[FINTRAC] Publication of updated guidance on politically exposed persons, ongoing monitoring and business relationships

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FINTRAC has updated its guidance on politically exposed persons and heads of international organizations, ongoing monitoring requirements and business relationships requirements to include regulatory amendments that will come into force on June 1, 2021. Key changes include:

 

1.       Politically expose person (PEP) and heads of international organizations (HIO): PEP and HIO obligations currently apply to the financial entities, securities dealers, money services businesses and life insurance sectors. As of June 2021, PEP and HIO obligations will apply to all reporting entity (RE) sectors.

 

2.       Business relationship requirements guidance: Regulatory amendments about when a business enters into a business relationship with a client will come into force in June 2021.

 

3.       Ongoing monitoring requirements guidance: Ongoing monitoring requirements have not changed but the regulatory references’ numbering has been revised.

 

FINTRAC is committed to working with businesses to increase their awareness and understanding of their compliance obligations under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act.

 

As Canada’s financial intelligence unit and AML/ATF regulator and supervisor, FINTRAC plays a key role in helping to protect the safety of Canadians and the security of Canada’s economy.

 

For questions, please contact guidelines-lignesdirectrices@fintrac-canafe.gc.ca

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Good morning,

 

FINTRAC has updated its Politically exposed persons and heads of international organizations guidance, Business relationships requirements guidance, Ongoing monitoring requirements guidance, and Guidance glossary. These guidance pieces have been updated to include regulatory amendments that will come into force on June 1, 2021, to follow the new guidance layout, to be more plain language, to reduce unnecessary repetition across all guidance pieces, and to include footnotes pointing to legislative and regulatory references. Below is a summary of the updates specific to each of these guidance pieces:

 

1.       Politically expose person (PEP) and heads of international organizations (HIO) guidance

 

Currently PEP and HIO obligations only apply to the financial entities, securities dealers, money services businesses (MSB) and life insurance sectors. However, as of June 2021, PEP and HIO obligations will apply to all reporting entity (RE) sectors. The updated PEP and HIO guidance consists of 4 separate guidance pieces, including:

 

·         PEP and HIO guidance:

o   This guidance explains general PEP/HIO information applicable to all sectors. Having this information in one guidance piece reduces the duplication of information applicable to all RE sectors.

·         PEP and HIO guidance for account-based reporting entity sectors:

o   This guidance explains the PEP/HIO requirements for account-based RE sectors, which include financial entities, securities dealers, and casinos.

·         PEP and HIO guidance for non-account-based reporting entity sectors:

o   This guidance explains the PEP/HIO requirements for non-account-based RE sectors, which include MSBs, British Columbia notaries, accountants, real estate, dealers in precious metals and stones, and agents of the Crown.

·         PEP and HIO guidance for life insurance companies, brokers and agents:

o   This guidance explains the PEP/HIO requirements for the life insurance sector. This sector has its own PEP/HIO guidance piece because its obligations are different from those of the other sectors.

 

2.       Business relationship requirements guidance

 

FINTRAC updated this guidance to reflect regulatory amendments regarding when you enter into a business relationship with a client which will come into force in June 1, 2021. Additionally, while the regulatory amendments removed the definition of a business relationship, the guidance still explains what a business relationship is.

 

3.       Ongoing monitoring requirements guidance

 

Ongoing monitoring requirements have not changed but where these requirements are found in the Regulations has changed. The addition of footnotes to the guidance will help reporting entities locate the new regulatory references. Additionally, FINTRAC updated the formatting and language of this guidance piece to align it with recently published guidance. 

 

4.       Guidance glossary

 

·         Minor updates to the definition of beneficiary; and

·         3 new definitions:

o   Mandatary;

o   Source of funds or virtual currency (VC); and

o   Source of wealth.

 

Please note that the current guidance on politically exposed persons and heads of internal organizations, ongoing monitoring, business relationships will remain accessible on FINTRAC’s website until June 1, 2021, but will be removed after that date.

 

FINTRAC is committed to working with businesses to increase their awareness and understanding of their compliance obligations under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act.

 

As Canada’s financial intelligence unit and anti-money laundering and anti-terrorist activity financing regulator and supervisor, FINTRAC plays a key role in helping to protect the safety of Canadians and the security of Canada’s economy.

 

For questions, please contact guidelines-lignesdirectrices@fintrac-canafe.gc.ca 

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