Securities dealers in Canada operate within a regulatory framework designed to prevent financial crime. The Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA) is the primary legislation governing these obligations. FINTRAC, the Financial Transactions and Reports Analysis Centre of Canada, is the agency responsible for ensuring compliance with this Act. Its role involves collecting and analyzing financial transaction information to help detect and deter money laundering and terrorist financing. For securities dealers, this means a set of specific duties aimed at safeguarding the financial system.

The Proceeds of Crime (Money Laundering) and Terrorist Financing Act

The PCMLTFA, along with its associated Regulations, sets out the legal requirements for entities like securities dealers. It defines what constitutes a “securities dealer” and outlines the various obligations they must meet. These obligations are not merely suggestions; they are legal mandates designed to create transparency and accountability in financial dealings. Understanding the scope and intent of this Act is the first step for any securities dealer aiming for compliance.

FINTRAC’s Role in Combating Financial Crime

FINTRAC acts as Canada’s financial intelligence unit. It receives reports from various entities, including securities dealers, about suspicious transactions and large cash transactions. The Centre then analyzes this information to identify potential threats and provides actionable intelligence to law enforcement and national security agencies. For securities dealers, FINTRAC’s role translates into a partnership in maintaining the integrity of Canada’s financial sector. Compliance with FINTRAC requirements for securities dealers is therefore a direct contribution to national security.

Key Definitions Under the Act

To properly adhere to the PCMLTFA, securities dealers must be familiar with several key definitions. These include:

Securities Dealer: Generally, a person or entity authorized under provincial legislation to deal in securities, provide portfolio management, or offer investment advising services.
Reporting Entity: This is a broad term that includes securities dealers, banks, money services businesses, and others who have obligations under the Act.
Suspicious Transaction: Any transaction or attempted transaction that gives rise to a suspicion of money laundering or terrorist financing.
Client Identification Program (CIP): The procedures a dealer must have in place to identify and verify the identity of their clients.

Understanding these terms is not just an academic exercise; it directly impacts how a dealer must conduct its business and what actions it needs to take to remain compliant.

Core Compliance Requirements for Securities Dealers

Securities dealers in Canada face several key obligations under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA) and its associated regulations. These requirements are designed to prevent financial institutions from being used for illicit purposes. Meeting these obligations involves a structured approach to client interactions, record management, and transaction oversight.

Client Identification and Verification Procedures

One of the most significant duties for securities dealers is the proper identification and verification of their clients. This process is fundamental to knowing who you are doing business with and is a primary defence against money laundering and terrorist financing. Dealers must collect specific information from clients, which can vary depending on whether the client is an individual or an entity. For individuals, this typically includes name, address, date of birth, and occupation. For entities, it involves details like the name, address, and the names of directors and beneficial owners.

Individuals: Collect and verify name, address, date of birth, and occupation.
Entities: Collect and verify entity name, address, and identify directors and beneficial owners.
Politically Exposed Persons (PEPs): Special attention must be paid to identifying PEPs, their family members, and close associates, requiring enhanced due diligence.

Verification can be done through various methods, such as examining government-issued identification or using reputable third-party sources. The goal is to have reasonable assurance of the client’s identity. This is a critical step in establishing a compliant business relationship and is a core part of client due diligence requirements.

Record Keeping Mandates

Securities dealers are required to maintain detailed records of their business activities for a minimum of five years. This includes records related to client identification, transactions, and any reports submitted to FINTRAC. Proper record-keeping is vital for demonstrating compliance and assisting law enforcement investigations.

Client identification and verification records.
Records of large cash transactions and large virtual currency transactions.
Copies of all reports submitted to FINTRAC (e.g., Suspicious Transaction Reports).
Records of any special measures applied to high-risk clients.

These records must be kept in a manner that allows for easy retrieval and inspection by FINTRAC or other authorized bodies. The integrity and completeness of these records are paramount.

Transaction Reporting Obligations

FINTRAC requires securities dealers to report certain types of transactions. These reporting obligations are a key mechanism for the agency to detect and deter financial crime. The primary reports include:

Suspicious Transaction Reports (STRs): These must be filed when a dealer suspects that a transaction or attempted transaction is related to money laundering or terrorist financing. There is no minimum amount for reporting suspicious transactions.
Large Cash Transaction Reports (LCTRs): These are required for cash transactions that equal or exceed $10,000 (Canadian dollars) in a 24-hour period.
Large Virtual Currency Transaction Reports (LVCTRs): Similar to LCTRs, these apply to virtual currency transactions equal to or exceeding $10,000 (Canadian dollars) in a 24-hour period.

