Beverly Cleveland, AVP, Compliance; Sr. Legal Counsel, Canadian Credit Union Association
In November, the House of Common’s Standing Committee on Finance released its report Confronting Money Laundering and Terrorist Financing: Moving Canada Forward (the report). The report examines Canada’s AML regime, and makes recommendations to the Government of Canada on legislative and regulatory gaps, the exchange of information and the privacy of Canadians, ways of strengthening intelligence capacity and enforcement measures, as well as the modernization of the regime.
Below is a very brief overview of only a few of the 32 recommendations in the report. If adopted, these recommendations will expand the scope of the current AML/ATF regime and have a significant impact on the businesses operating in the industries affected by these changes, including credit unions.
Beneficial Ownership and Politically Exposed Persons
The Report recommends a pan-Canadian beneficial ownership registry be created for all legal persons and entities who have at least 25% ownership or shares or voting rights. As well, reporting entities would be required to identify beneficial owners and determine if they are politically exposed persons or associated with any, and prohibit any account opening or financial transactions until the beneficial ownership has been ascertained. Also, the report recommends clarifying the statutory definition of politically exposed persons and moving to a risk-based model of compliance for politically exposed persons.
Exchange of Information and Privacy
The Report makes several recommendations regarding the sharing and exchange of information to assist in money laundering investigation, as well as between federally regulated financial institutions provided that FINTRAC is notified; and partnering with industry leaders who are investing in technology that tracks suspicious activities.
Expanding the Scope of the Proceeds of Crime (Money Laundering) and Terrorist Financing Act
The Report recommends expanding the scope of the PCMLTFA to include lawyers and other professionals, armoured cars and white lab ATMs, real estate and sellers of luxury items.
Strengthening Intelligence Capacity and Enforcement
The Report also recommends strengthening the capacity and enforcement powers of FINTRAC to better facilitate money laundering investigations, and enabling law enforcement agencies to use geographic targeting orders. As well, making it a criminal offence for an entity or individual to structure transactions to avoid reporting requirements; and engaging with provinces and territories to develop a national view of AML.
The full report, and an excellent summary titled Standing Committee on Finance Releases Recommendations on Canada’s Anti-Money Laundering and Anti-Terrorist Financing Regime by Ana Badour and Drew Wong, McCarthy Tetrault is now available here under Regulatory Compliance - Anti-Money Laundering - Key Documents (member log in required).