In response to global geopolitical tensions, particularly following Russia’s invasion of Ukraine, the Canadian government has implemented a series of sanctions that pose significant compliance challenges for Canadian Certified Public Accountants (CPAs). According to Michele Wood-Tweel, FCPA, and Vice-President of Regulatory Affairs at CPA Canada, the focus must be on understanding and implementing economic sanctions alongside anti-money laundering (AML) regulations. ‘It’s not just about knowing the rules; it’s about knowing how to spot the signs of evasion,’ Wood-Tweel stated.
The number of sanctions currently exceeds 1,200 and continues to grow, affecting all individuals and entities within Canada and Canadians operating abroad. Violation of these sanctions constitutes a criminal offense. Eric Lachapelle, CPA, and National Financial Crime Leader at KPMG Canada, highlighted the distinction between AML and economic sanctions, noting, ‘AML is all about catching and reporting suspicious activities, while economic sanctions go beyond that—they’re about ensuring you’re not doing business with anyone on those lists. And with new sanctions emerging frequently, it’s a full-time job keeping up.’
The financial sector in Canada, encompassing banks and insurance companies, faces heightened risks. Marc Tassé, CPA, and a financial crimes expert, emphasized the importance of due diligence, stating, ‘Accountants can be unwittingly used by those looking to launder money. It’s crucial to vet your clients thoroughly before you start working with them.’
Methods used to launder money range from offshore accounts and shell companies to cryptocurrencies, complicating the tracking of illicit funds. ‘You might think a transaction is straightforward, but it could have origins in Russia or Belarus,’ Wood-Tweel warned.
To navigate these challenges, CPAs are advised to remain vigilant and conduct thorough background checks on transactions and parties involved. Tassé recommended the establishment of a robust AML program, which should include a compliance officer, written policies, risk assessments, and regular training.
Lachapelle stressed the importance of staying informed about regulatory changes, saying, ‘Keeping up with the ever-changing regulations can feel daunting, but it’s essential. Even if you can’t implement large-scale solutions, at least stay informed. And remember, bad advice can lead to serious consequences.’
For the most current information, Wood-Tweel suggested regular monitoring of the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) and Global Affairs Canada websites. Additionally, CPA Canada provides resources on AML and sanctions to aid professionals in their compliance efforts.
As CPAs in Canada tackle these complex issues, their role in maintaining financial integrity and adhering to international obligations remains crucial.