Deterring and Detecting Money Laundering and Terrorist ...

Compliance with Guideline E-17 in pertinent respects will be included in OSFI's AML/ATF assessment methodology. Guidance on Designated Name ... Skiptomaincontent Skiptosecondarymenu DeterringandDetectingMoneyLaunderingandTerroristFinancing PageContentAlternativeFormats PDF,378KBAccompanyingDocuments GuidelineImpactAnalysisStatement LetterRelatedDocuments NoticeAsofJuly26,2021,thisGuidelinehasbeenrescindedandisnolongerapplicable.Formoreinformation,pleaseconsultourconsultationresponsepublishedonMay17,2021.DocumentProperties TypeofPublication:Guideline Category:SoundBusinessandFinancialPractices Date:December,2008 No:B-8 Audiences:Banks/ FBB/ T&L/ LifeINTRODUCTIONThefightagainstfinancialcrimeisanongoingpriorityforgovernmentsaroundtheworld.Theabilityofcriminalsandcriminalorganizationstousefinancialinstitutionstolaunderfunds,alongwiththepotentialrisktotheirreputations,andultimatelytotheirsafetyandsoundness,continuestobeaconcernforfinancialandotherregulators.Overthepastseveralyearstherehasbeenextensiveactioninmanycountriestoimplementpermanentmeasurestofightmoneylaunderingandterroristfinancing.ThisactionhasbeendrivenlargelybytheleadershipoftheFATF,ofwhichCanadaisafoundingmember.TheFATFistheintergovernmentalbodythatdevelops,monitorsandevaluatescountryAML/ATFstandards.Thesestandardsassetoutinits40AMLRecommendationsand9ATFRecommendationsestablishastrongAML/ATFframeworkandpermitarisk-basedapproachtotheimplementationofpreventativemeasures.TheGovernmentofCanada,ledbytheDepartmentofFinance,hasestablishedaprivate/publicsectoradvisorycommitteetogatherinformation,onanongoingbasis,onhowCanada’sAML/ATFregimecanbecontinuouslyreviewed.ThefederalGovernmentalsoimplementedsignificantchangestothePCMLTFAandPCMLTFRin2007/2008toensurethattheAML/ATFlegislativeframeworkisinlinewithinternationalstandards.OSFI’smandateincludessupervisingfinancialsoundnessandpromotingtheadoptionofpoliciesandproceduresdesignedtomitigaterisk.OSFIbelievesthattheriskmanagementoutcomesidentifiedinthisGuidelinewillfurtherreducethesusceptibilityofFRFIstobeingusedbyindividualsororganizationstolaunderfundsandfightterroristfinancing,therebyreducingtheirexposuretodamagetotheirreputation,akeyassetinthefinancialservicesindustry.Totheextentpossible,OSFIhasalignedthisGuidelinetotheframeworkofAML/ATFpreventativemeasuressetoutintheFATFRecommendations.OSFIbelievesthiswillhelpfocusattentionontheprincipalgoalsofrisk-baseddeterrenceanddetection.TableofContents INTRODUCTION CompliancewiththisGuideline “Fit&Proper”requirementsforsignificantowners,directorsandseniorofficersofFRFIs GuidanceonDesignatedNameSearchingandSanctions LegislativeComplianceManagement AML/ATFGuidanceIssuedbyFATFandInternationalSupervisoryBodies THERISKBASEDAPPROACHINTHECONTEXTOFTHEPCMLTFAANDPCMLTFR AML/ATFPROGRAM PrincipalElementsofAML/ATFProgram Scope BOARDANDSENIORMANAGEMENTOVERSIGHT ReportingtoSeniorManagementandtheBoard CAMLO Introduction Mandate Qualifications ASSESSMENTOFINHERENTRISKS Methodology RiskCategories RatingandRanking UsingAssessmentofInherentRisksastheBasisforRiskControls CONTROLPOLICIESANDPROCEDURES Policies Procedures CLIENTDUEDILIGENCE(CDD) NatureandAmount ClientIdentificationandAscertainingofIdentity SourceofAccumulatedFundsorWealth Monitoring SPECIFICHIGHERRISKS UseofAgentsorMandataries FraudwithrespecttoMortgageLoansandotherProducts PEFPs ClientCorporationsthatcanissuebearershares CorrespondentBanking ProcessingElectronicFundsTransfers TradeFinance NewandDevelopingTechnologies RECORDKEEPINGANDRETENTION TRANSACTIONREPORTING General SuspiciousTransactionsandSuspiciousAttemptedTransactions,andReportsonTerroristProperty AggregationofCashTransactions TRAINING SELFASSESSMENTofCONTROLS EFFECTIVENESSTESTING EffectivenessTestingComparedToAssessmentofRisksandControls INTERPRETATIONCompliancewiththisGuidelineFINTRACisresponsibleforensuringcompliancewithPart1ofthePCMLTFA,andthePCMLTFR.Theseprescribeacomplianceprogramwitharisk-basedcomponentdesignedtoensureeffectivecontroloverMLandTFrisks.ThisGuidelinedoesnotcreateanynewregulatoryrequirements.ItisintendedtoassistFRFIsinidentifyingandcomplyingwithapplicableAML/ATFrequirementsandmeasurescontainedinthePCMLTFAandthePCMLTFR.ThisGuidelineisalsoaimedathelpinginstitutionsmeetOSFI'sgovernanceandcontrolexpectations.EffectivecontroloverMLandTFrisks,andrelatedregulatory,operationalandreputationrisks,isessential.Inordertoachieveeffectivecontrol,FRFIswilladoptdifferentapproachestotheirAML/ATFprogramsthattakeintoaccountthenature,scope,complexityandriskprofileoftheirinstitution.FRFIsareexpectedtotakeintoaccountthecontentsofthisGuidelinewhenimplementingtheirAML/ATFprograms.OSFI'sAML/ATFassessmentprogram,whichaimstoassistOSFIinevaluatingtheeffectivenessofcontrols,takestheforegoingintoconsiderationintheassessmentofindividualinstitutions.TheOSFIActenablesOSFIandFINTRACtoexchangeinformationonFRFIs’compliancewithPart1ofthePCMLTFA.Tothisend,onJune14,2004,OSFIandFINTRACsignedaMemorandumofUnderstandingforexchanginginformation.FRFIsshouldalsobeawarethatinDecember2008,FINTRACwillbeabletoimposeadministrativemonetarypenaltiesagainstitsreportingentities,includingFRFIs,forviolationsofprescribedprovisionsofthePCMLTFAandPCMLTFR.FRFIsshouldnotethatFINTRAC,astheagencyresponsibleforensuringcompliancewithPart1ofthePCMLTFA,andthePCMLTFR,publishesandmaintainsitsownGuidelinesoncompliancewiththePCMLTFAandthePCMLTFR.OSFIhasmadeeveryeffortnottoduplicateinsubstanceFINTRACguidance.ThisGuidelineshouldthereforebereadinconjunctionwithFINTRAC’sGuidelines,asappropriate.WherewedorefertomatterstouchedoninFINTRAC’sGuidelines,wehaveconformedreferencestothoseusedbyFINTRAC.“Fit&Proper”requirementsforsignificantowners,directorsandseniorofficersofFRFIsTheFATFRecommendationsincludemeasurestomitigatetheriskthatcriminalsandotherinappropriatepersonsmighttakeoverownershipof,orundulyinfluencethemanagementof,financialinstitutions.OSFIscreensallpersonswhoownorcontrol,directlyorindirectly,significantinterestsinFRFIs.ThisscreeningisdonepriortotheapprovalofanewFRFIandwhenownershipinterestschange.Inaddition,OSFIscreensdirectorsandseniorofficerswhowillbeinplacewhenaFRFIcommencesoperations.However,OSFIseekstorelyonFRFIs’internalprocessesforassessingtheongoingsuitabilityandintegrityofdirectorsandseniorofficerswhoareappointedaftertheFRFI’sinitialstartup.OSFI’sexpectationsofFRFIs’internalprocessesforscreeningdirectorsandseniorofficerspost-authorizationaresetoutinOSFIGuidelineE-17“BackgroundChecksonDirectorsandSeniorManagementofFREs”.Arisk-basedapproachtoassessingtheFRFI’sownscreeningprocessesisappliedbyOSFIwherewarranted.CompliancewithGuidelineE-17inpertinentrespectswillbeincludedinOSFI’sAML/ATFassessmentmethodology.GuidanceonDesignatedNameSearchingandSanctionsCertainprovisionsofthePCMLTFAandthe CriminalCodegivebothFINTRACandOSFIresponsibilityfordealingwithissuesrelatedtothefinancingofterroristactivities.FINTRAC’sobjectivesincludetheprevention,detection,anddeterrenceofthefinancingofterroristactivities,whileOSFI’sroleisthatofacentralreportingchannelfortheaggregatereportingrequirementsoutlinedinsubsection83.11(2)ofthe CriminalCode.WithrespecttoFRFIs’terroristpropertyreportingobligations,OSFIpostsonitsInternetsite(www.osfi-bsif.gc.ca)listsofterroristindividualsandorganizations,andwillcontinuetoreceivemonthlyreportsfromFRFIsonthefindingsoftheircontinuoussearchingforandfreezingofterroristassetsasrequiredbytheregulationsunderthe UnitedNationsActorbysubsection83.11(1)ofthe CriminalCodeinrespectofdesignatedentities.Inaddition,FINTRACandanumberofinternationalorganisationshavepublishedinformationrelatedtoterroristfinancingactivities.FINTRAChasalsoissuedaguidelineonSubmittingTerroristPropertyReports.Overthepastfewyears,Canadahasimplementedseveralneweconomicandanti-proliferation(ofweaponsofmassdestruction)sanctionsagainstanumberofcountries,entitiesanddesignatedpersons.Inaddition,theFATFhasissuedguidancedocumentsonanumberoftheseandrelatedmatters.ThearrayofobligationsimposedonFRFIsbythereportingrequirements,sanctionsandrelatedproceduralactionsmeritsdealingwithdesignatednamesearching,listings,reporting,economicandanti-proliferationsanctionsinaseparateGuideline.OSFIanticipatesthatthisGuidelinewillbeissuedin2009Footnote1.LegislativeComplianceManagementThecomponentsoftheFRFI’sAML/ATFprogramthataredesignedtocomplywiththePCMLTFAandPCMLTFRshouldbeincorporatedinto,orreferencedby,theFRFI’sLCMframework.AlthoughthechiefcomplianceofficerisresponsiblefortheLCMframeworkgenerally(GuidelineE-13:LegislativeComplianceManagement),theAML/ATFcomponentsoftheLCMframeworkshouldbetheresponsibilityoftheCAMLO.AML/ATFGuidanceIssuedbyFATFandInternationalSupervisoryBodiesTheFATF,theBaselCommitteeonBankingSupervisionandtheInternationalAssociationofInsuranceSupervisorshaveeachissuedrisk-basedAML/ATFguidancedirectedatthefinancialsector.FRFIsshouldconsulttheappropriateguidanceissuedbythesebodiesformoreinformationonriskassessmentandeffectivecontrols.THERISKBASEDAPPROACHINTHECONTEXTOFTHEPCMLTFAANDPCMLTFRThebasicprincipleunderpinningOSFI’s