Accountants - Giving Instructions Versus Providing Advice
The purpose of this notice is to clarify the difference between an accountant providing advice to a client as opposed to giving instructions on behalf of a client.
If you are an accountant or an accounting firm, you are subject to certain requirements under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act and its regulations, when you engage in1 any of the activities identified below on behalf of any person or entity (other than your employer), or give instructions in respect of those activities on behalf of any person or entity (other than your employer), or receive fees for doing any of these activities.
The three activities are as follows:
- Receiving or paying funds2;
- Purchasing or selling securities, real estate property, business assets or entities; or
- Transferring funds or securities by any means.
Note: Audit, review or compilation work carried out according to the recommendations in the Canadian Institute of Chartered Accountants (CICA) Handbook are not included in the activities subject to the Act or its regulations.
Giving instructions versus providing advice
Giving instructions means that the accountant is actually directing the movement of funds. By contrast, providing advice to their client is not considered to be giving instructions. The following are examples that demonstrate the difference between providing advice and giving instructions:
Example of providing ‘advice’: "For tax purposes, we recommend that you transfer your money into a certain investment vehicle."
Example of giving ‘instructions’: “As per my client's instructions,
I request that you transfer $ XXXX from my client's account, account number XXX, to account number YYY at Bank X in Country Z.”
1 Engage in means to carry out the described activities. However, this does not mean that a formal engagement letter is required nor do fees need to be charged to be considered engaged in one of those activities. If an accountant carries out these activities, on behalf of any person or entity, or charges a fee for them, they are subject to the Act’s requirements. Back
2 Receiving or paying any funds on behalf of a client means an accountant is subject to the requirements. One common example would include a firm or accountant receiving funds in trust to pay bills on behalf of a client. Back
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