Timely and accurate reporting is not just a regulatory requirement; it is a significant contribution to Canada’s anti-financial crime efforts.

Developing Robust Compliance Policies and Procedures

Creating and maintaining solid policies and procedures is a cornerstone of any securities dealer’s anti-money laundering (AML) and anti-terrorist financing (ATF) program. These aren’t just documents to tick a box; they are the operational blueprint for how your firm will meet its legal obligations under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA).

Written Policies and Procedures for Securities Dealers

Your written policies and procedures need to be detailed and specific to your business model. They should clearly outline how your firm will identify and verify clients, keep records, and report suspicious transactions. It’s not enough to have generic guidelines; they must reflect the actual day-to-day operations of your dealership. For entities, these policies require approval from a senior officer, signifying a commitment from the top.

Client Identification and Verification: Detail the steps taken to confirm the identity of all clients, including beneficial owners.
Record Keeping: Specify what records are kept, for how long, and how they are stored securely.
Transaction Monitoring and Reporting: Outline the process for identifying and reporting suspicious transactions, large cash transactions, and other required reports.
Risk Assessment: Describe how the firm assesses and documents its exposure to money laundering and terrorist financing risks.
Training: Explain the ongoing training program for employees regarding AML/ATF obligations.

Integrating AML/ATF into Business Operations

Simply having policies isn’t sufficient; they must be woven into the fabric of your business. This means integrating AML/ATF considerations into client onboarding, transaction processing, and even product development. Think of it as building compliance into your workflow, rather than layering it on top. This approach helps prevent duplication of effort and ensures that AML/ATF awareness is a constant, not an afterthought. For instance, client account forms should incorporate fields for required AML/ATF information, and staff should be trained on how to use these forms correctly. This proactive integration is key to a truly effective program.

A common pitfall is treating AML/ATF compliance as a separate function. Instead, it should be viewed as an integral part of sound business practice and client relationship management. This mindset shift helps in identifying potential risks early and responding appropriately.

Regular Review and Updates of Compliance Programs

The financial landscape and regulatory requirements are always changing. Therefore, your compliance program, including your written policies and procedures, must be reviewed and updated regularly. This review should happen at least every two years, or more frequently if there are significant changes to your business, new regulatory guidance, or identified weaknesses in the program. The review process should test the effectiveness of all components of your compliance program, including your risk assessment, training, and reporting mechanisms. This ensures your program remains relevant and effective in combating financial crime. You can find helpful indicators for identifying suspicious activities on the FINTRAC website.

Here’s a basic checklist for program review:

Assess Policy Effectiveness: Do the current policies align with regulatory requirements and business reality?
Test Procedures: Are employees following the established procedures for client identification, record keeping, and reporting?
Evaluate Training: Is the employee training program adequate and effective in raising awareness and competence?
Review Risk Assessment: Has the enterprise-wide risk assessment been updated to reflect current risks and business activities?
Examine Reporting: Are all required reports being filed accurately and on time?

Specific Obligations for International Dealer Exemption

Eligibility for the International Dealer Exemption

Foreign securities dealers looking to operate in Canada without full registration might qualify for an international dealer exemption. This exemption, outlined in National Instrument 31-103, generally applies to non-resident persons or companies registered to deal in securities in their home jurisdiction. However, it’s not a free pass. The exemption typically restricts dealings to “permitted clients” and often involves only “foreign securities.” It’s important to understand that this exemption is about registration relief, not a waiver of all regulatory obligations.

FINTRAC’s Stance on Exempt Entities

FINTRAC views entities operating under the international dealer exemption as “securities dealers” for the purposes of the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA). This means that even if you’re exempt from provincial registration, you still have obligations under the PCMLTFA. FINTRAC has made it clear through policy interpretations that being authorized to operate, even if exempt from registration, still brings you under the Act’s purview. This applies to a whole range of responsibilities, including reporting, record keeping, and client identification. You’ll need to develop and apply written compliance policies and procedures that align with these requirements for your Canadian activities. McMillan LLP can help you understand these obligations. FINTRAC’s policy interpretations confirm this stance.