SupervisoryFrameworkisthatFRFIsmustdevelopandimplementeffectiveriskmanagementcontrolstomanagetheirexposuretofinancialriskandultimatelytheirfinancialstabilityandsoundness.ThisGuidelineaimstoassistFRFIsintheirdevelopmentandimplementationofeffectiveAML/ATFcontrolstomanagetheirexposuretoMLandTFrisks.ThePCMLTFAandPCMLTFRprescribevariousoutcomesthatFRFIsmustachievetodetectanddeterMLandTF.Theseoutcomesaresetoutasregulatoryrequirementswhich,intheaggregate,formthecomplianceregimetobeembeddedinFRFIs’AML/ATFprograms.Examplesofregulatoryrequirementsinclude:theidentificationofclients;theappointmentofaCAMLO;determiningwhetheraclientisaPEFP;theprohibitionondealingwithshellbanks.Somerequirementsfeedintobroaderoutcomes;othersarethemselvesoutcomes.Inallcases,themannerinwhichtheseoutcomesmaybeachievedisprescribed.Generally,therearethreewaysinwhichthePCMLTFAandtheRegulationsprescribehowanoutcomeistobeachieved:1.ByoneormorePrescriptiveMeasuresInthesesituations,oneormoremeasuresareprescribed.Alloftheprescribedmeasuresmustbefollowed.AnexampleisPEFPdetermination-ifaclientisdeterminedtobeaPEFP,certainprescribedmeasuresmustbetaken.2.ByachoiceofPrescriptiveMeasuresInthesesituations,achoiceofalternativemeasuresisprescribed.ThesemeasuresofferFRFIsflexibilityinachievingtheprescribedoutcome.Asidefromselectingwhichoptiontochoose,nootheroptionsoralternativesareavailabletotheFRFI.Examplesincludeprescribedtypesofacceptableidentificationdocumentationforindividualsandprescribedsetsofalternativemeasuresfortheidentificationofcreditcardclientsinnon-face-tofacesituations.3.ByReasonablemeasuresInthesesituations,thePCMLTFAandPCMLTFRallowFRFIsmoreflexibilitytodetermineforthemselveshowtoachievetheprescribedoutcomes,providedthatthemeasureschosenare“reasonable”.Tobereasonable,themeasuresusedmustachievetheprescribedoutcome.Anexampleisreasonablemeasurestodeterminethesourceoffundsforcertainhighriskclients.ThisGuidelineidentifiesmeasuresthatOSFIhasfoundtobereasonablewhenappliedeffectively–i.e.,whentheyachieveprescribedoutcomes.Themeasures,whicharedrawnfromawidebaseofsources,includingtheFATF,shouldnotbetreatedaschecklists.Asnotedbelow,OSFIexpectsFRFIstohaveAML/ATFprogramsinplacethatincludemeasureswhicharenotexpresslyaddressedbythePCMLTFAandPCMLTFR,butwhichareconsistentwithotherOSFIGuidanceandOSFI’sSupervisoryFramework.AML/ATFPROGRAMTheAML/ATFprogramisthekeyvehicleforestablishingandmaintainingeffectivecontroloverMLandTFrisksinallrelevantareasoftheFRFIenterprise.ThefollowingisamoredetaileddescriptionofOSFI’sexpectationsandprescribedcontentoftheAML/ATFprogram:PrincipalElementsofAML/ATFProgramFRFIsshouldensurethattheirAML/ATFprogramsincludethefollowingelements,eachofwhichisexpandeduponinthisGuideline.ElementsrequiredbythePCMLTFAandthePCMLTFRaremarkedwithanasterisk:SeniorManagementOversight,including*ReportingtoSeniorManagementFootnote2;*AnappropriateindividualresponsibleforimplementationoftheprogramFootnote3.Seefurther,“CAMLO”;*AssessmentofinherentMLandTFrisksFootnote4.Seefurther,“AssessmentofInherentRisks”;*WrittenAML/ATFpoliciesandproceduresthatarekeptuptodateFootnote5.Seefurther,“ControlPoliciesandProcedures”;*WrittenongoingtrainingprogramFootnote6.Seefurther,“OngoingTraining”;SelfAssessmentofcontrols.Seefurther,“SelfAssessmentofControls”;and*EffectivenesstestingFootnote7.Seefurther,“EffectivenessTesting”.ScopeTheAML/ATFprogramshouldimplementacorporatestandardofinherentriskassessmentandriskcontrolmeasures,acrossallrelevantbusinessareasoftheFRFI.TheformalityandsophisticationoftheAML/ATFprogramshouldbecommensuratewiththesizeandcomplexityoftheFRFIanditsbusinesses.Asageneralprinciple,thecorporatestandardshouldbeconsistentwithCanadianregulatoryrequirementsFootnote8.ThePCMLTFAFootnote9requiresthatstandardsconsistentwiths.6,6.1and9.6ofthePCMLTFAbeappliedinrespectofwhollyownedsubsidiariesandbranchesincountriesthatarenotmembersoftheFATFwherethelawsofsuchcountriespermitit.FRFIsshouldensurethatunlessthereisanexplicitprohibition,suchstandardsareapplied.FRFIsshouldnotifyOSFIifacountryexplicitlyprohibitscompliancewiths.9.7or9.8ofthePCMLTFA,toassistOSFIinanalysingthesituationinrespectofthatcountry.SENIORMANAGEMENTOVERSIGHTSeniorManagementshouldhaveresponsibilityandaccountabilityfor:directingday-to-dayimplementationandmanagementoftheAML/ATFprogram;ensuringthatitisadequatetomitigateMLandTFrisk;thatitcomplieswiththePCMLTFAandPCMLTFRasrequired;andthatitisimplementedeffectivelyinallrelevantbusinessareas.SeniorManagementshouldensurethat:TheCAMLOisappropriatelyqualifiedandhasclearanddocumentedauthorityandaccountabilityforthedesignoftheAML/ATFprogram;TheCAMLOdoesnotreporttotheAuditororrevenue-producingbusinesses,inordertoavoidpotentialconflictsofresponsibilities.InsmallerFRFIs,wherefunctionalsegregationmaybedifficulttoachieve,compensatingcontrolsshouldbeestablishedtomeetthisgoal.ConsiderationshouldbegiventooutsourcingtheCAMLOfunctionifcompensatingcontrolsarenotpracticalorpossible.QualifiedindividualshaveclearanddocumentedresponsibilityandaccountabilityforAML/ATFprogramimplementationinallrelevantbusinessareasofoperation,andsufficientresourcestomanageprogramimplementationeffectively;TheCAMLOandtheAuditorhaveadequateresourcesintermsofpeople,datamanagementsystemsandbudgettoimplementandadministertheAML/ATFprogramrequirementseffectivelyandtoofferobjectiveopinionsoradvicetoSeniorManagement;AllsignificantrecommendationsinrespectofAML/ATFprogramissuesandcontrolsmadebytheCAMLO,theAuditorandSeniorManagementareacteduponinatimelymanner.ReportingSeniorManagementshouldensuretheyreceivesufficientpertinentinformationfromtheCAMLO,theAuditorandothersourcesasappropriate,toenablethemtoensuretheoveralladequacyandeffectivenessoftheAML/ATFprogram.ThePCMLTFRFootnote10prescribetimingandcontentofwrittenreportsoneffectivenesstesting,includingreportingonanyupdatesmadetoAML/ATFpoliciesandproceduresandthestatusoftheimplementationofsuchupdates.Inlarger,morecomplex,FRFIs,AML/ATFreportsoneffectivenesstestingmadeatdifferenttimes(forexample,duringauditsofdifferentbusinessareas)shouldbecollatedandconsolidatedperiodically.Thiswillsupportthegoalofassessingoveralladequacyandeffectiveness.FRFIsshouldensurethatAML/ATFreportingtoSeniorManagementbytheCAMLOandbytheAuditorisnotundulycommingled,inordertodifferentiatethecontentsandpurposeofthereporting.ThereportsfromtheCAMLOshouldincludeinformationabout:theFRFI-widescopeoftheassessmentofinherentrisksincluding:significantpatternsortrends;theselfassessmentofcontrolsandmaterialchangesthereto;andremedialactionplansorrecommendations,ifany,withmilestonesandtargetdatesforcompletion.Whereappropriate,theCAMLOshoulddrawconclusions,offeradviceormakerecommendationsabouttheoverallstructureandscopeoftheAML/ATFprogram.PleaserefertoOSFI’s CorporateGovernanceGuidelineforOSFI’sexpectationsofFRFIBoardsofDirectorsinregardstooperational,business,riskandcrisismanagementpolicies.CAMLOIntroductionWhetherornotthebroaderriskmanagementstructureoftheFRFIisdecentralized,responsibilityforimplementationoftheenterpriseAML/ATFprogramshouldbeassignedtotheCAMLO,whoshouldbeonepersonpositionedcentrallyatanappropriateseniorcorporateleveloftheFRFI.ForthepurposesofthisGuideline,FRFIsshouldtreattheCAMLOasanindependentoversightfunctionasdescribedinOSFI’sCorporateGovernanceGuideline.TheCAMLOisexpectedtoberesponsiblebothfortheregulatorycompliancecomponent