The Canadian government announced that it is undertaking a potentially significant revision to its anti-money laundering (AML) and counter terrorist financing (CTF) regime. The proposed changes are in addition to those proposed by the government in November 2011.
In its Consultation Paper entitled “Strengthening Canada’s Anti-Money Laundering and Anti-Terrorist Financing Regime”, the government is proposing amendments that will affect financial institutions, lawyers, life insurance companies, securities dealers, money services businesses, accountants, notaries practicing in British Columbia, real estate sales people and developers, dealers in precious metals and stones and casinos.The proposed amendments include the following:
- Require banks and casinos to keep identification records of persons authorized to sign for business accounts so that in the event of reasonable grounds to suspect that a transaction is related to a money laundering or terrorist financing offence, the bank or casino can also report to FINTRAC, information as to those persons authorized to sign business accounts.
- Expand the identification and record keeping requirements of introduced business relationships (i.e., between banks and securities brokers).
- Increase security requirements in connection with the receipt by customers of electronic bank statements (although this has nothing to do with AML/CTF).
- Tighten non face-to-face identification methods for credit and charge card companies.
- Review the requirement for reporting entities to keep evidence of client signatures when accounts are opened.
- Expand the definition of politically exposed persons (PEP) to include close associates of the person. In Canada, the Proceeds of Crime (Money Laundering) and Terrorist Financing Act varies the international definition of PEP by limiting it to just foreign PEPs where the FATF Recommendations do not include such a limitation.
- Require life insurance companies to determine if clients are PEPs.
- Require banks and securities dealers to determine if clients are PEPs.
- Eliminate the reporting requirement for financial transactions between public issuers and reporting entities if the reporting issuer has assets of $75 million or more.
- Require that corporate documents be current.
- Change the definition of “third party” to “instructing party” on the basis that reporting entities apparently do not comprehend what a third party means.
- Eliminate the reporting monetary amount for international electronic fund transfers from $1,000 to $1. This is one of the most significant proposals, impacting not only the regulatory burden on reporting entities but also the privacy interests of Canadians.
- Adopt the US definition of “prepaid access” for prepaid card and other such products and implement prepaid access identification requirements for reporting entities and for cross-border currency reporting purposes. With respect to the latter, the definition of “monetary instrument” will be amended to include prepaid access products.
- Expand the identification and record-keeping requirements for life insurance companies and increase the reporting requirements for life insurance companies.
- Eliminate certain transactions from reporting for dealers in precious metals and stones and accountants.
- Expand what the 24-hour rule means to capture more transactions that are reportable by reporting entities.
- Simplify registration requirements for money services businesses.
- Give FINTRAC greater powers to require reporting entities to file required reports and increase the administrative penalties for failures by reporting entities to do so.
- Require reporting entities to document and keep records of each instance in which that undertook reasonable measures in client ID steps.
- Allow CBSA officers to question passengers departing from, or arriving in Canada with respect to the importation and exportation of currency and other monetary instruments.
- Expand the information sharing among agencies, particularly for national security purposes.
- Expand the application of the AML regime to charities.
- Implement regulations to allow the Minister of Finance to issue directives in respect of AML issues.
- Change the law as it relates to what triggers a reportable suspicious transaction to broaden it by including activities (whether financial or not) that may be taken for a financial transaction, and it appears the change may also include eliminating the requirement that the person reporting must have reasonable grounds to suspect that the transaction is related to a money laundering or terrorist financing offence as defined in the Criminal Code.
- Allow the sharing of information to the CBSA from FINTRAC for offences under the Immigration and Refugee Protection Act, for example in situation of immigration fraud, misrepresentation as to permanent residence or other immigration related offences.
The government is accepting comments until March 1, 2012 in respect of the proposals.