AML & ATF Policy and Procedures for Deposit Agents of Peoples Trust Company

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1 PROCEEDS OF CRIME (MONEY LAUNDERING) AND TERRORIST FINANCING ACT AND REGULATIONS In order to comply with the Office of the Superintendent of Financial Institutions (OFSI) and the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) regarding the above Act and Regulations, Peoples Trust has established the following procedures to assist our deposit Agents in ascertaining the identities of all new and existing clients in an attempt to help combat money laundering. As per your Deposit Agent Agreement with, it is expected that anyone acting on the behalf of will adhere to and follow the relevant laws established in the Act. What is Money Laundering? Money laundering is the process through which criminals use legitimate businesses and institutions to conceal the criminal origin of their profits. It is the conversion of cash, or other property derived from criminal activity, so as to give it the appearance of having been obtained from a legitimate source. It is a process often divided into three stages; 1) Placement: The first stage of the process takes place when the individual deposits their criminal proceeds within legitimate organizations. Depositing illegal cash proceeds into a Financial Institution account is an example of the placement part of the process. 2) Layering: This is the stage where the individual attempts to distance themselves from the criminal source of funds by creating a complex layer of financial transactions that makes the audit trail difficult to follow back to the original crime. 3) Integration: At this stage, the individual attempts to legitimize the proceeds so that there is no suspicion as to their criminal origin. Funds are then placed back into the economy as if from a legitimate source. If the placement and layering stages of the process have been successful, integration gives the appearance of legitimately earned funds. 1

2 What is Terrorist Financing? FINTRAC Guideline 1: Backgrounder, Section 3.1, December 2010 defines terrorist financing as; Terrorist financing provides funds for terrorist activity. The main objective of terrorist activity is to intimidate a population or compel a government to do something. This is done by intentionally killing, seriously harming or endangering an individual or causing substantial property damage that is likely to seriously harm people. It can also be done by seriously interfering with or disrupting essential services, facilities or systems. There are two primary sources of financing for terrorist activities: 1) Obtaining financial support from countries, governments, organizations or individuals and, 2) Revenue-generating activities including criminal acts, legitimately earned income or donations to non-profit organizations involved in terrorist financing networks. No Cash Policy Due to the difficulty in clearly establishing the source of funds for cash transactions Peoples Trust does NOT, under any circumstances, accept any cash from deposit Agents towards the purchase of any Peoples Trust product. Acceptance of Cheques Only cheques drawn on Canadian financial institutions will be processed. This includes insurance companies, investment dealers, mutual fund dealers, government, banks, credit unions and trust companies. NOTE: The original cheque or copy used for the deposit must accompany the deposit application. The product registration must be the same as the payee. Know Your Client KYC An effective Know Your Client policy ensures that can effectively identify, verify and monitor clients and their transactions, relative to the risks of money laundering and terrorism financing. PTC's anti-money laundering program relies on a KYC philosophy, which extends to deposit Agents. This expectation is noted in all Agent Agreements. 2

3 Mandatory Application Information for All Registered Owners The following information must be gathered at the time of account opening, and maintained throughout the entire business relationship: Client Name(s) Civic address of all registered owners Date of Birth Detailed Occupation (refer to following information on occupations) Social Insurance Number (S.I.N.) Third Party Declaration Intended use of Account Politically Exposed Foreign Person (PEFP) Determination (refer to following information on PEFPs) Two pieces of Canadian Government issued identification, one must be photo ID (refer to following for acceptable forms of identification) Copy of the cheque used to purchase the investment Signature of all registrants Should Peoples Trust receive an application that does not have all of the required detail, the Agent will be notified and given 10 business days to forward the information to Peoples Trust. If the requirements are not met within this time frame, the funds may be returned to the Agent and Peoples Trust will not be responsible for damages or lost business. Once the broker has met the identification requirements of a client, it will not be necessary to provide the information again, although it is their responsibility to provide up to date information as need be (address, occupation, identification, etc.). Acceptable Identification Listing Any valid piece of identification issued by a Canadian Government Body (Federal, Provincial or Municipal) including, but not limited to: Valid Driver s License Current Canadian Passport Certificate of Canadian Citizenship Certificate of Naturalization Permanent Resident Card Birth Certificate Old Age Security Card Certificate of Indian Status Social Insurance Number (SIN can be used as ID providing the card is physically seen) Provincial ID card Health Cards Issued by BC (Signature Only) 3