andthebroaderprudentialriskmanagementcomponentoftheAML/ATFprogram.MandateFRFIsshouldensurethattheCAMLOhasclearanddocumentedresponsibilityandaccountabilityforAML/ATFprogramcontent,designandenterprise-wideimplementation.Inparticular,theCAMLO’smandateshouldincludeaccountabilityfor:oversightofAML/ATFcontrolactivityinallrelevantbusinessareasforthepurposesofestablishingareasonablethresholdlevelofcontrolconsistencythroughouttheenterprise;keepingtheAML/ATFprogramcurrentrelativetotheFRFI’sidentifiedinherentrisks(clientsandbusinessrelationships,productsanddeliverychannels,geographiclocationsofactivityandanyotherrelevantfactors);developingandimplementinganassessmentofinherentMLandTFrisks,includingbutwithoutprejudicingthegeneralityoftheforegoing,beingsatisfiedthatnewproduct/service/businessacquisitionprocessesaresubjectedtotimelyinherentriskanalysisandappropriatemeasuresaredevelopedtocontrolidentifiedrisks.Seefurther,“AssessmentofInherentRisks”;beingsatisfiedthatsystemsresources,includingthoserequiredtoidentifyandreportsuspicioustransactionsandsuspiciousattemptedtransactions,aresufficientinallrelevantareasoftheFRFI;developingandimplementingaselfassessmentofcontrols;seefurther,“SelfAssessmentofControls”;writtenAML/ATFpoliciesandproceduresthatarekeptuptodateandapprovedbyaseniorofficer;writtenongoingtrainingprogramsforSeniorManagement,employees,agentsandotherpersonsauthorizedtoactontheFRFI’sbehalf;ensuringthattheAuditorisawareoftherequirementinthePCMLTFRforeffectivenesstestingoftheAML/ATFprogramatleasteverytwoyears;beingsatisfiedthatsystemsandotherprocessesthatgenerateinformationusedinreportstoSeniorManagementareadequateandappropriate,usereasonablyconsistentreportingcriteria,andgenerateaccurateinformation;andreportingtoSeniorManagementpertinentinformationaboutAML/ATFprogramadequacyandissues.IftheCAMLOdelegatesorassignsdutiestootherindividuals,oriftheFRFIassignssomeelementsoftheAML/ATFprogramtobusinessareasthatdonotreporttotheCAMLO,theCAMLOshouldtakereasonablemeasurestobesatisfiedthatsuchelementsareimplementedsatisfactorily.Reasonablemeasurestoachievethiscouldinclude:wherethoseresponsibleforfilingSTRsdonotreporttotheCAMLO,beingsatisfiedthatthreshold-basedcriteriaareconsistent,thatreportingisaccurateandtimely,andensuringtheCAMLOreceivesregularsummaryreportsonSTRfilingsfromsuchareasoftheFRFI;andEstablishingamanagementcommitteetocoordinatetheimplementationoftheAML/ATFprogram.FRFIsshouldensurethattheCAMLOhas:unfetteredaccessto,anddirectcommunicationswith,SeniorManagementandtheBoard;andunfetteredaccesstoallpertinentinformation,recordsandpersonnelthroughouttheFRFI.QualificationsResponsibilityfortheimplementationoftheAML/ATFprogramrequiresthattheCAMLOhaveathoroughworkingknowledgeofML/TFrisksandcontrolsintheFRFIandAML/ATFregulatoryrequirements;abroadknowledgeoftheoperationsoftheFRFI;andappropriateprofessionalqualifications,experienceandstrongleadershipskills.ConsiderationshouldbegiventothesefactorswhenFRFIsconsidertheseniorityandreportingrelationshipoftheCAMLO.ASSESSMENTOFINHERENTRISKSThePCMLTFAFootnote11requiresthatthecomplianceprogramincludethedevelopmentandapplicationofpoliciesandprocedurestoassess,inthecourseofaFRFI’sactivities,theriskofaMLoraTFoffence.ThePCMLTFRFootnote12requiresthatthefollowingcategoriesofMLandTFriskbecoveredinaFRFI’sassessmentofinherentrisk:theclientsandbusinessrelationshipsoftheFRFI;theproductsanddeliverychannelsoftheFRFI;thegeographiclocationoftheactivitiesoftheFRFI;andanyotherrelevantfactor.Forthepurposesofitem(iv)above,FRFIsshouldtakeintoaccounttransactionriskfactors,forexample,structuredorotherwisecomplextransactions,andfactorsthatmayfallintomorethanoneoftheotherthreecategories.Assessmentofinherentrisksreferstoaprocessthat:identifiescurrentandemergingMLandTFrisksinherentinactivitiesoftheFRFIwithoutreferencetoanycontrolsoverthemandwhetherornottheactivitiesinwhichtheyresideareconsideredmaterialindollarterms;assessestherelativeseriousnessoftheidentifiedrisks;andhighlightsthehigherrisksamongthem.InconsideringMLandTFrisks,considerationshouldbegiventowhat,ifany,pertinentchangeshaveoccurredsincetheassessmentofinherentriskswaslastperformed.Reasonablemeasurestoaccomplishthiscouldinclude:considerationoffactorsthatledtothefilingofsuspicioustransactionreportsandanypatternsortrendsinthese;andconsiderationofexternalfactorssuchasregulatorydevelopments,MLorTFtypologiesandregulatoryNoticesandAdvisories.RegularassessmentofinherentMLandTFrisksenablesFRFIstotailororadjustcorporatecontrolmeasurestoidentifiedrisk,whichinturnfacilitatestheallocationofmoreriskmanagementresourcestoareasofgreatervulnerability.Seefurther,“SelfAssessmentofControls”below.ThefollowingsectionsdiscussthemethodologyanddesiredoutcomesoftheprocessusedtoanalyseinherentMLandTFrisks.MethodologyThereisnosingleprescribedoruniversallyusedmethodologyforinherentML/TFriskassessment.However,themethodologyusedshouldassesstheriskofMLoffencesorTFoffencesacrosstheFRFIandincludethecategoriesofriskidentifiedinp.71(1)(c)ofthePCMLTFR.Theoutcomeofthemethodologyshouldbearational,well-organizedandwell-documentedinherentriskanalysis.Reasonablemeasurestoincludeinthemethodologyusedwouldincludeconsiderationof:thebusinesslinesandotheroperationsoftheFRFI;cross-borderandinternationaloperations,ifany,andlinkagesamongthese;typologiesofhowfinancialinstitutionshavebeenabused;andanyotherrelevantinformationthatisavailabletotheFRFI.RiskCategoriesInherentriskassessmentshouldaddressthedifferentcategoriesofriskexposuretoMLandTF.ThePCMLTFRFootnote13requiresthatinherentriskassessmentaddressthefollowingspecificcategoriesofrisk.Ineachcategory,OSFIhasindicatedtypesofrisks.ClientRisk:ThisisriskassociatedwithtypesofclientsthatbuyorusetheFRFI’sproductsandservices.Categoriesofclientsthatmayindicateahigherriskcouldinclude:politicallyexposedpersons;clientsconductingtheirbusinessrelationshiportransactionsinunusualcircumstances,suchasgeographicdistancefromtheFRFIforwhichthereisnoreasonableexplanation;clientswhosenature,structureorrelationshipmakeitdifficulttoidentifytheultimatebeneficialowner(s)ofsignificantorcontrollinginterests,includingclientsthatarecorporationswiththeabilitytoissuebearershares;cash(andcashequivalent)intensivebusinessesincluding: Moneyservicesbusinesses(forexample,remittancehouses,foreignexchangebusinesses,moneytransferagents,banknotetraders,cashcouriersorotherbusinessesofferingmoneytransferormovementfacilities);Casinos,bettingandothergaming-relatedbusinesses;Businessesthat,whilenotnormallycash-intensive,generatesubstantialamountsofcashforcertainlinesofactivity;andcharitiesandothernon-profitorganizationsthatarenotmonitoredorsupervised(forexample,notregisteredwithCRA).Businessrelationshiprisk:Thisisriskassociatedwiththeclient’sstatedpurposeindealingwiththeFRFI.Categoriesofbusinessrelationshipsthatmayindicateahigherriskcouldinclude:intermediarystructures,suchasholdingcompanies,numberedcompaniesortrusts,thathavenoapparentbusinesspurposeorthatmakebeneficialownersdifficulttoidentify;accountants,lawyersorotherprofessionalsholdingcommingledfundsaccountswherethebeneficialownershipofthefundsmaybedifficulttoverify;anduseoftheFRFI’sproductsorservicesbyclientsofclients,forexample,clientsofcorrespondentbanks.Product/ServiceRisk:ThisisriskassociatedwithFRFIproducts/servicesthatenableclientstomovefunds.Categoriesofproductsandservicesthatmayindicateahigherriskcouldinclude:deposit-taking,especiallycash,andinsuranceproductsthatallowlargeone-timeorregularpayments,pre-paymentsordeposits,tobemadeandsubsequentlywithdrawnfromdepositordeposit-likeaccounts(forexample,sideaccounts);“freelook”or“coolingoff”periodscoupledwithpremiumrefunds,forexample,insomelifeinsuranceproducts;cashvalues,earlycashsurrenderandloanprovisions,andprovisionsfordeposit,accumulationandwithdrawaloffundswithrelativeeaseandspeed,forexample,non-registeredsegregatedfunds;tradefinanceserviceswhere theFRFIisnotabletoassesswhetherthevaluesofgoodsorservicesbeingimportedorexportedarereasonable;orFRFIsconfirm,adviseormakepaymentsunderlettersofcreditforpurposesoftheirclients’buyingorsellinggoodsinternationally.creditaccountsinrespectofwhichlargecreditbalancesareallowedtobemaintained,forexample,somecreditandcorporatecardproducts;payablethroughaccountsthatpermitclientsofaforeigncorrespondentbanktodrawdrafts(orcheques)onCanadian-basedaccounts;lockboxesfortheuseofclientsofforeigncorrespondentbanksthatpermitsuchbankstocollectpaymentsduefromtheirclientsdomiciledinCanada;andpouchservicesandsimilarinternationalcommercialpaymentservices.DeliveryChannelRisk:ThisisriskassociatedwithhowFRFIs’products/servicesaredeliveredtoclientsincludingservicesdeliveredtoclientsnon-face-to-face.Categoriesofdeliverychannelsthatmayindicateahigherriskcouldinclude:useofintermediariesorintroducers(forexample,mortgageanddepositagentsandbrokers),thatmaynotbesubjecttoAML/ATFlawsandmeasuresandwhoarenotadequatelysupervised;theInternet,telephoneandmailwhenusedasacompletesubstituteforfacetofaceinteractionwiththeclientindeliveringbankingservices;andtransferspayableuponpresentationofidentity(PUPIDs).Geographiclocationrisk:ThisisriskassociatedwithplacesinwhichFRFIactivitiesarecarriedout.WhereFRFIshavesubsidiariesorbranchesinsuchplaces,thismaymitigateorelevatetherisk.Categoriesofcountriesthatindicateahigherriskincludecountries:subjecttoCanadianorothernationalsanctions,embargoesorsimilarmeasures,suchasthe