FINTRAC Guidance Canadian Institute Conference May 9, 2017

Transcription

1 FINTRAC Guidance Canadian Institute Conference May 9, 2017

2 Overview Regulatory amendments FINTRAC Guidance Project 6

3 Regulatory Update for Life Insurance New methods to identify clients Politically exposed persons (PEPs) and Heads of international organizations (HIOs) Record of reasonable measures Risk assessment must consider the use of new technology and the activities of affiliates 7

4 How to identify clients In force as of June 30,

5 Dual Process Chart Name and address Name and date of birth Name and confirm a financial account Issued by Canadian government Canada Pension Plan (CPP) statement CRA documents: Notice of assessment Issued by other Canadian sources T4 statement Record of Employment Investment account statements RRSP GIC Issued by Canadian government Any card or statement issued by a Canadian government body Original birth certificate Marriage certificate Issued by other Canadian sources Insurance documents (home, auto, life) Confirm that your client has a deposit account, credit card or loan account by means of : Credit card statement Bank statement Loan account statement mortgage Cheque that has been processed (cleared) 9 5

6 Know your client Business relationships Ongoing monitoring Beneficial ownership Third party determination 3

7 Politically Exposed Persons (PEPs) 10

8 In force as of June 17, 2017 Who is a PEP? A PEP is an individual who is or has been entrusted with a prominent public function. Who is the head of an international organization (HIO)? An international organization is one that is set up by the governments of more than one country The head of one of these international organizations the head of an institution established by one of these international organizations 11

9 When do you make a PEP or HIO determination if you are a financial entity? Account opening Periodic review of existing accounts Detection of a fact about an existing account holder International EFT of $100,000 or more

10 Family Members and Close Associates 1. If a person is a PEP or HIO, then their family members must also be regarded as PEPs or HIOs. These family members are: (a) their spouse or common-law partner; (b) their child; (c) their mother or father; (d) the mother or father of their spouse or common-law partner (e) a child of their mother or father. 2. Certain activities will also require you to take reasonable measures to determine if any of your clients could be a close associate of a PEP or HIO. 13

11 Triggering Activities Determine How a determination is made Obligations Record Keeping Account opening Periodic monitoring of existing account holders Detect a fact for existing account holders EFTI or EFTO of $100,000 or more Foreign PEP Domestic PEP or HIO Take reasonable measures for all of the triggering activities to determine if the person is a foreign PEP or a family member or close associate of a foreign PEP. If the determination is yes, you must carry out the associated obligations. Take reasonable measures at account opening, or as part of your periodic review, to determine if a person is a domestic PEP, a HIO, or a family member of one of those persons. A determination is made because a fact is detected that identifies an existing account holder as a domestic PEP, a HIO, or their family member or close associate. Take reasonable measures to determine if the person sending or receiving an EFT of $100,000 or more, is a domestic PEP, a HIO, or their family member or close associate. If the determination is yes, AND you assess the client as a high risk for a money laundering or terrorist financing offence, you must carry out the Action to take if a determination is made: Take reasonable measures to establish the source of the funds that have been, will be or are expected to be deposited into the account or that are used for an outgoing EFT. Ensure that a member of senior management reviews the transaction or approves keeping the account open. Apply policies and procedures for high-risk clients. Part of that includes enhanced ongoing monitoring of the account activities to detect suspicious transactions that must be reported. You must record: the office or position of the PEP or HIO; the name of the organization or institution of the PEP or HIO; the source of the funds, if known, that were used for the transaction or that have been, will be or are expected to be deposited into the account; the date you determined the individual to be a PEP, HIO, their family member or close associate; the name of the member of senior management who reviewed the transaction or approved keeping the account open; and, the date the transaction was reviewed or the account was approved to stay open. You may want to include the nature of the relationship between your client and the PEP or HIO, as applicable. Summary sheet for financial entities

12 Unsuccessful reasonable measures record Subsection 67.3 of the Regulations: where the reasonable measure is unsuccessful, the reporting entity must keep a record of: 1. The measure taken; 2. The date on which each measure was taken; and, 3. The reasons why the measures were unsuccessful. Example If an MSB is processing a large cash transaction and you ask the customer if they are receiving the funds on behalf of a third party and the individual refuses to answer yes or no. You would need to record that you asked the person, the date you asked and the fact that the person refused to answer. In force as of June 17,

13 Risk Assessment Developments relating to new technologies and their impact You will have to consider money laundering or terrorist financing risks that may arise because of new products and new business practices, including new delivery channels, and the use of new or developing technologies for both new and existing products. Why was this requirement added? The requirement was added to ensure that reporting entities are aware of the money laundering and terrorist financing vulnerabilities posed by implementing new technologies, in order to mitigate the risk. In force as of June 17,

14 Risk Assessment Risk-based assessments related to affiliates As part of the compliance program, financial entities, life insurance companies and securities dealers will have to consider any risk resulting from the activities of: an entity that is affiliated with them and that is a financial entity, life insurance company, or securities dealer; a foreign entity that is affiliated with them and that carries out financial entity, life insurance company, or securities dealer activities In force as of June 17,

15 FINTRAC Guidance Project 17

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19 Goal of PCMLTFA Public safety of Canadians Integrity of Canada s financial system We all have a role to play to detect and deter crime 31

20 Any further questions: