Effective October 2025, securities dealers and advisers will have new anti-money laundering obligations with respect to any client that is at high risk for a money laundering or terrorist activity financing offence, if that client is also incorporated or continued under the Canada Business Corporations Act (CBCA).
The securities dealer or adviser will be required to cross reference the beneficial ownership information provided by the client and maintained in its records against the federal government's beneficial ownership registry and report material discrepancies.
As a reminder, under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act, dealers and portfolio managers are required to conduct a risk assessment of clients to determine if there is a risk of a money laundering or terrorist activity financing offence. Under existing expectations, the firm is then expected to conduct risk mitigation measures with respect to the client, with the nature and extent of those measures to be based on the risk rating attributed to the client. For example, high risk clients are expected to be subject to "high risk client" policies and procedures, such as enhanced ongoing monitoring.
Under the new requirement, clients deemed high risk and who are governed by the CBCA must be subject to a new mandatory "high risk client" procedure, which requires the firm to take reasonable measures to confirm the accuracy of the beneficial ownership information by cross referencing it against the government's public registry. If the firm finds a material discrepancy between the information provided by the client and the information in the public registry, the registered firm must report the discrepancy to the Director under the CBCA within 15 days after the day on which the discrepancy was identified, together with the related specified information.
We will be releasing an insight shortly with respect to FINTRAC's recent imposition of monetary penalties for failure to meet existing AML requirements.
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