SpecialEconomicMeasuresActormeasuresprescribedundertheUSAPATRIOTAct;subjecttoUnitedNationsSecurityCouncil(UNSC)sanctions(inCanada,UNSCsanctionsareappliedbyregulationsissuedunderthe UnitedNationsAct);identifiedbycrediblesourcesasprovidingfundingorsupportforterroristactivitiesortheproliferationofweaponsofmassdestruction;identifiedbycrediblesourcesashavingsignificantlevelsofcorruptionorothercriminalactivity;thatarenotmembersoftheFATF,andinparticular,countriesthataresubjecttomonitoringbytheFATForotherwiseidentifiedbytheFATFaslackingappropriateAML/ATFregulatoryrequirements;andwherelegislationprohibitsorundulyrestrictsaccesstoclientinformationbytheCAMLO.Otherrelevantfactors:FRFIsshouldensurethattheytakeanyotherrelevantfactorsintoconsiderationinaninherentriskassessment,includingtransactionriskfactorsandcombinationsoffactorsthatmayfallwithinmorethanoneoftheotherthreecategories.RatingandRankingAnappropriatemethodologyshouldassignappropriateMLandTFrisklevelstothepertinentactivitiesoftheFRFIandinsodoing,identifythehigherriskstowhichenhancedduediligenceandongoingmonitoringmustbeapplied.ThecriteriausedforratingandrankingshouldhavearationalbasisinMLandTFriskandaddressMLandTFriskfactorsthatareuniquetospecificbusinesslines,areasandjurisdictions,andalsomoregeneralriskfactors.Finally,themethodologyshouldenableFRFIstocomplywiththeregulatoryrequirementtoidentifyhigherriskclientsactivity Footnote14forpurposesofestablishingathresholdlevelofenhancedduediligencethatisappropriateinthecircumstances.See“CustomerDueDiligence”below.UsingAssessmentofInherentRisksastheBasisforRiskControlsResultsoftheassessmentofinherentrisksshouldinformthedevelopmentofriskcontrols,andtheallocationofresources,commensuratewithlevelsofMLandTFriskintheenterprise.Certainriskcontrolmeasuresareprescribedbyregulatoryrequirements.Thesecannotbequalifiedorbypassedbyinherentriskassessments.Theyinclude,forexample:clientidentificationandascertainingidentity(subjecttoprescribedexemptions);determiningunderprescribedcircumstanceswhetheraclientisaPEFPorisactingonbehalfofathirdparty;reportingsuspicioustransactionsandsuspiciousattemptedtransactions,largecashtransactionsandlargeEFTs;andrecordkeeping.CONTROLPOLICIESANDPROCEDURESControlpoliciesandproceduresshouldidentifyandimplementmeasuresdesignedtocontrolinherentrisks.FRFIsshouldensurethatcontrolpoliciesandproceduresarekeptuptodatetomitigaterisks.Theymustalsocomplywithotherregulatoryrequirements:forexample,thePCMLTFRFootnote15requiresthatwrittencompliancepoliciesandproceduresformpartoftheAML/ATFcomplianceprogramandbeapprovedbyaseniorofficer.Controlpoliciesandproceduresshouldbeembeddedinbusinessareascommensuratewiththeriskstheyareintendedtomitigate,andotherwisetailoredtotheparticularcircumstancesinwhichtheyoperate.PoliciesAML/ATFpoliciesshouldsetriskmanagementstandardstogoverntheapproachoftheFRFItodeterringanddetectingMLandTF,andshouldensureregulatorycompliance.PoliciessettingacorporatestandardshouldbeapprovedbySeniorManagementandimplementedconsistentlyacrosstheenterprise. Theyshouldestablishclearanddefinitiverequirementsthroughouttheorganization.InkeepingwiththegeneralprinciplethatthecorporatestandardshouldbeconsistentwithCanadianregulatoryrequirements(see"Policies"above),policiesshouldimplementthecorporatestandard,atleast,ofAML/ATFprogramrequirementsinwhollyownedsubsidiariesandbranchesoutsideCanadatotheextentthatlawsoftheforeignjurisdictionspermitit.Policiesshouldalsoreflectthatunlessthereisanexplicitprohibition,thecorporatestandard,atleast,shouldbeapplied.Itshouldbenotedthatdifferencesinlocalmarketconditionsarenotasoundbasisforloweringoreliminatingenterprisestandards.Insuchcases,FRFIsshouldensurethataspecificriskassessmentismadetodeterminewhetheroperatinginsuchmarketswouldresultinanunacceptableMLorTFrisktotheFRFI.Examplesoftopicsthatshouldbecoveredbypoliciesare:whatmoneylaunderingis.FRFIsshouldensurethattheirpoliciesandproceduresadequatelyaddresstheirexposuretothestagesofmoneylaundering(placement,layeringandintegration)andarenotundulylimitedtoanti-placementmeasures(forexample,prohibitionsorrestrictionsontheacceptanceofcash);objectivesoftheAML/ATFprogram;keyareasofinherentrisk;Clientduediligencestandardsreflecting: minimumacceptableclientidentificationrequirements,verificationstandards,informationgatheringandmonitoring;prohibitiononenteringclientrelationshipsorprocessingtransactionsifidentitycannotbeascertained;appropriateorprescribedrestrictionsonenteringclientrelationshipsorprocessingtransactionsbeforeidentityisestablished;thetypesofclientsconsideredhigherriskornotacceptable;adefinitionofenhancedduediligenceapplicabletosuchhigherriskclients;reporting;andrecordsretention;dealingwithclientswhoexhibitlevelsofriskthatareunacceptabletoaFRFI;identificationofclientswhoseaccountswereopenedpriortothecomingintoeffectofthe2002regulatoryrequirementsandthePCMLTFR,andwhohavenotbeenidentifiedinaccordancewiththePCMLTFR,ifsuchclientsortheiractivitiesareassessedasbeinghighriskFootnote16;businessrulesdefiningwhatareunusualtransactionsandwhichunusualtransactionsaresuspicious;andthemandatesofkeyriskmanagementcontrolfunctionssuchastheBoard,SeniorManagement,theCAMLO,theAuditor,andothers.ProceduresProceduresarethetoolsFRFIsusetotranslateAML/ATFpoliciesintopractice.Therefore,itisessentialthatproceduresstateclearlywhatactionsaretobetaken,bywhom,whereandwhen(notingpertinentregulatorydeadlinesasappropriate).TheevolvingnatureofAML/ATFregulationandchangestoaFRFI’sbusinessrequirethatproceduresbeupdatedonaregularbasistoensuretheircontinuedeffectiveness.ShouldaFRFI’sproceduresallowforpermittedexceptions,theproceduresshouldincludeauthorizationprocessesandassociatedenforcementmechanismstooverseesuchexceptions.CLIENTDUEDILIGENCE(CDD)CDDiscomprisedofclientidentification,informationgathering,ascertainingidentityandongoingmonitoring.Thesecomponentsmustcomplywithapplicableregulatoryrequirements,andmustbeenhancedforhigherrisksituationsFootnote17.TheextentofCDDperformedshouldcorrespondtotherelativelevelofassessedMLandTFrisksinthecircumstances.See“SpecificHigherRisks”below.Asageneralprinciple,abusinessrelationshipshouldonlybeenteredintoormaintainedwithaclientiftheFRFIissatisfiedthattheinformationithasgathereddemonstratesthattheFRFIknowstheclient(i.e.theclienthasdisclosedhisorhertrueidentityandalegitimatepurposeforenteringormaintainingthebusinessrelationshipwiththeFRFI).DTIsarerequiredtokeeparecordoftheintendeduseofeachaccountopened,otherthanacreditcardaccountFootnote18.TheprescribedrulescomprisingCDDrequirementsdonotpermitFRFIstoestablishanonymousFootnote19accountsforclients.IfFRFIsprovideservices(suchasaccountnumberingorcodingservices)thateffectivelyshieldtheidentityofaclientforbusinessreasons(forinstance,inacorporateacquisitionwheretheprematurecirculationofinformationcouldjeopardizethetransaction),orwhereclientidentityiswithheldforproprietaryreasons,FRFIsmustensurethattheyhaveappropriatelyascertainedtheidentityoftheclientandthatthisinformationisaccessiblebytheCAMLO.Wheretheregulatoryrequirementsprescribeadeterminationofthestatusofaclient,forexample,thedeterminationofwhetheraclientisaPEFP,theremustactuallybeadeterminationandFRFIsshouldensurethatadeterminationismadebasedonanassessmentoftheinformationreceived.NatureandAmountThenatureandextentofCDDmeasuresshouldbeappropriateforthenatureof,andproportionaltothelevelof,theMLandTFriskthatisposedbytheclientinthecircumstances.See”InherentRiskAssessment”,above.Ataminimum,CDDmeasuresmustcomplywiththerequirementsofthePCMLTFAandPCMLTFR.CDDstandardsshouldprovidethatwheretherearedoubtsFootnote20abouttheveracityoradequacyofpreviouslyobtainedclientidentificationandverificationdata,enhancedCDDmustbeperformed.FRFIsshouldenhanceCDDmeasuresifstandardmeasuresproduceinconsistent,otherwiseuncertainordoubtfulresults.Thelevelofsuchenhancedduediligenceshouldbesufficienttomitigatetheinconsistencies,uncertainordoubtfulresults.ClientIdentificationandAscertainingofIdentityFRFIsmayhaveclientswhoseidentitieshavenotbeenascertainedinaccordancewiththePCMLTFRonaccountofhavingbecomeclientspriortotheAML/ATFrequirementscomingintoforcein2002,orhavingpurchasedproductsthatthePCMLTFRexemptfromclientidentificationrequirements.FRFIsshouldensurethatifsuchclientssubsequentlypurchaseproductstowhichclientidentificationrequirementsapply,theyaresubjecttoappropriateclientidentificationmeasures.Reasonablemeasurestoensurethatsuchclientsareappropriatelyidentifiedcouldinclude:ascertainingtheidentityoftheclientinrespectofeachproductpurchased;andestablishingsystemsthatflagotherwiseunidentifiedclientswhopurchaseproductssubjecttoprescribedclientidentificationrequirements.ThePCMLTFRspecifiestheoriginalsofprescribedvaliddocuments(ortypesofvaliddocuments)thatmaybeinspectedtoascertaintheidentityofindividualsandtheexistenceofentitiesinfacetofaceandnonfacetofacescenarios,andthetimingfordoingso.AFRFI’sCCDpolicyshouldprovidecleardirectionthatcomplieswiththePCMLTFR,(whereapplicable)on:whenaclient’sidentitymustbeascertained(timing);howtoascertaintheidentityoftheclient,whentheclientispresentornotpresent;andwhichoriginalandvalididentificationdocumentsshouldbeusedtoascertainidentificationandwhatinformationistoberecordedfromthem.Whileidentificationandverificationstandardsandpoliciesmustmeettheminimumprescribedrequirements,FRFIsmayconsiderthattheassessmentofinherentriskjustifiestheapplicationofadditionalidentificationrequirementstosomecategoriesofclient.Forexample:thePCMLTFRFootnote21prescribestheuseofvalidgovernment-issueddocumentstobeusedtoascertaintheidentityofaclient.Theseinclude, interalia,birthcertificates.ThePCMLTFRpermitsSocialInsuranceNumber(SIN)cardstobeusedtoascertaintheidentityofaclient.WhereabirthcertificateoraSINcardistheonlydocumentavailabletoascertainidentity,andtheassessedMLorTFriskoftheclientisotherthanminimal,FRFIsshouldconsiderapplyingadditionalidentificationmeasures.Suchadditionalmeasurescouldincludeviewingtheoriginalofotheracceptablegovernment-issuedidentificationdocuments,includinggovernment-issuedphotoidentification,or,ifthesearenotavailable,othercredibleevidencesupportingtheidentityoftheclientsuchasapropertytaxorutilitybill.ForpersonswithoutacceptableCanadianidentificationdocuments,comparableorequivalentforeignidentificationdocumentsmaybeacceptableiftheycanbereadandassessedasvalididentificationdocuments(forexample,byreferencetopubliclyavailableinformation)andcanbeunderstoodbytheFRFI.Identifyingaclientthatisacorporationorotherentitymayinvolvethecollectionofsubstantialinformationinsomecases.InadditiontoconfirmingtheexistenceoftheentityFootnote22,FRFIsmusttakereasonablemeasurestoobtainthenamesandoccupationsofitsdirectorsandthenames,addressesandoccupationsofindividual(s)whoaretheultimatebeneficialownersof25%ormoreoftheentity Footnote23.Reasonablemeasurestoobtainthisinformationcouldinclude:requestingitfromtheentity;consultingacrediblepublicorotherdatabase;oracombinationofboth.WhereaFRFIisrequiredtoobtaintheoccupationofaperson(forexample,adirectorofacliententity),theFRFIshouldensurethattheoccupationobtainedistheperson'sprincipaloccupationandnotmerelytheperson'stitleinthecliententity.Themeasuresappliedshouldbecommensuratewiththelevelofassessedrisk.DTIsmustalsoascertaintheidentityofeverypersonwhosignsasignaturecardinrespectofabusinessaccount,exceptthatwherethesignaturecardissignedbymorethanthreeauthorizedindividuals,theidentitiesofatleastthreeofthemmustbeascertainedFootnote24.Therequirementsofidentificationofindividualclientsareapplicable.Lifeinsurancecompaniesshouldadoptasimilarpracticeasamatterofprudentriskmanagementbecausetheinherentriskofnotidentifyingsigningofficersforbusinessaccountsissimilar.ThePCMLTFAandPCMLTFRprohibitFRFIsfromopeningaccountsinprescribedcircumstancesiftheFRFIcannotestablishtheidentityoftheclientinaccordancewithprescribedmeasuresFootnote25.FRFIsmustalsotakereasonablemeasures,attimesprescribedbythePCMLTFRFootnote26,todeterminewhethertheindividualclientisactingfororonbehalfofathirdparty.Reasonablemeasurescouldinclude:askingthequestiononaproductapplication;orincludinganegativeassurancestatementabovetheclient'ssignaturelineontheapplicationorotherpurchasedocument.LifeInsuranceCompaniesLifeinsurancecompaniesarenotrequiredtoascertaintheidentityof,orobtaintheidentificationinformationof,apersonwheretherearereasonablegroundstobelievethattheperson’sidentityhasbeenascertainedintheprescribedmannerbyanotherlifeinsurancecompanyorlifeinsurancebrokeroragentinrespectofthesametransactionorofatransactionthatispartofaseriesoftransactionsthatincludestheoriginaltransactionFootnote27.Forthesesituations,lifeinsurancecompaniesshouldthereforedevelopandimplementpoliciesandproceduresdesignedtoensurethat:theyperformappropriateinitialandongoingduediligenceonotherlifeinsurancecompanies,lifeinsurancebrokersoragents;andtherearereasonablegroundstobelievethattheclientidentificationandverificationproceduresusedbysuchotherlifeinsurancecompanies,lifeinsurancebrokersoragentscomplywiththePCMLTFAandPCMLTFRandwiththelifeinsurancecompany’sownpoliciesandprocedures.OSFIunderstandsthatwithrespecttoindividualproducts,inpracticelifeinsurancecompaniesdoreceiveinformationabouttheidentityoftheclientonapplicationformssubmittedbylifeinsuranceagentsorbrokers.Thispracticeenableslifeinsurancecompaniestoperiodicallydeterminethatthegroundsforrelyingonsuchagentsarereasonable.SourceofAccumulatedFundsorWealthFRFIsshouldsatisfythemselvesthat,inappropriatecircumstances,theamountofclients’accumulatedfundsorwealthappearstobereasonableandconsistentwiththeinformationprovided.Doubtsabouttheoriginofsuchfundsorwealthshouldbesatisfiedbeforeproceedingwiththerelationshiporpermittingtransactionstooccur.Reasonablemeasurestoimplementthisrequirementcouldinclude:obtainingandevaluatingmoredetailedinformationfromtheclient;andverifyinginformationobtainedfromotherfinancialinstitutionsorreferences.Wheredoubtspersist,considerationshouldbegiventonotproceedingwiththerelationshiportransaction.Incaseswhereaclientisassessedashigherrisk andthesourceofaccumulatedfundsorwealthdoesnotappeartobereasonable,orisinconsistentwiththeinformationprovideddespitetakingreasonablemeasurestoresolvetheinconsistency,theFRFIshouldconsiderdecliningtoenterthebusinessrelationship,orterminatingit,andconsiderfilingasuspiciousattemptedtransactionreport.MonitoringStandardFRFIsmustbeabletoidentifysuspicioustransactions,orsuspiciousattemptedtransactions,andreportthesetoFINTRAC.Further,FRFIsmusttakereasonablemeasurestoascertaintheidentityofeverypersonwithwhomtheFRFIconductsatransactionthatisdeterminedbytheFRFItobesuspiciousFootnote28.Theseobligationsimplythattheactivitiesofallclients,regardlessoftheirriskranking,mustbesubjecttosomeformofongoingmonitoringtodetecttransactionsorattemptedtransactionsthatarepotentiallysuspicious.Reasonablemeasuresforsuchmonitoringcouldinclude:Identificationandreviewoftypesoftransactionsorattemptedtransactions(definedbysize,frequency,geographicallocation,deliverychannel,businessrelationshiporotherfactors)thatappeartobeinconsistentwiththeintendedpurposeoftheaccountorthecircumstances;andChangesintransactionactivitythatmayontheirownorinconjunctionwithrecordedchangesinclientinformation,beindicativeofachangeinthenatureofaclient'sbusinessorintendeduseoftheaccount.FRFIsshouldconductfeasibilitystudies,asappropriate,todeterminewhethertransactionvolumesmerittheapplicationofinformationtechnologysolutionstotransactionmonitoring.Monitoringshouldidentifyinformation,transactionsorattemptedtransactionsthatareunusualorpotentiallysuspiciousandthatrequirefurtheranalysis.Monitoringcriteriashouldcoverallrelevantindicators.Relevantindicatorscouldinclude:frequentandunexplainedmovementofaccountstodifferentfinancialinstitutions;frequentandunexplainedmovementoffundsbetweendifferentfinancialinstitutionsinvariousgeographiclocations;clientinformationaboutorexplanationsforthesourceoftransactionfundsoraccumulatedwealththatisnotclearlyreasonableorcredible;transactionsthatarestructuredorotherwisecomplex,orunusuallylargerelativetothesizeandbusinessoftheclientorthegeographicallocationofthetransaction;typesoftransactions,orpatternsoftransactions,inconsistentwiththepurposeoftheaccountorthebusinessoftheclient;andtransactionsthathavenoapparenteconomicorvisiblelawfulpurpose.EnhancedThePCMLTFAandPCMLTFRprovidethatwhereaFRFIdeterminesthattheriskofaMLorTFoffenceishigh,FRFIsmusttakeprescribedspecialmeasuresforidentifyingclients,keepingrecordsandmonitoringfinancialtransactionsinrespectoftheactivitiesthatposethehighriskFootnote29.Theprescribedspecialmeasuresinclude:reasonablemeasurestodeterminewhetherthehighriskclientisaPEFPFootnote30;keepclientidentificationinformationandtheinformationreferredtoinPCMLTFRs.11.1uptodateFootnote31;conductongoingsuspicioustransactionandsuspiciousattemptedtransactionmonitoring