1. Money Laundering Detection and Obligations of CA Kexin Chen Original Production Acc 626

2. Agenda What is money laundering and terrorist financing Anti-Money Laundering bodies Requirements for CA frims Establish a compliance program Legislative concerns for other industries Tools used

3. What is Money Laundering

4. Why Anti-Money Laundering (AML)? Increase the transparency and efficiency of a economy Eliminate or inhibit criminal activities Eliminate Terrorist Financing activities Tax evaders as use money laundering techniques

5. Terrorist Financing Similar to money laundering activities Backbone of a terrorist group Source of fund: gang activities, human trafficking, drugs, credit card fraud Uses of fund: Car bomb, train recruit, supplies Effective AML controls could eliminate the flow of funds or predict their activity 9/11 and USA Patriot Act

6. AML in Canada

7. AML Legislation in Canada Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA) Financial Transaction and Reports Analysis Center of Canada (FINTRAC)

8. Requirements for CAs CAs on assurance engagements does not have legislative concerns CAs cannot be associated with criminal activities Money Laundering/ Terrorist Financing are criminal activities Increase audit risk and impact audit opinion CICA HB, Assurance Section 5136, Misstatements/ Illegal Acts

9. Requirement for CAs – Other Engagements (a) engage in any of the following activities on behalf of any person or entity, namely, receiving or paying funds, purchasing or selling securities, real property or business assets or entities, or transferring funds or securities by any means; (b) give instructions on behalf of any person or entity in respect of any activity referred to in paragraph (a); or (c) receive professional fees in respect of any activity referred to in paragraph (a) or in respect of any instructions referred to in paragraph (b).” "Frequently Asked Questions | Chartered Accountants of Canada." Cica.ca. Chartered Accountants of Canada. Web. 01 July 2011. http://www.cica.ca/research-and-guidance/money-laundering/item13454.aspx#4

10. Examples of services Some common activities performed by public accountants that requires compliance to anti-money laundering standards are: offer consulting services and business advice to clients; act as a trustee for clients and any other type of financial intermediaries; and provide income tax advice and tax planning services

11. What to Report Large cash transactions Cash or cash like transactions over $10,000 Suspicious activities

12. Establish a Compliance Program Designate Compliance Officer Documentation Program Commit Personnel in AML activities Compliance Training Regular Evaluation Program

13. Requirements for Other Industries Financial Institutions Casinos Money service Dealers in precious metals and stones securities dealers. Receiving or transferring funds

14. Tools Used Manual Morrill and Janes Bank Computer Assisted Analysis Tools Actimize SAS AML 3 Main Features Activity monitoring Watch list filtering Customer due diligence/ know your customers

15. Did it work? How effective is AML activities? “Bin Laden files showed that terrorist activities have scaled back” CAs role is clear, limit AML activities with: Not accepting audit clients engaged in money laundering Have to report money laundering activities to FINTRAC on other engagements

16. Thank You