updating your compliance program to
reflect the changes
(7) Expected enforcement of the changes
be familiar with CPA Canada’s new guide
for AML compliance and its uses for
compliance program development
(8) CPA Canada’s legacy guide
(9) Our new guide and its expected release
date
n.b. This session is designed to help you update your program rather than design one.
3
Overview
Canada’s national AML program enlists individuals and companies in
the fight against money laundering and terrorist financing, and
accounting firms have been part of that program and contributing for
about a decade.
Accounting firms are responsible to identify clients, keep certain records
and report transactions in prescribed circumstances, and to maintain a
compliance program.
Changes to our obligations came-into-force on February 1, 2014 and will
be enforced this summer. Generally they involve isolating clients that
perform certain activities and monitoring them.
CPA Canada is releasing an updated guide to help accountants and
accounting firms comply with their obligations.
4
Canada’s National AML Program
Taking the profit out of crime to increase public safety and meet
international commitments
– Creating a hostile environment for money launderers
– Investigating and sanctioning criminals that do launder money
Hostile environment includes enlisting the financial, real estate,
insurance, accounting, casino, precious metals sectors (known as
“Reporting Entities”) to keep information about clients and
transactions, and to report suspicious and large transactions
Reports and records can also be used to assist in investigations
5
Canada’s National AML Program
The Financial Transaction Reports and Analysis Centre
(FINTRAC) is Canada’s Financial Intelligence Unit, and has
two roles
– Collecting, analyzing and disclosing money laundering and terrorist
financing intelligence to law enforcement, tax, and other intelligence
agencies
– Enforcing Reporting Entity compliance with their obligations
6
The Role of Accountants in AML
When AML requirements are applicable, Accountants and
Accounting Firms must:
(A) Perform certain responsibilities in their day-to-day activities
(B) Maintain a program to ensure that they comply with their
responsibilities
7
The Role of Accountants in AML
When AML requirements are applicable, Accountants and
Accounting Firms must:
(A) Perform certain responsibilities in their day-to-day activities
Circumstance
Re
ce
ipt
of
Fu
nd
s
Re
co
rd
Cli
en
t
Ide
nti
fic
ati
on
La
rge
Ca
sh
Tra
ns
ac
tio
n R
ep
ort
Th
ird
Pa
rty
De
term
ina
tio
n
Su
sp
icio
us
Tra
ns
ac
tio
n R
ep
ort
Te
rro
ris
t P
rop
ert
y
Re
po
rt
Receiving funds of $3,000 or more ● ●
Receiving $10,000 or more in cash ● ● ● ●
Suspicious activity or transaction ● ●
Knowledge of terrorist property ●
8
The Role of Accountants in AML
When AML requirements are applicable, Accountants and
Accounting Firms must
(B) Maintain a program to ensure that they comply with their
responsibilities
• A person designated to implement and maintain the program
(Chief Anti-Money Laundering Officer, or CAMLO)
• An assessment of AML risk and risk mitigation plan
• Policies and procedures
• A program to train all employees and agents
• A bi-annual effectiveness review
9
Applicability to Your Firm
There is a two part test, first:
(1) Does your firm qualify as an accounting firm?
(2) Does your firm conduct any triggering activities, that aren’t
otherwise exempted?
10
Applicability to Your Firm
There is a two part test, first:
(1) Does your firm qualify as an accounting firm?
• Does your firm provide accounting services to the public?
– Bankruptcy/Insolvency generally exempted
• At least of the entity’s partners, employees or administrators
is a professionally designated accountant?
11
Applicability to Your Firm
There is a two part test, first:
(2) Does your firm conduct or instruct any triggering activities on
behalf of a client?
• Receiving, paying or transferring funds
• Purchasing or selling real property, business assets, or
entities
• Purchasing, transferring or selling securities
Important considerations: (1) Instructions versus advice, and
assurance engagements
(2) Even one triggering activity obligates
your firm to have a program... It’s
important that you have one in place if
only to isolate triggering activities
12
Changes to Our Obligations
Legislation which came into force on February 1, 2014
obligates Accountants and Accounting Firms to track and
monitor “Business Relationships”
A “Business Relationship” is established for every client for
which two or more triggering activity transactions occur over
a five year period involving: a receipt of funds record; large
cash report, or suspicious transaction report
13
Changes to Our Obligations
Within 30 days of the inception of a “Business Relationship”,
the Accounting Firm must document the “Purpose and
Intended Nature of a Business Relationship”, which may be
described as:
– Transferring funds or securities
– Paying or receiving funds on behalf of a client
– Purchasing or selling assets or entities
That documentation may be maintained in your regular
records (e.g. An engagement letter).
14
Changes to Our Obligations
All Business Relationships must be subject to “Ongoing Monitoring” on a
risk-sensitive basis
Ongoing Monitoring consist of periodically:
– reviewing transactions to assess whether there are any suspicious
transactions, or those that are otherwise inconsistent with our expectations
of the client;
– Keeping client identification information up to date, such as their address,
principal business or occupation, and other information collected when you
identify them (but not necessarily re-identifying the client); and,
– Re-assessing the level of client risk.
All Ongoing Monitoring efforts must be documented
15
How to Update Your Program
Update your mechanism for identifying triggering activities to track all
triggering activity transactions by clients over time, together with a risk
rating/tracking system.
Design and Implement a program to document the client’s purpose and
intended nature of their business relationship on the second triggering
transaction, or by which routine documents will be referenced.
Design and implement a program to initiate and document reviews of
client identification information, transaction and risk, with greater
frequency for higher risk clients.
Change procedures to reflect the above.
Update training to reflect the above for impacted individuals.
16
Expected Enforcement
FINTRAC released guidance related to the new Business Relationship
requirements on January 31, 2014, the day before the related
regulations came-into-force (see below)
FINTRAC has signalled that, because of the delay in producing
guidance, examinations will begin addressing the new requirements
around August 2014
Policy and procedure deficiencies are subject to maximum penalties of
$100,000
Client identification information deficiencies are subject to maximum
penalties of $1,000 per client
English: http://www.fintrac.gc.ca/publications/guide/Guide6/6D-eng.asp
French: http://www.canafe.gc.ca/publications/guide/Guide6/6D-fra.asp
17
CPA Canada’s Legacy AML Guide
http://www.cica.ca/publications/list-of-publications/manual/item13720.pdf
18
CPA Canada’s New AML Guide
Expected publication in June/July 2014
Addresses all existing AML obligations
Contains guidance and sample forms related to:
– Determining the application of AML obligations
– Performing required tasks
– Designing and implementing a compliance program
– Dealing with FINTRAC examinations
– Addressing privacy concerns