4 Alberta Saskatchewan Quebec New Brunswick Nova Scotia Newfoundland & Labrador (No Picture or Signature) (No Picture or Signature) (Can be used only if clients offers it as ID) (Signature Only) (Signature Only) (No picture or Signature) NOTE: Peoples Trust requires two pieces of identification and one must be a photo ID. The only exception is that elderly clients who do not have photo ID may substitute it with another form of ID from the Acceptable Identification Listing. Occupation Occupation should be detailed enough to indicate how individual earns income. Please provide specific details as to the type of position held by the individual and the name of the employer. If self-employed, state the nature of the business. If the client is retired, provide their last occupation. Social Insurance Number Under NO circumstances will Peoples Trust accept a deposit from an individual who does not have or will not supply a valid Social Insurance Number (SIN). The SIN is required by Canada Revenue Agency (CRA) for taxation purposes and must be included on all applications. The SIN may be used as identification providing the client presents the actual SIN card. Third Party Declaration In cases where a third party is involved, specific information about the third party and their relationship with the account holder must be obtained. Third Party Disclosure form must be completed and sent in with the client application. Intended Use of Account For every account opened the FI must have a record of its intended use. Examples of intended use for personal accounts may include saving for a new home; retirement; education, etc. Note: Registered products such as RRSPs and TFSAs are exempt. 4

5 Signatures Signatures are required for all deposit products, and are mandatory for registered products to acknowledge receipt of the Declaration of Trust. Recognizing the remote aspects of some client s transactions, Agents could supply a copy of an original Client Information and Consent Form signed by the client(s) as supporting documentation to complete the transaction. This would be applicable only to non-registered products. NOTE: A signature is not required where the person has previously provided a signature with respect to an existing account with Peoples Trust, as long as a current signature is available upon request. Politically Exposed Foreign Person (PEFP) With each product or account, it must be determined if the client is a PEFP. A PEFP will be defined as an individual who holds or has held one of the following offices or positions in or on behalf of a foreign country: a head of state or government a member of the executive council of government or member of a legislature a deputy minister (or equivalent) an ambassador or an ambassador s attaché or counselor a military general (or higher rank) a president of a state-owned company or bank a head of a government agency a judge, or a leader or president of a political party in a legislature A politically exposed foreign person will also include the following immediate family members of the individual described above: spouse or common-law partner mother or father child brother, sister, half-brother or half-sister or spouse s or common-law partner s mother or father 5

6 Corporations and Non-corporate Business Entities Peoples Trust does not accept Corporate and Non-Corporate Business Deposits. Please note that any new Corporate and Non-Corporate Business Deposits will be automatically returned to the Agent and Peoples Trust will not be held responsible for damages or lost business. Non-residents Peoples Trust does not accept clients who are not residents of Canada. Please note that any new Non-resident deposits will be automatically returned to the Agent and Peoples Trust will not be held responsible for damages or lost business. Required Record Retention Peoples Trust and its Agents need to ensure that the following records are being kept: Account holder information Account operating agreements Intended use of account Account statements Cleared cheques drawn on or deposited to an account Deposit slips Debit and credit memos Copies of Suspicious Transaction Reports Records of identified Politically Exposed Foreign Persons Signature cards Records should be kept for at least 5 years after the end of the business relationship. Suspicious Activity Reporting A suspicious activity is defined under the Act as: a financial transaction that occurs in the course of their activities and in respect of which there are reasonable grounds to suspect that the transaction is related to the commission of a money laundering or a terrorist activity financing offence. The Act does not define what constitutes reasonable grounds for suspicion that a transaction is related to a money laundering or terrorist activity financing offence. This determination is left up to the Financial Institution, its representatives and staff. 6

7 Every financial transaction for which there is knowledge of reasonable grounds to suspect that money laundering or terrorist activity financing is taking place will have to be reported. When a fact is detected that constitutes reasonable grounds to suspect the transaction is related to money laundering or terrorist activity financing, the transaction will have to be reported. Financial institutions are required to report a suspicious transaction when the transaction has been completed. Financial institutions must also report suspicious situations involving uncompleted transactions (ie. attempted suspicious transactions). If a deposit Agent acting on the behalf of feels a client is acting of a suspicious nature, they should contact their PTC Agent Services Administrator immediately. The following are examples of common indicators that may point to a suspicious transaction: Client does not want correspondence sent to home address Client presents confusing details about the transaction Client over justifies or explains the transaction Client is secretive and reluctant to meet in person Client s home or business telephone number has been disconnected or there is no such number when an attempt is made to contact client shortly after opening account Client insists that a transaction be done quickly Inconsistencies appear in the client s presentation of the transaction Client appears to have recently established a series of new relationships with different financial entities Client uses aliases and a variety of similar, but different addresses Client uses a post office box or General Delivery address, or other type of mail drop address, instead of a street address when this is not the norm for that area Client offers you money, gratuities or unusual favours for the provision of services that may appear unusual or suspicious OSFI/Sanctions Screening Financial institutions are responsible for determining if they have property in their possession or control that they believe is owned or controlled by or on behalf of a terrorist individual or entity on The Office of the Superintendent of Financial Institutions (OSFI) list. FINTRAC, the RCMP and the Canadian Security Intelligence Service (CSIS) should be notified concerning property of Designated Persons in the FRFI s possession or control. PTC searches its customer database on a weekly basis for terrorist individuals or entities contained on the OSFI list, as well as other designated sanctions lists. 7