The Investment Industry Association of Canada (IIAC) recently released a list of recommendations, shared with the federal Department of Finance, for improvements to Canada’s Anti-Money Laundering and Anti-Terrorist Financing Regime (AML/ATFR).
The IIAC says that the federal government should maintain a central beneficial ownership registry, in collaboration with all provinces and territories, to provide accurate and transparent information to IIAC members. In addition to this, the IIAC is recommending a government-developed and government-maintained database of politically exposed persons and heads of international organizations against which firms can scrub their client base or portfolios.
The IIAC says it understands the need to “keep open” certain accounts that are being investigated. However, the association is asking for amendments so that firms are shielded from liability exposure or reputational damage from such a move. And, adds the IIAC, once a business relationship is marked as “last account closed,” no ongoing monitoring should take place, given the lack of ability to transact with the account.
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The IIAC says it supports information-sharing, but it is requesting strengthening of and clarifications to Canada’s Personal Information Protection and Electronic Documents Act (PIPEDA) to protect firms if they inadvertently violate PIPEDA when sharing information in good faith to identify suspected activities.
On the other hand, the IIAC is opposed to enabling the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) to exchange compliance-related findings with other regulators. The association says this would not have any demonstrable benefit to strengthening AML/ATFR.
Current regulations place the onus on reporting entities to file a suspicious transaction report (STR) with reasonable grounds, regardless of dollar value. IIAC is suggesting a monetary threshold in addition to the existing criteria for filing STRs.
The association says this “would help facilitate a coordinated risk-based approach across FINTRAC and reporting entities and allow FINTRAC to concentrate its resources on higher value suspicious transactions.”
The IIAC also suggests streamlining the identification of exceptions on the account opening process by extending these exceptions to entities that have been vetted by foreign regulators with a robust AML regime or that are within a Financial Action Task Force jurisdiction in good standing.