Footnote32;andgenerallymitigatethehighriskFootnote33.FRFIsshouldconsidercreatingmorethanonecategoryofhigherriskclient,andmorethanonecategoryofenhancedduediligence,ifthenature,scope,complexityandriskprofileofthefinancialinstitutionmeritsuchaction.Eachlevelofenhancedmonitoringshouldreflecttheassessedlevelofriskappropriately.Reasonablemeasuresforapplyingenhancedmonitoringcouldinclude:Morefrequentreviewsofclientactivityandtypesofactivity;Morefrequentupdatesorreviewsofclientinformation;Theapplicationofadditionalclientidentificationmeasures;Thegatheringofinformationfrompublicoropensourcessuchascommercialdatabases;Morefrequentflaggingofunusualtransactionsorotherinformation;andReferralofclientactivityandtransactionstoamoreseniorofficerintheFRFIforreview.Additionalmeasuresthatcouldbetakentostrengthenthemonitoringofhighriskactivitiesinclude:Reviewofbusinessreports,includingexceptionsreports,generatedbymanagementinformationsystems(forexample,anti-fraudsystems),forpossibleindicatorsinthemofunusualorsuspiciousactivity.AnalysisofSTRinformationfortrendsandotherindicatorsofsuspiciousactivitytoaidthedevelopmentofappropriaterisk-basedcontrolsinbusinessesthatindicatesuchactivity.SPECIFICHIGHERRISKSThissectiondiscussesOSFI’sexpectationsandprescribedmeasuresinrespectofenhancedduediligenceandrelatedcontrolsapplicabletoareasofidentifiedhigherrisk.UseofAgentsorMandatariesManyFRFIsrelyonintroducers,intermediariesorotherthirdpartiesFootnote34forclientinformationgatheringandverificationpurposes.Theseinclude,forexample,depositandmortgagebrokersandsolicitors.MLandTFriskmitigationcanbecompromisedwhereFRFIsdonotensurethatappropriateclientidentificationstandardsareappliedbytheintroducers,intermediariesorotherthirdparties.Withoneexceptionforlifeinsurancecompaniesreferredtoabove,accountabilityforascertainingtheidentityoftheclientandobtainingtheinformationusedtoidentifytheclientremainswiththeFRFIwhenitusesathirdpartytoascertaintheidentityofclients.Inrespectofthisaccountability,FRFIsmusthaveanagreementorarrangementinwritingwiththeagentormandataryifsuchpersonistoberesponsibleforclientidentificationandverification.TheprovisionsofthisarrangementoragreementmustconformtotherequirementsofthePCMLTFRFootnote35anditshouldobligatetheagentormandataryto:applytheDTI’sorlifeinsurancecompany’sclientidentificationandverificationrequirements(whichmustcomplywiththeregulatoryrequirements);ensurethat,wheretheclientispresentatthetimeclientidentificationisascertained,theagentormandataryappliesclientidentificationproceduresthatincludeviewingoriginalidentificationdocuments;ensurethat,wheretheclientisnotpresentatthetimeclientidentificationisascertained,theagentormandataryappliesprescribednon-face-to-faceidentificationrequirements Footnote36;andprovidetheclientidentificationinformationtotheDTIpromptlyafterobtainingit.DTIsandlifeinsurancecompaniesshouldalso:ensurethatiftheagentormandataryisresponsibleforcollectingtheinformationrequiredtomakeathirdpartydeterminationoraPEFPdetermination,theseresponsibilitiesarealsodocumented;Ensuretheyreceiveclientidentificationinformationintherequiredtimeframes;andperiodicallyreview,inasystemicmanner,thequalityofclientinformationgatheredanddocumentedbytheagentormandatarytoensurethatitcontinuestomeettheirrequirements.Documentationofrelationshipsandcommunicationswith,andclientduediligenceworkof,agentsandmandataries,shouldbecompleteandcurrent,andclientinformationshouldbeplacedintheclient’srecordpromptlyuponreceivingit.Seefurther,“RecordKeepingandRetention”,below.FRFIsshouldconsiderterminatingrelationshipswithagentsormandatariesthatdonotcomplywithagreeduponclientidentificationresponsibilitiesorprovidetheDTIorlifeinsurancecompanywiththerequisiteclientinformationonatimelybasis.ContractswithagentsandmandatariesshouldbereviewedandupdatedasnecessarytoensurecompliancewiththePCMLTFRFootnote37regardingtheuseofagentsandmandataries.TheextentoftheDTI’sorlifeinsurancecompany’sexposuretotheagentormandataryfortheresultsofclientduediligenceshouldbeaddressedexpresslyintheDTI’sorlifeinsurancecompany’sinherentriskassessment.FraudwithrespecttoMortgageLoansandotherProductsFraudulentmisrepresentationinrespectofFRFIs'productstakesmanyformsthatcouldinclude:Forgedorfalsifiedemploymentlettersorreferences,ormisrepresentedself-employment;Forgedorfalsifiedpaystubs,T4slips,andCRANoticesofAssessment;Forgedorfalsifiedpersonalidentificationdocuments;Useof"straw"(i.e.,non-existent)individuals;Falseorfalsifiedcreditrecords;Concealedlegalorbeneficialownership;Concealedsourcesofdownpayment;andInflatedassets.FRFIsshouldensuretheirclientacceptanceandduediligenceprocessesaddresstheriskoffraud,apredicateoffenceformoneylaundering.FRFIsshouldtakereasonablemeasurestoaddresstherisk,whichcouldinclude:Applyingenhancedclientidentificationmeasuressuchasviewingasecondpieceofidentification,orviewinggovernment-issuedphotoidentification;Havinganagentormandataryapplyenhancednon-face-to-faceclientidentificationmeasures;Ensuringthatlegaland/orbeneficialownershipofpropertyorbusinessisunderstoodanddocumented;Satisfyingthemselvesthattheamountofclients'accumulatedfundsorwealthappearstobereasonableandconsistentwiththeinformationprovided(seefurther,"SourceofAccumulatedFundsorWealth"above);Trainingstaff,agentsormandatariesintherecognitionofvalididentificationdocumentsandsignsoffalsificationofdocuments;Obtainingcorroborationofinformationinemployerletters,references,paystubsorcreditrecords,asappropriate;andCorroboratingtheexistenceandvalueofstatedassets.LifeinsurancecompaniesshouldensurethatmortgageloansaresubjecttotheAML/ATFprogram.PEFPsTheFATFRecommendationsstatethatPEPsarepotentiallymoresusceptibletofinancialcrimethanotherclientsoffinancialinstitutions.InCanada,thePCMLTFArequiresFRFIstodetermine,inprescribedcircumstances,whethertheyaredealingwithPEFPsandalsoprescribesmandatoryenhancedduediligencemeasurestobetakeninrespectofPEFPsinprescribedcircumstances.Footnote38APEFPisdefinedinthePCMLTFAasanindividualwhoholdsorhaseverheldprescribedofficesorpositionsinoronbehalfofaforeignstateorisaprescribedmemberofthefamilyofsuchapersonFootnote39.Forpurposesoftheforegoing,theterm"foreignstate"shouldbeinterpretedtoincludetheprincipalpoliticalsubdivisionsofforeigncountrieswhenapplyingthePEFPdefinition.Oncethedeterminationismade,prescribedactionsmustbetakenwithinminimumtimeperiods.TimingofPEFPdetermination-DTIsTherearethreesituationsthattriggertherequirementforDTIstodeterminewhetheraclientisaPEFP:whenanaccountisopenedFootnote40;whenanexistingclientisdeemedtobehighriskFootnote41;andwhenaclientinitiatesorreceivesanEFTof$100,000ormore Footnote42.Thedeterminationandapprovalbyaseniorofficertokeeptheaccountopenmustbemadenolaterthan14daysfromaccountactivation Footnote43orwithin14daysoftheEFTbeingreceivedorsentFootnote44.Thereisnospecifictimeperiodinrespectofdeterminationasaresultofariskassessment.FRFIsshouldensurethatthePEFPdeterminationrequiredwhenanexistingaccountisdeemedtobehighriskismadenolaterthan14daysthereafter,tobeconsistentwithotherprescribedrequirements.TimingofPEFPdetermination–LifeInsuranceCompaniesLifeinsurancecompaniesmusttakereasonablemeasurestodetermineifapersonwhomakesalump-sumpaymentof$100,000ormoreinrelationtoanimmediateordeferredannuityorlifeinsurancepolicyontheirownbehalforonbehalfofathirdpartyisaPEFP Footnote45.Suchpersonmaynotbethepolicyholder.Thedeterminationmustbemadewithin14daysofthepaymenttransaction