FINTRAC Interpretation Notice no. 7
February 17, 2011
Insolvency Practitioners Providing Trustee in Bankruptcy Services
Paragraph 5(j) of the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA) and subsections 34(1), sections 35 and 36 of the Proceeds of Crime (Money Laundering) and Terrorist Financing Regulations.
The purpose of this notice is to clarify the application of the PCMLTFA relating to insolvency practitioners offering bankruptcy services.
Insolvency practitioners provide trustee in bankruptcy services. These services are not triggering activities for any obligations under the PCMLTFA. Trustee in bankruptcy services or insolvency practitioners are not covered as services or as an entity under our legislation. However, if you are an insolvency practitioner and you are an accountant or an accounting firm, you may have obligations relating to other activities.
Insolvency practitioners who are accountants:
If you are an individual accountant or an accounting firm offering trustee in bankruptcy services or acting as an insolvency practitioner, you may have obligations under the PCMLTFA if you engage in certain triggering activities other than bankruptcy services. However, as explained above, bankruptcy services you provide as an insolvency practitioner, including acting as a trustee in bankruptcy, do not fall within the triggering activities under our legislation.
Definition of accountants
An accountant means a chartered accountant, a certified general accountant or a certified management accountant. An accounting firm means an entity that provides accounting services to the public that has at least one partner, employee or administrator that is an accountant.
In this context, if you are an insolvency practitioner, whether a chartered insolvency and restructuring professional or otherwise, you would not be considered to be “providing accounting services to the public” if you only provide such services as follows:
- As receiver, pursuant to the provisions of a Court order or by-way of a private letter appointment pursuant to the terms of a security interest
- As trustee in bankruptcy
- As monitor under the provisions of the Companies' Creditors Arrangement Act or any other proceeding that results in the dissolution or restructuring of an enterprise or individual and to which the firm, individual or insolvency practitioner serves as an officer of the Court or agent to a creditor(s) or the debtor.
Triggering activities for accountants
If you are an accountant or an accounting firm, as explained above, you have obligations under the PCMLTFA if you engage in any of the following activities on behalf of any individual or entity (other than your employer) or give instructions in respect of those activities on behalf of any individual or entity (other than your employer):
- receiving or paying funds;
- purchasing or selling securities, real property or business assets or entities; or
- transferring funds or securities by any means.
In this context, an accountant or an accounting firm appointed by a Court, or acting as a trustee in bankruptcy, is not considered to be acting on behalf of any other individual or entity.
Obligations under the PCMLTFA, as referred to throughout this interpretation notice, include reporting, client identification, record keeping, and implementing a compliance regime. For more information about these, see FINTRAC's guidelines.
- Date Modified: