Canada: FINTRAC Releases Policy Interpretations Containing Guidance For International Dealers

Last Updated: January 24 2015
Article by Shahen A. Mirakian

Co-authored by Vlad Duta, Student-at-Law

In December 2014, as a result of a recent request1 made under the Access to Information Act2, the Financial Transactions and Reports Analysis Centre of Canada ("FINTRAC") released its policy interpretations regarding the Proceeds of Crime (Money Laundering) and Terrorist Financing Act3 (the "Act") and its accompanying regulations4 (the "Regulations").

Since 2008, FINTRAC has been providing policy interpretations in the form of responses to questions from persons and entities with obligations under the Act and the Regulations. Last month, FINTRAC released several hundred of these responses on its website. While they do not constitute legal advice, a number of these responses provide helpful guidance on FINTRAC's interpretation of the obligations of persons dealing in securities in Canada in reliance on the international dealer exemption (described below) ("IDE Persons").

Obligations of IDE Persons under the Act

Foreign securities dealers operating in Canada are exempt from the requirement to register as a dealer in Canada if they meet the "international dealer" exemption criteria5 in section 8.18 of National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registration Obligations (the "National Instrument").6 In the past, there has been some confusion regarding how this exemption interacts with the obligations for securities dealers under the Act, and whether this exemption effectively relieves IDE Persons from compliance requirements under the Act. McMillan has consistently advised its international dealer clients about their obligations under the Act, which have now been confirmed by FINTRAC in published policy interpretations.

FINTRAC notes in its published responses to policy interpretation questions that the Act applies to "securities dealers", which are defined under the Act and the Regulations as "persons and entities authorized under provincial legislation to engage in the business of dealing in securities or any other financial instruments or to provide portfolio management or investment advising services."7 With regard to this definition, a passage from one of FINTRAC's responses from 2012 clearly summarizes its position on exemptions from registration: 

The definition of a securities dealer does not refer to registration but rather to being "authorized" to provide [dealing or advising services]. Therefore, the fact that one is exempted assumes that a provincial authority "authorizes" the entity to operate without being registered. Therefore, exempted entities, such as ... entities that are exempted from registration, are covered under our Act.8

FINTRAC has expressed this same position in a number of other published responses.9 These responses confirm FINTRAC's position that there is a definitive obligation on IDE Persons to comply with the Act. This means that IDE Persons must observe the entire suite of responsibilities under the Act, including those with respect to reporting,10 record keeping, ascertaining identity, politically exposed foreign persons and third party determination. In addition, as part of their compliance regimes, IDE Persons must develop and apply written compliance policies and procedures.11

The policy interpretation responses from FINTRAC serve as an important reminder that foreign dealers should turn their mind to their obligations under the Act when initially seeking to become IDE Persons, including creating written policies and procedures for compliance.

Compliance Policies and Procedures for IDE Persons

In its responses to policy interpretation questions, FINTRAC also provides guidance on how IDE Persons should prepare their written compliance policies and procedures. FINTRAC clarifies that foreign securities dealers need only comply with obligations under the Act with respect to their Canadian activities:

[If] the foreign securities dealer is authorized by the province to be engaged in the activities described under subsection 1(2) of the [Regulations], under an International Dealer Exemption[,] [c]onsequently, the foreign securities dealer is subject to the [Act] for its Canadian activities, and has to develop and apply policies and procedures consistent with record keeping, client identification and compliance regime requirements for its Canadian activities only.12 [emphasis added]

In addition, FINTRAC makes it clear that if a non-Canadian client of an IDE Person is listed under Canadian laws relating to terrorist financing or United Nation sanctions, FINTRAC would expect to receive a report in respect of that non-Canadian client.13 This is consistent with the views of the Canadian Securities Administrators about the reporting responsibilities of IDE Persons as set out in CSA Staff Notice 31-317 (Revised) Reporting Obligations Related to Terrorist Financing.14

More specific information about compliance obligations for securities dealers can be found in FINTRAC's Guideline 6E: Record Keeping and Client Identification for Securities Dealers.15


Foreign securities dealers operating in Canada in reliance on the international dealer exemption are considered by FINTRAC to be securities dealers for the purposes of the Act. As a result, they are required to develop and apply written policies and procedures relating to their record keeping, client identification and transaction reporting requirements under the Act for their Canadian activities.

McMillan is able to assist foreign securities dealers to better understand their obligations under the Act and to prepare written compliance policies and procedures as part of the process of becoming eligible to deal with Canadian clients in reliance on the international dealer exemption.

1 On September 22, 2014, Outlier Solutions Inc., a consulting company offering anti-money laundering and counter terrorist financing services, made a request to FINTRAC to disclose FINTRAC's policy positions related to the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA) from 2008 to the present.

2 RSC 1985, c A-1.

3 SC 2000, c 17 [PCMLTFA].

4 Proceeds of Crime (Money Laundering) and Terrorist Financing Regulations, SOR/2002-184 [PCMLTFR].

5 The "international dealer" exemption is available to non-resident persons or companies that are registered to carry on the business of dealing in securities or engage in the business of a dealer in their home jurisdiction. The exemption applies only to trades with "permitted clients" (defined in the National Instrument) and generally only to trades that involve "foreign securities" (defined in the National Instrument).

6 Available online at:

7 PCMLTFA, s. 5(g); PCMLTFR, s. 1(2).

8 FINTRAC Policy Interpretations, "Other", response 48, available online at:

9 See the following responses: FINTRAC Policy Interpretations, "Other", responses 2, 35 and 51, available online at:; FINTRAC Policy Interpretations, "Compliance Regime", response 44, available online at, FINTRAC Policy Interpretations, "Reporting", response 91, available online at

10 Securities dealers must make reports on suspicious transactions, terrorist property, and large cash transactions.

11 PCMLTFA, s. 9.6(1); PCMLTFR, s. 71(1).

12 FINTRAC Policy Interpretations, "Other", response 2, available online at:

13 FINTRAC Policy Interpretations, "Other", responses 2 and 35, available online at:

14 Available online at:

15 Available online at:

The foregoing provides only an overview and does not constitute legal advice. Readers are cautioned against making any decisions based on this material alone. Rather, specific legal advice should be obtained.

© McMillan LLP 2015

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Shahen A. Mirakian
In association with
Related Topics
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions