Investment dealers are under “considerable” pressure to update their compliance programs to meet a new and rapidly changing regulatory field when it comes to Proceeds of Crime legislation.

In a letter to members of the Investment Industry Association of Canada (IIAC), vice president Michelle Alexander says systems under the Anti-Money Laundering and Terrorist Financing Act will soon need to be updated to mirror these expectations.

With technological changes come more risks

Technological changes are driving the industry response to regulatory expectations which include developments related to virtual currencies, the introduction of fintech and regtech as well as digital identity recognition. While the changes present new opportunities for money laundering and terrorist financing activities, they also allow the industry to reduce their own threats and risks while better serving clients and helping to ensure they are meeting their obligations under the legislation.

Some regulatory gaps remain, but the federal government appears to be committed to closing them, says Alexander. The IIAC has participated in the legislation’s review and recognizes the importance of developing a strong AML/ATF regime that requires continual updates in order to be responsive to emerging risks and evolving standards.

More needs to be done to meet technical standards

A 2016 evaluation report found that Canada has strong anti-money laundering and anti-terrorist financing legislation and regulations but noted there are several areas where action could be taken to ensure the framework meets technical standards and is even more effective.

“The IIAC is committed to ensuring Canada makes these necessary improvements, which will result in the country being in a strong position to combat money laundering and terrorist financing going forward.”