Canadian Activities of Foreign Securities Dealers

For foreign securities dealers operating in Canada under an exemption, FINTRAC’s focus is on their Canadian activities. This means you only need to comply with the PCMLTFA requirements as they relate to business conducted within Canada. You’re expected to have written policies and procedures that cover record keeping, client identification, and compliance regimes specifically for these Canadian operations. If any of your non-Canadian clients are listed under Canadian laws concerning terrorist financing or United Nations sanctions, FINTRAC would expect a report. This aligns with the Canadian Securities Administrators’ views on reporting responsibilities for these dealers.

Key Obligations for Exempt Dealers:
- Develop and implement written policies and procedures for Canadian activities.
- Adhere to client identification and verification requirements for Canadian clients.
- Maintain records related to Canadian transactions and client relationships.
- Report suspicious transactions and activities connected to Canadian business.

It’s a common misconception that an exemption from provincial securities registration automatically exempts a firm from federal anti-money laundering and counter-terrorist financing laws. FINTRAC’s position is firm: if you are authorized to deal in securities, even under an exemption, you are subject to the PCMLTFA for your Canadian operations.

Risk Assessment and Enhanced Due Diligence

Conducting Enterprise-Wide Risk Assessments

Securities dealers in Canada have a legal duty to assess and document the risks associated with money laundering and terrorist financing. This isn’t just a suggestion; it’s a requirement under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA). Think of it as understanding the potential weak spots in your business where illicit funds might try to enter the financial system. FINTRAC provides guidance on factors to consider, which include the types of clients you deal with, the products and services you offer, where your business operates geographically, and how new technologies might introduce new risks. A thorough risk assessment forms the bedrock of an effective anti-money laundering (AML) and counter-terrorist financing (ATF) program. It helps you focus your resources where they are most needed.

Identifying High-Risk Business Relationships

Once you’ve got a handle on your overall risk, the next step is to identify specific business relationships that might be riskier than others. This involves looking at various indicators. For instance, clients with complex ownership structures, where it’s difficult to pinpoint the ultimate beneficial owner, can pose a higher risk. This is because such structures can be used to obscure the true source of funds. Similarly, clients who seem to be conducting transactions that lack a clear economic basis or a recognizable strategy, given their profile, warrant closer attention. It’s about looking beyond the surface and asking questions when something doesn’t quite add up. If you find yourself struggling to get clear information about a client’s beneficial ownership, that’s a red flag in itself.

Implementing Enhanced Due Diligence Measures

For those business relationships identified as high-risk, simply applying standard client identification procedures isn’t enough. You need to implement enhanced due diligence (EDD) measures. This could mean more frequent monitoring of client activity, requiring additional information beyond the standard Know Your Client (KYC) requirements, or obtaining senior management approval before establishing or continuing the relationship. The specific measures will depend on the nature and level of the risk identified. For example, if a client is a Politically Exposed Person (PEP), you’ll need to take special measures to verify their identity and understand the source of their wealth and funds. It’s about being proactive and taking extra precautions to mitigate the risks associated with these relationships. FINTRAC has specific guidance on these measures, and it’s important to consult it to ensure your approach is adequate. Failing to implement appropriate special measures for high-risk clients can lead to significant penalties, as seen in recent administrative monetary penalties.

Here are some common indicators that might suggest a higher risk relationship:

Clients with complex or opaque ownership structures.
Transactions that appear to lack a clear business or economic purpose.
Clients who are reluctant to provide requested information or documentation.
Transactions involving jurisdictions known for high levels of corruption or money laundering.
Clients who are Politically Exposed Persons (PEPs) or associated with them.

The goal of risk assessment and enhanced due diligence is not to avoid doing business, but to do business safely and in compliance with the law. It requires a thoughtful, ongoing process of identifying, assessing, and mitigating potential risks to prevent your firm from being used for illicit purposes.

Reporting Suspicious Transactions and Activities

Securities dealers have a significant role in spotting and reporting activities that might be linked to money laundering or terrorist financing. It’s not just about following rules; it’s about actively contributing to the integrity of the financial system. This means keeping a close eye on transactions and client behaviour, looking for anything that seems out of the ordinary.

Identifying Potentially Suspicious Transactions

Detecting suspicious activity requires a keen awareness of client profiles and transaction patterns. You need to compare what a client is doing with what you know about them – their usual business, their stated occupation, and their risk level. Transactions that don’t make much sense from an economic standpoint or lack a clear strategy, especially when they don’t align with the client’s known activities, should raise a flag. For instance, the early redemption of certain investments like GICs or mutual funds, particularly if it involves fees and lacks a sensible explanation, could be a sign. Similarly, if a client requests the proceeds from a sale in the form of negotiable instruments like bank drafts or certified cheques instead of the usual account deposit or reinvestment, that warrants closer examination. Frequent transfers of funds between multiple accounts, especially if they seem to serve only as conduits without legitimate underlying transactions, or rapid changes in account ownership among connected individuals, also require scrutiny.

Transactions inconsistent with the client’s profile or stated business.
Activities lacking a clear economic basis or strategy.
Unusual methods of receiving transaction proceeds (e.g., negotiable instruments).
Complex fund movements between multiple accounts without apparent purpose.

Escalating and Reporting Suspicious Activity

Once a potential suspicious transaction or activity is identified, the next step is to escalate it internally according to your firm’s established procedures. All employees must understand their obligation to report any suspicious activity they detect to the designated compliance officer or department within the firm. This internal reporting is critical for a coordinated response. The compliance officer then assesses the information and, if deemed necessary, files a Suspicious Transaction Report (STR) with FINTRAC. It’s important to remember that even if a transaction appears to be part of a market-based criminal offence, it should still be considered for reporting to FINTRAC if it suggests money laundering or terrorist financing.

The process of reporting suspicious activity is a core component of an effective anti-money laundering and anti-terrorist financing program. It requires diligence from all staff, clear internal escalation paths, and timely reporting to the authorities.

Indicators of Money Laundering and Terrorist Financing

FINTRAC provides guidance on various indicators that can help securities dealers identify potential money laundering and terrorist financing activities. These indicators are not exhaustive but serve as helpful examples. Some common red flags include:

Physical Certificates: Depositing physical share certificates without clear information on their source or how the client acquired them can be a risk, as it may obscure the origin of funds.
Unusual Investment Patterns: Clients making investments that seem overly complex or do not align with their stated financial goals or risk tolerance.
Structuring: Clients attempting to break down large transactions into smaller ones to avoid reporting thresholds.
Use of Multiple Accounts: Frequent and complex movement of funds between various accounts, especially those held by related parties, without a clear business rationale.
Requests for Unusual Transactions: Clients asking for proceeds to be paid out in specific, non-standard ways, such as through multiple certified cheques or wire transfers to unrelated third parties.

It is also beneficial to review gatekeeper reports filed under UMIR Rule 10.16 concerning market manipulation or insider trading, as these may highlight activities that should be reported to FINTRAC. Furthermore, any improper activities by employees or agents, such as internal fraud or conspiracy to manipulate markets, should be assessed for potential reporting as suspicious transactions.

Reporting Obligations Related to Sanctions and Terrorism

Securities dealers in Canada have specific duties when it comes to reporting information related to sanctions and terrorism. These obligations are part of the broader effort to combat financial crime and ensure Canada’s financial system isn’t used for illicit purposes. It’s not just about spotting suspicious money movements; it also involves actively monitoring for individuals and entities targeted by sanctions.

Monitoring Designated Individuals and Organizations

Dealers must regularly check their clients against lists of designated individuals and organizations. These lists are established under Canadian economic sanctions legislation. This means keeping an eye on who is subject to sanctions imposed by Canada, the United Nations, and other international bodies Canada is party to. This proactive screening is a key part of preventing sanctioned parties from accessing Canada’s financial services. The process typically involves comparing client names against these official lists. Failure to do so can lead to serious consequences.

Monthly Reporting on Sanctions Compliance

Beyond just checking names, securities dealers are required to report on their sanctions compliance efforts. This usually takes the form of a monthly report. These reports confirm whether any matches were found on the designated lists and detail any actions taken. The reporting mechanism is often managed through specific government portals or systems. It’s important for dealers to have clear internal procedures to ensure these reports are accurate and submitted on time. This includes having backup personnel and training in place in case the primary person responsible is unavailable.

Reporting Terrorist Property

Another critical obligation involves reporting any property that is suspected to be owned or controlled by a terrorist or a terrorist group. This falls under the reporting of “terrorist property.” If a securities dealer identifies assets or funds that they believe are linked to terrorism, they must report this to FINTRAC. This reporting is separate from suspicious transaction reports and requires specific attention to detail regarding the nature of the property and its suspected connection to terrorism. The goal here is to disrupt the flow of funds to terrorist organizations.

FINTRAC Enforcement and Penalties

Administrative Monetary Penalties for Non-Compliance

FINTRAC has the authority to issue administrative monetary penalties (AMPs) to reporting entities that don’t follow the rules laid out in the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA) and its associated regulations. These penalties are civil in nature and serve as a way to encourage compliance. Violations are categorized, and the severity of the penalty often reflects the seriousness of the breach. For instance, failures in reporting suspicious transactions or in conducting adequate risk assessments can lead to significant financial penalties. Securities dealers must be aware that FINTRAC is increasingly applying substantial penalties, indicating a more rigorous approach to compliance examinations.

FINTRAC’s Examination and Enforcement Approach

FINTRAC conducts examinations to assess whether reporting entities, including securities dealers, are meeting their obligations. These examinations can be triggered by various factors, including risk assessments and intelligence. During an examination, FINTRAC will review the entity’s policies, procedures, client identification processes, record-keeping, and reporting activities. If non-compliance is identified, FINTRAC may take a range of actions, from requiring corrective measures to imposing AMPs. There’s also a noted collaboration between FINTRAC and OFSI (Office of the Superintendent of Financial Institutions) in certain areas, aiming for a more coordinated regulatory oversight.

Consequences of Non-Compliance for Securities Dealers

Failing to comply with FINTRAC requirements can have serious repercussions for securities dealers. Beyond financial penalties, which can amount to hundreds of thousands of dollars, non-compliance can damage a firm’s reputation and lead to increased regulatory scrutiny. In severe cases, repeated or wilful non-compliance could potentially impact a firm’s ability to operate. It’s important for dealers to understand that the PCMLTFA outlines offences that can carry fines of up to $2 million and imprisonment for up to five years for the most serious violations. The focus remains on ensuring that dealers have robust anti-money laundering and anti-terrorist financing programs in place. For more details on definitions relevant to these obligations, you can refer to FINTRAC’s definitions.

Common areas where securities dealers have faced penalties include:

Failure to develop and maintain up-to-date written compliance policies and procedures.
Inadequate risk assessments that do not fully consider client and business risks.
Not conducting or documenting required reviews of compliance programs.
Failure to submit suspicious transaction reports (STRs) when required.
Not implementing special measures for high-risk clients or transactions.

The regulatory landscape is dynamic, and staying informed about FINTRAC’s expectations and enforcement trends is vital for securities dealers. Proactive compliance, rather than reactive remediation, is the most effective strategy.

Guidance and Resources for Securities Dealers

FINTRAC’s Published Guidance Documents

FINTRAC puts out a lot of helpful information to guide securities dealers. It’s not just a bunch of rules; they try to explain what they mean and how to follow them. They have specific guidance documents that cover things like client identification, keeping records, and reporting transactions. It’s really important to check these out regularly because they get updated. They also have policy interpretations that can clarify specific situations. You can find all of this on the FINTRAC website. It’s a good idea to bookmark their site.

Leveraging Industry Best Practices

Beyond what FINTRAC says directly, there are industry groups and associations that also put out best practices for anti-money laundering (AML) and counter-terrorist financing (ATF). These often come from years of experience dealing with these issues. Think of them as tried-and-true methods that other securities dealers have found effective. Following these can help you build a stronger compliance program. It’s like learning from others’ successes and mistakes without having to make them yourself.

Understanding Specific Regulatory Requirements

Sometimes, the rules can seem a bit complicated, especially when you’re dealing with different types of clients or transactions. FINTRAC’s guidance documents often break down these specific requirements. For example, they might have separate sections for reporting large cash transactions versus suspicious transactions. They also provide details on what constitutes a “politically exposed person” or how to verify beneficial ownership. It’s worth taking the time to read through these sections carefully to make sure you’re not missing any details that apply to your business.

Here’s a quick look at some key areas FINTRAC guidance often covers:

Client Identification and Verification: How to know who your clients are.
Record Keeping: What information you need to keep and for how long.
Reporting Obligations: When and how to report certain transactions or activities.
Compliance Programs: What elements should be in your firm’s overall AML/ATF plan.

Staying up-to-date with FINTRAC’s guidance and industry best practices is not just about avoiding penalties; it’s about building a more secure and trustworthy business. It shows your clients and regulators that you take financial crime seriously.

