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Canada’s Anti-Money Laundering Legislative Changes

03/02/2014


Canada’s anti-money laundering (AML) regulator recently released their final guidance to help companies comply with legislative changes that became effective on February 1, 2014. Those changes were designed to achieve better alignment of Canada’s systems with international AML standards. The changes impact the ways that financial institutions and other entities with AML responsibilities will identify their clients, monitor business relationships and otherwise manage their money laundering risks. MNP summarized the legislative changes in this blog article . This article focuses on areas where the final guidance provides clarity for seemingly ambiguous new legislative standards, areas where it appears to differ from the language of the new regulations, and other ways in which the guidelines differs from their predecessors.

The Guidance comes in the form of updated guidelines, which are meant to help provide plain language to companies trying to comply with complex AML laws. Guidelines are binding on the regulator, but do not have the force of law. The two updated guidelines are:

1) Guideline 4: Implementation of a Compliance Regime, and
2) Guideline 6: Record Keeping and Client Identification to reflect the new standards. Guideline 6 is issued in a number of versions, tailored to each major category of business with responsibilities pursuant to the legislation.

Most of the drafted changes in Guideline 4 and 6 relate to risk management, and particularly an explanation of how FINTRAC expects that financial institutions will conduct ongoing monitoring of their entire relationship with any client for the purpose of detecting suspicious transactions and keeping their records current. The drafted Guideline 6 also addresses the new standards about beneficial ownership and control.

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