Preventing Money Laundering

Prevent Money Laundering_Imagerecent article from CPA Canada, summarized below, shares strategies CPAs can implement to fight money laundering. Read the full article on the CPA Canada website, here

Money laundering in Canada has recently been in the forefront of the news. These illegal acts have had a negative impact on the economy and reputation of organizations. 

One of the most prevalent money laundering schemes is conducted through the real estate markets. According to TaxPage.com, often in these cases, real estate purchases are made through various lawyers, shell companies, and those acting as the homebuyer. By purchasing a property, the money launderer has “washed their dirty money.” 

Another area that is of increasing concern is money laundering through Canadian casinos. Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) has warned casinos that customers using bank drafts in these institutions may be trying to launder money, as bank drafts are an easy way for the holder to act with anonymity. 

As crimes like these continue, CPAs are well-positioned to recognize and prevent money laundering in organizations.  A recent article from CPA Canada offered some suggestions on how to help combat money laundering. CPAs, like you, should: 

Implement an anti-money laundering compliance program 
Firms should develop and implement an anti-money laundering compliance program to ensure clients do not fall victim to these activities. These programs put controls in place to spot and report suspicious behavior. 

FINTRAC outlines a few features of an anti-money laundering compliance program: 

  • appoint a designated compliance officer on your team; 

  • develop written compliance policies and procedures; 

  • conduct a risk assessment of business activities and relationships; 

  • maintain a written ongoing compliance training program; and 

  • institute and document an effectiveness review of your compliance program. 

Spot red flags to stop money laundering before it occurs 
Recognizing suspicious activities helps prevent them from occurring. A simple example of suspicious transactions would be an individual or organization moving money from account A to account B to account C, instead of just A to C. Having a third party conduct transitions, when there isn’t a need for one, should be a warning sign. 

CPAs should also be on alert for situations where individuals are hesitant to share proper documentation for transactions. 

For CPAs working in finance departments, it is important to note and ask questions about atypical activities, such as unexpected new vendors or suppliers. An example would be a real estate company using an auto body repair shop for recurring mortgage financing. 

Recognizing changes to behaviour and processes can make a difference. 

Learn more 
You can read the full article on the CPA Canada website.