Seeking Expert Legal Assistance

Navigating Complex Regulatory Landscapes

Dealing with FINTRAC requirements can get complicated, especially for securities dealers. The rules under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA) are detailed and can change. It’s not always straightforward to figure out exactly what applies to your specific business operations. This is where getting advice from legal professionals who focus on financial crime and compliance becomes really helpful. They can help you understand the nuances of the law and how it affects your day-to-day work.

Ensuring Comprehensive Compliance

Making sure your firm is fully compliant involves more than just ticking boxes. It means building a system that actively prevents money laundering and terrorist financing. This includes:

Developing clear, written policies and procedures tailored to your business.
Implementing robust client identification and verification processes.
Establishing effective transaction monitoring and reporting mechanisms.
Conducting regular risk assessments and employee training.

Legal counsel can assist in reviewing and refining these elements to align with current regulatory expectations and best practices. They can also help in preparing for FINTRAC examinations.

Consulting with Legal Professionals

When you’re unsure about a specific FINTRAC obligation, like how to handle a complex beneficial ownership structure or what constitutes a suspicious transaction in a novel scenario, seeking legal advice is a sensible step. Lawyers specializing in this area can provide clarity and guidance. They can help interpret regulatory guidance, advise on the implications of new legislation, and assist in responding to FINTRAC inquiries or examinations. Ultimately, proactive engagement with legal experts can prevent costly mistakes and safeguard your firm’s reputation.

Engaging legal counsel experienced in anti-money laundering and counter-terrorist financing (AML/ATF) regulations is not merely a reactive measure but a strategic investment in your firm’s operational integrity and long-term stability. They can offer tailored strategies to meet your specific compliance challenges.

Frequently Asked Questions

What is FINTRAC and why does it matter to securities dealers?

FINTRAC, which stands for the Financial Transactions and Reports Analysis Centre of Canada, is the Canadian government agency that keeps an eye on financial activities to fight money laundering and the financing of terrorism. For securities dealers, understanding FINTRAC’s rules is super important because they have to follow specific laws to help prevent criminals from using the financial system for bad purposes. This means dealers need to know how to identify their clients, keep good records, and report certain transactions.

What does “client identification and verification” mean for securities dealers?

It means that when a securities dealer opens an account for a new client, they must take reasonable steps to confirm who that person really is. This usually involves asking for official identification, like a driver’s license or passport, and making sure the information matches. It’s like making sure you know who you’re doing business with to avoid dealing with criminals.

Why is record keeping so crucial for securities dealers under FINTRAC rules?

FINTRAC requires securities dealers to keep detailed records of their clients and the transactions they make. Think of it like keeping a detailed diary of all your business dealings. These records are essential because they can be used later if authorities need to investigate suspicious financial activities or track down illegal money.

What kinds of transactions do securities dealers need to report to FINTRAC?

Securities dealers have to report certain types of transactions to FINTRAC. This includes things like large cash transactions (usually over $10,000), and importantly, any transaction that seems suspicious or could be related to money laundering or terrorist financing. Reporting these helps FINTRAC spot and stop illegal activities.

What is the “International Dealer Exemption” and who can use it?

The International Dealer Exemption (IDE) is a special rule that allows certain foreign securities dealers, who are already registered in their home country, to do business in Canada without needing to register again here. However, they still have to follow FINTRAC’s rules for their Canadian business activities. It’s not a free pass to ignore the law.

What is a “risk assessment” and why do securities dealers need to do one?

A risk assessment is like a dealer figuring out where the biggest dangers of money laundering or terrorist financing might be in their business. They look at things like their clients, the types of services they offer, and where their clients are located. Doing this helps them focus their efforts on the areas that need the most attention and put stronger controls in place.

What happens if a securities dealer doesn’t follow FINTRAC’s rules?

If a securities dealer fails to follow FINTRAC’s rules, they can face serious consequences. FINTRAC can issue large fines, known as Administrative Monetary Penalties (AMPs). In some cases, non-compliance can lead to even more severe penalties, impacting the dealer’s ability to operate. It’s definitely something dealers want to avoid.

Where can securities dealers find more help or information about FINTRAC requirements?

FINTRAC provides a lot of helpful information on its official website, including detailed guidelines and resources specifically for securities dealers. Additionally, seeking advice from legal professionals who specialize in financial regulations, like Substance Law, is a smart move. They can help navigate the complex rules and ensure your business is fully compliant.

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