Canadian accountants and auditors will see increased demands for information on fraud, corruption, money laundering and embezzlement as the result of a new Financial Crimes Agency (FCA), with legislation now working its way through the country’s parliament.
In September, Bill C-29 received a second reading in the House of Commons and is awaiting deliberation in committee. Should the Liberal government of Prime Minister Mark Carney prevail with its slender majority, the independent FCA will be able to investigate and lay charges against a wide range of offences, including money laundering, fraud, sanctions evasion and corruption. It will receive CA$352.7m over five years from 2026-27, with supporting funding for the Public Prosecution Service of Canada.
‘It’s not about organised crime, it’s about disorganised law enforcement’
Under the new regime, accountants may be targeted during investigations, as discussed in a recent EY note. This warns that accountants and their clients should ‘expect increased programme scrutiny and expanded enforcement risk’. Moreover, ‘with specialised capabilities at the core, the agency may focus on more frequent and in-depth requests for transaction data, intelligence and collaboration’. It is therefore vital that ‘internal compliance teams must be ready to provide robust information seamlessly and quickly’.
In a blog posted in July, Canadian law firm McCarthy Tétrault, which offers taxation services, stressed that FCA officers would have the authority to seek ‘judicial authorisations under the Criminal Code, such as for search warrants, digital assets warrants, and other investigative techniques’.
In May, finance minister François-Philippe Champagne stressed that while cross-province complex crime, such as fraud and money laundering, would be targeted, grassroots offences of elder fraud would also be investigated by the FCA: ‘Too many Canadians, especially seniors and vulnerable people, are being targeted by scams and financial crime,’ he said.
Collaboration is key
Will the new FCA work? Chris Mathers, an AML expert and financial crime consultant, and a former investigator with the Royal Canadian Mounted Police (RCMP), is concerned that the FCA will struggle to collaborate with other law enforcement agencies. ‘If you’re going to have silos, then there’s less cooperation,’ he warns. ‘There can be bad feelings between agencies – turf wars – and then it’s not about organised crime, it’s about disorganised law enforcement.’
The old RCMP dictum that ‘A Mountie can do any job we give them’ does not apply any more, Mathers says: ‘Crime has become very sophisticated and you need specialists.’ The FCA must therefore ensure that it recruits talented young financial investigators to work alongside experienced hands.
‘The challenge was always to go from intelligence to evidence. Are we going to be able to prosecute?’
As for accountants’ role in FCA investigations, they must cooperate with police probes despite lacking the client privilege protections afforded to lawyers. The rules on when accountants must proactively file suspicious transaction reports (STRs) under anti-money laundering rules – when they transfer, receive or pay funds; or purchase or sell securities and assets, for a client – will not change.
However, such data is not privileged during criminal investigations, so accountants will have to yield information if the FCA comes calling. The only protection will be when accountants are conducting work for lawyers (and hence protected by attorney-client privilege), so legal advice will be important. In such cases, Mathers says, the process of deciding what information should be withheld must be assessed by a judge.
Support for initiative
Marc Tassé, a forensic accountant and director of the MBA programme at the University of Ottawa, who has spoken on government panels about the FCA, is a keen supporter of the new agency. He stresses the value of the FCA’s anticipated recruitment of professionals from beyond law enforcement, such as the Financial Transactions and Reports Analysis Centre of Canada (Fintrac); the Canadian Security Intelligence Service; the Canada Border Services Agency; the Canada Revenue Agency; and the RCMP. He points out that, in the past, for non-law enforcement agencies, ‘the challenge was always to go from intelligence to evidence. Are we going to be able to prosecute?’
The need for such a diverse group of professionals to fight financial crime comes, Tassé says, because ‘Criminals are very intelligent and smart’ and use facilitators, including accountants and lawyers, to help them, especially with money laundering. They routinely mingle dirty money with legitimate transactions, ‘so it becomes very, very hard to be able to clearly identify, to say this specific transaction resulted from money laundering’.
The FCA may impede corrupt accountants and lawyers from keeping criminal transactions hidden. For instance, former Fintrac employees would know what questions to ask to ensure that STRs passed to the FCA include all relevant information about, say, the family of a suspect, as well as the targeted person: ‘It’s trying to put everyone’s knowledge together,’ Tassé says.
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