Footnote46.PointstoConsiderinMakingaPEFPDeterminationThePCMLTFAandPCMLTFRrequirethatFRFIstake“reasonablemeasures”tomakethePEFPdetermination.Reasonablemeasurescouldinclude:AskingtheindividualforinformationthatcouldindicatePEFPstatus,suchasexistingorpreviousconnectionstotheprescribedrelationships;Screeningtheindividual’snameandotherpersonalinformationagainstacommerciallyorpubliclyavailabledatabasetogathermoreinformationabouttheindividual;oracombinationofboth.AboutaskingtheClientIfFRFIschoosetoasktheindividualforinformation,FRFIsshouldkeepinmindthatclientsshouldnotbeexpectedtoknowthecriteriathatdeterminewhethertheyarePEFPs.FRFIsshouldalsonotethatthereisnoobligationimposedonFRFIstodisclosetoaclientthatadeterminationmustbemade,orneedstobemade.Areasonableapproachwouldbetoasktheclientiftheclienthasorhaseverhadaprescribedconnectiontoaforeignstate,government,militaryorjudiciary.Thequestionscouldbeexpandedtocoverfamilymemberswithanysimilarconnections.Iftheresponsesarenotclearorinconclusive,additionalassessmentorduediligencemaybenecessarybeforefinalizingthedetermination.Theadditionalmeasurescouldrangefromaskingtheapplicantformoreinformation,tointernetsearches,torunningtheindividual(s’)name(s)againstapublicdatabase.FINTRAChaspublishedapamphletthatFRFIscanusetoexplaintotheirclients,ifnecessary,whytheyneedtoenquireabouttheirbackground.ThispamphletcanbeviewedatFINTRAC’sInternetsite.AboutconsultingacommercialdatabaseFRFIsthatchoosetoscreennamesandotherpersonalinformationagainstacommercialorpubliclyavailabledatabaseshouldensurethey:DeterminewhethertheprovideridentifiesinthedatabaseindividualswhofitthedefinitionofPEFPsinthePCMLFTAandPCMLTFR.Mostofthesedatabasesarebuiltusingopensource(i.e.public)information.IfthefamilymembersofaPEFParenotwellknown,thereisnoguaranteethatadatabasewillknowaboutthem.Establishthefrequencyandmethodologyusedtoupdatetheinformationinthedatabase,includingwhethertheproviderremovesnamesfromthedatabasewhenofficeholdersleaveofficeordie.Ifnamesareremoved,thedatabasemaynotcapturepersonswho“haveeverbeen”PEFPs.Establishaprocesstodiscardfalsepositivehits,andidentifyotherstepstobetakeniftheinformationinthedatabaseisinconclusive.Areabletoscreenthenamesofclientsinallbusinesslinesagainstthislist,especiallyiftheFRFIhasmanualprocedures,legacysystems,orusesthedatabasetoscreenforthenamesofdesignatedpersonsunderanti-terroristregulations.OSFIdoesnotexpectFRFIstodependonaclientdatabaseinmakingaPEFPdeterminationwheretheinformationobtainedfromtheclientshowsthattheclientisaPEFP.Clients,whoinitiallyprovideinformationthatclearlyestablishesthemtobePEFPs,mustbedeterminedtobePEFPsandneednotbescrubbedthroughdatabasesunlessitisdonemerelytoobtainbackgroundoradditionalinformation.Refertothediscussionabout“reasonablemeasures”in"ClientDueDiligence",above.FRFIsshouldensureadeterminationismadebasedonanevaluationoftheinformationreceivedfromaclientoradatabase.FRFIsshouldalsoensurethat,whereaclientisdeterminedtobeaPEFP,andtheFRFIisawarethattheclienthasfamilymemberswhoarealsoPEFPsbyreasonofthedefinitioninthePCMLTFA,thenamesofsuchfamilymembersarescrubbedagainsttheFRFI’sclientdatabasestodetermineifaccountsareheldinsuchnamesbytheFRFI.FRFIsthatuseagentsormandataries(depositbrokers,mortgagebrokersorothers)toidentifytheirclientsandremitclientidentificationinformationtothemretainresponsibilityforPEFPdetermination.FRFIsmayassignresponsibilityforcollectingtheinformationnecessaryfortheFRFItodetermineiftheclientisaPEFP,buttheFRFI,nottheagent,isresponsibleformakingthedeterminationandforapplyingtheprescribedmeasuresaccordingly.FRFIsshouldensurethatwhereagentsormandatariesareresponsibleforgatheringtheinformation,theagentsunderstandwhatisrequiredtobedoneandtheFRFIsatisfiesitselfthatitsagentsaredoingwhatisrequired.Ifaclient’snameiscontainedinapublicdatabase,buttheFRFIdoesnotdeterminetheclientisaPEFP,theFRFImaywishtomakeanoteofthe“hit”forfuturereferenceortoguideitinanyfutureriskassessment.WhatHappensafteraPEFPDeterminationismadeOnceaPEFPdeterminationismade,itmaynotbereversedorotherwisechanged,otherthantocorrecterror.ThePEFPdefinitionprovidesthatthecriterionorcriteriathattriggerPEFPstatusremain(s)ineffectinperpetuity.WhenaclientisdeterminedtobeaPEFPaFRFImust:Takereasonablemeasurestoestablishthesource(i.e.,howtheclientacquiredthefundsintheaccount)ofthePEFP’sfunds;see“ApplyingPEFPDeterminationtoCanadiansourcesoffundsorpayments”,below;ForDTIs,obtaintheapprovalofaseniorofficertokeeptheaccountopen;forlifeinsurancecompanies,ensurethataseniorofficerreviewsthetransaction;andConductenhancedongoingmonitoringofthePEFP’saccounttoidentifypotentiallysuspicioustransactions.Reasonablemeasurestoestablishsource(s)offundsincludeaskingtheclienttoexplainhowtheclientcametoholdthefunds.Examplesofsourceoffundscouldinclude:savingsaccumulatedthroughemployment;saleofinvestments;saleofabusiness;aninheritance;asalarybonus;andconsultingfees.Inrespectoftheapprovalbyaseniorofficer,suchindividualshouldbeapersonatamoreseniorlevelwhohastheauthoritytomakethisdecision.ReasonablemeasuresforenhancedandongoingmonitoringofPEFPs’accountsmayinvolvemanualorautomatedprocesses,oracombinationofbothdependingonresourcesandneedsandcouldinclude:DevelopingreportsorperformingmorefrequentreviewofPEFPaccountactivity,andflaggingactivitiesthatdeviatefromexpectationsandelevateconcernsasnecessary;SettingupamanagementcommitteetoregularlyreviewallidentifiedPEFPsandtheirtransactions;andReviewingtransactionsmorefrequentlyagainstindicatorsofsuspicioustransactions.PEFPsinCanadaandDomesticPEPsThePEFPdefinitioninthePCMLTFAindicatesthatthecountryofresidenceorcitizenshipofanindividualisimmaterialtoPEFPdetermination.FRFIsshouldthereforeensurethattheirmethodologyofPEFPdeterminationdoesnotprecludeindividualsmerelybecausetheymaybeCanadiancitizensorresidents.FRFIsmayneedtoensuretheydistinguishbetweenPEFPsanddomesticPEPs.ThelatterarenotseparatelydefinedinthePCMLTFAdefinitionofPEFP,althoughaPEFPcouldalsobeadomesticPEP.However,FRFIsarenotunderanylegalobligationtoidentifydomesticPEPs perse,whetherbyscreeningorflagginglargetransactionsorinanyotherway.Further,evenifFRFIsknowtheyaredealingwithadomesticPEP,theyarenotunderanylegalobligationtoapplythemeasuresthatareapplicabletoPEFPaccounts,unlessthatindividualisaPEFP.WhereaFRFIisawarethataclientisadomesticPEP,theFRFIshouldassesswhateffect,ifany,thismayhaveontheoverallassessedriskoftheclient.Iftheassessedriskiselevated,theFRFIshouldapplyenhancedduediligencemeasuresasitconsidersappropriate.IdentificationofPEFPsinForeignSubsidiariesorBranchesThePCMLTFAandPCMLTFRdonotobligeFRFIstoapplyPEFPmeasurestotheirsubsidiariesorbranchesofFRFIsoutsideCanada.WhereaFRFIisawarethataclientofasubsidiaryorabranchoutsideCanadaisaPEFP,theFRFIshouldassesswhateffect,ifany,thismayhaveontheoverallassessedriskoftheclient.Iftheassessedriskiselevated,theFRFIshouldapplyenhancedduediligenceasitconsidersappropriate.TheoperationsofforeignbranchesandsubsidiariesmaybesubjecttolocalAML/ATFlegislation,whichmayincluderequirementstoidentifyandmonitorPEPs,includingPEFPs.IdentificationofPEFPswhoownorcontrol25%ormoreofClientsthatareCorporationsorEntities,orwhoaredirectorsorofficersofsuchcorporationsorentitiesFRFIsarenotobligedbythePCMLTFAorPCMLTFRtoapplyPEFPdeterminationprocedurestopersonswhoownorcontrol25%ormoreofclientsthatarecorporationsorentities,orwhoaredirectorsorofficersofsuchcorporationsorentities.WhereaFRFIisawarethatapersonwhoownsorcontrols25%ormoreofaclientthatisacorporationorentity,orwhoisadirectororofficerofsuchacorporationorentity,isaPEFP,theFRFIshouldassesswhateffect,ifany,thismayhaveontheoverallassessedriskoftheclientcorporationorentity.Iftheassessedriskiselevated,theFRFIshouldapplyenhancedduediligenceasitconsidersappropriate.Appropriateduediligencecouldinclude:AdeterminationastowhetherthePEFPisaclientoftheFRFI,and,ifso,whetherenhancedmonitoringproceduresshouldapplytotheclient’sandthePEFP’stransactions.Enhancedmonitoringoftheclientaccount.ApplyingPEFPdeterminationstoCanadiansourcesoffundsorpaymentsForlifeinsurancecompanies,thePCMLTFRFootnote47doesnotdistinguishbetweendomesticandforeignpayments.Accordingly,lifeinsurancecompaniesshouldapplyaPEFPdeterminationtoprescribedfundsfromanysource,domesticorforeign.ForDTIs,domestictransfersintooroutofanaccountdonot,ofthemselves,triggeranyrequirementtomakeaPEFPdetermination Footnote48.However,ifaDTIhasalreadydeterminedthataclientisaPEFP,OSFIbelievesthatariskassessmentshouldbemadetodeterminewhethermonitoringdomesticincomingtransferswouldbeadvisable.ClientCorporationsthatcanissuebearersharesIdentifyingaclientthatisacorporationthatcanissuebearersharesmayrequirespecialcustomeridentificationmeasures.Bearersharescanhidetheidentityofbeneficialownersoftheclientcorporation.Iftheaggregateofsuchsharescouldamounttomorethan25%ofsuchclientcorporation,aFRFImightbeunabletoidentifythebeneficialowner(s).WhereaFRFIassesses(usingtheriskcategoriesoutlineabove)thattheriskofdealingwithsuchaclientcorporationmaybepresent,theFRFIshouldapplyreasonablemeasurestomitigatethisrisk.Reasonablemeasuresshouldalwaysincludeobtainingtheidentityofthepersonorpersonswhobeneficiallyown25%ormoreofthesharesofthecorporationtakingintoaccountanyissuedandoutstandingbearershares,andcouldalsoincludeoneormoreofthefollowing:Requestingtheclientcorporationtoimmobilizeanyissuedandoutstandingbearershares,forexample,byarrangingforthecertificatesrepresentingsuchsharestobeplacedwithacustodiansuchasatrustee.ThearrangementshouldpermittheFRFIto: Verifyonrequestthatthesharescontinuetobeheldbythecustodian;andBeadvisedonatimelybasisofanychangeinownershipofthesharesthatmaychangethisinformation.Requestingtheclientcorporationtoamenditscharterdocumentstoremovethepowertoissuebearersharesandlimittheissueofnewshares;Requestingtheclientcorporationtocancelanyissuedandoutstandingbearersharesandreplacethemwithsharesinregisteredform.FRFIsshouldensurethatthemeasurestakenaredocumented.CorrespondentBankingForthepurposeofthisGuideline,"correspondentbankingrelationship"hasthesamemeaningasinthePCMLTFA.Correspondentbankingrelationshipsareestablishedbetweenbankstofacilitate,amongotherthings,transactionsbetweenbanksmadeontheirownbehalf;transactionsonbehalfoftheirclients;andmakingservicesavailabledirectlytoclientsofotherbanks.Examplesoftheseservicesinclude:inter-bankdepositactivities;internationalelectronicfundstransfers;cashmanagement;chequeclearingandpaymentservices;collections;paymentforforeignexchangeservices;processingclientpayments(ineitherdomesticorforeigncurrency);andpayable-throughaccounts.Correspondentbankingrelationshipswithforeignfinancialinstitutions(FFIs)areidentifiedbytheFATFasaspecifichigherriskarea,andconsequentlythePCMLTFAandPCMLTFRprescribemeasures Footnote49tobeappliedbyFRFIsthatenterintocorrespondentbankingrelationshipswithFFIsandtheirclients.FRFIsthatofferpayablethroughaccountsservicestocustomersofFFIsmusttakereasonablemeasurestoascertainwhethertheFFIshavemetrequirementsthatobligethemtoidentifyandascertaintheidentitiesofsuchclientsthatareconsistentwiththerequirementsofthePCMLTFR,andensurethattheFFIswillproviderelevantcustomeridentificationdatatotheFRFI,uponrequestFootnote50.Reasonablemeasurestoachievetheserequirementscouldinclude:ObtainingcopiesoftheFFI’sAMLpolicies,andinparticularitscustomeracceptancepolicies,andreviewingtheseforconsistencywiththerequirementsofthePCMLTFR;EnsuringthatthedocumentationoftheagreementwiththeFFIincludesanobligationonthepartoftheFFItoproviderelevantcustomeridentificationinformationtotheFRFIwhenrequestedtodoso.Reasonablemeasurestomonitorcorrespondentbankingrelationshipsgenerallycouldinclude,forexample:EstablishandperiodicallyupdateanAMLcountryriskratingsystemandassignaratingtoeachcountryinwhichacorrespondentbankingrelationshiphasbeenestablished,forthepurposeofimplementinganappropriatelevelofmonitoring;ReviewtheFATF(orFATFstyleregionalbody’s)mutualevaluationreportorotherassessmentoftheFFI’shomecountry’smeasurestoimplementtheFATF40Recommendationsand9SpecialRecommendations;ReviewtheFFI’sownershipandbackground;Besatisfiedthatitsactivitiesareauthorized,regulatedandsupervisedbytherelevantregulatoryauthorityinitshomecountry;MeetorotherwisecommunicatewithseniorrepresentativesoftheFFItounderstandtheircommitmenttoeffectivecontrolofMLandTFandunderstandkeyprovisionsoftheFFI’sAML/ATFpoliciesandproceduressuchasthosedealingwithclientacceptance;andUsetheservicesofcrediblethirdparties(suchasthoseprovidingadocumentrepositoryorAML/ATFrankings)asasourceofadditionalinformationontheFFIanditsregulatoryenvironment.WhereaFRFIascertains,pursuanttos.55.1ofthePCMLTFR,thattherearecivilorcriminalsanctionsimposedagainstaFFIinrespectofAML/ATFrequirements;orwhereaFRFIascertainsthataFFIdoesnothaveinplaceAML/ATFpoliciesandproceduresasspecifiedinss.15.1(3)ofthePCMLTFA;thenforthepurposeofdetectinganysuspicioustransactionsrequiredtobereportedtoFINTRACunders.7ofthePCMLTFAtheFRFIshouldconductongoingmonitoringofalltransactionsinthecontextofthecorrespondentbankingrelationshiptomitigatethehigherrisk Footnote51.TheextentofsuchmonitoringinthecaseofsanctionsidentifiedagainstaFFIshouldcorrespondtothecontext,severityandtypeofsanctionsimposedontheFFI.Reasonablemeasurescouldinclude:ReviewinginmoredepththeFFI’sclientacceptanceprocessanditsprocessforriskassessingitsclients,productsandservices;TrainingofficersoftheFRFIontherequiredenhancedtransactionmonitoringrequirementstobeappliedwithrespecttotherelationship,includingthosetransactionsoftheFFI’sclientsthatarepermittedtoaccesstheFRFI’sbankingservices;EscalatingthelevelofSeniorManagementresponsiblefortherelationship;Reviewingtransactionsoverthresholdamounts(usingarisk-basedapproach),identifiedbyanalyzingclientrisk,businessrelationshiprisk,product/servicerisk,deliverychannelrisk,geographicriskandotherrelevantriskfactors;ReviewingtheFFI’smethodologyformonitoringandsurveillanceoftransactions,inparticularthosethatultimatelyresultinatransactionbeingprocessedbytheDTI(e.g.aninternationalwirepayment,paymentunderaletterofcredit,etc.)andpreparingasummaryofthekeyAML/ATFpoliciesandproceduresoftheFFIaswellasprovidingdetailsontheduediligencecarriedout;andConductingrisk-basedretrospectiveduediligenceonexistingclientsutilizingthecorrespondentbankingrelationshipusingtheFRFI’sstandardsandcriteriaestablishedinaccordancewiththePCMLTFAandPCMLTFR;andGivingconsiderationtorestrictingordiscontinuingpayable-throughaccountservicesiftheFRFI’sanalysisoftherelationshipconcludesthattheFFI’spolicesandproceduresdonotmeetthestandardssetoutins.55.2ofthePCMLTFR.AFRFIactingasanintermediarybankmaynotbeinapositiontounderstandthepurposeofEFTsoriginatedbyclientsofFFIsorotheroriginatorbanks,orconductCDDonthesepersons.Consequently,suchaFRFIthatreceivesacoverpaymentfortransactionsmaynotbeinapositiontodeterminewhetherEFTsrepresentedbythecoverpaymentaresuspicious,basedonanunderstandingoftheactivitiesoftheoriginator(andthebeneficiary,ifthebeneficiaryisnotaclientoftheFRFI).Itis,however,possibleforintermediaryFRFIstomonitortransactionsthattheyprocesstoidentifypatternsofactivitythatmaybesuspicious,toreportsuspicioustransactionsorattemptedtransactions,and,wheresuchtransactionsareassociatedwithaparticularFFI,toreviewtherelationshipwiththatFFI.ProcessingElectronicFundsTransfersAllinformationprescribedbythePCMLTFAandPCMLTFR,includingoriginatorinformationFootnote52,mustbeincludedonalloutgoinginternationalEFTsanddomesticSWIFTpaymentsoriginatedbyFRFIs.Inaddition,FRFIsmusttakereasonablemeasurestoensurethatincomingEFTsincludeoriginatorinformation.FRFIsthatactasintermediarybanksshoulddevelopandimplementreasonablepoliciesandproceduresformonitoringpaymentmessagedatasubsequenttoprocessing.Suchmeasuresshouldfacilitatethedetectionofinstanceswhererequiredmessagefieldsarecompletedbuttheinformationisunclear,orwherethereismeaninglessdatainmessagefields.Reasonablemeasurescouldinclude:Contactingtheoriginator’sbankorprecedentintermediarybanktoclarifyorcompletetheinformationreceivedintherequiredfields;considering(inthecaseofrepeatedincidentsinvolvingthesamecorrespondentorincaseswhereacorrespondentdeclinestoprovideadditionalinformation)whethertherelationshipwiththecorrespondentortheintermediarybankshouldberestrictedorterminated;and/orfilingasuspicioustransactionreport.Thereasonsfordecisionstakenshouldbedocumented.TradeFinanceTraditionaltradefinanceservicesincludelettersofcreditorotherfinancialproducts,whichgiveFRFIstheopportunitytoviewandassessdetailsofthetransactionthattriggersaninternationalpayment.FRFIsthatoutsourcetradefinanceservicestootherfinancialinstitutionsshouldensurethatthisoutsourcingisincludedintheFRFI’sinherentriskassessment.IftheassessmentindicatesthattheriskofMLandTFiselevated,theFRFIshouldimplementreasonablemeasurestocontroltherisk.Reasonablemeasurescouldinclude:Conductingananalysisoftheprovider’spoliciesandpractices;andCommunicatingtotheproviderwhatAML/ATFcontrolmeasurestheFRFIexpectstheprovidertohaveinplace.TheFRFIshouldhavetherighttoauditsuchmeasures.OSFIrecognizesthatFRFIswhoseservicesareusedtomaketradefinancepaymentsonanopenaccountbasismaynothaveanopportunitytoreviewthenatureofaclient'sunderlyingtradetransaction.Reasonablemeasurestoaddressthisriskcouldinclude:Periodicverification,usingcredibleopensourcematerialorinformation,ofthebusinessoftheclientthattriggerstheneedforsuchpayments;Periodicreviewofelectronicfundstransferdatatodeterminewhethertheclient'sbusinessincludessignificanttradeactivity;Periodicreviewoftheclient'stransactionscomparedtotheFRFI'srecordoftheintendedpurposeoftheaccount;Meetingorotherinteractionwiththeclient;orPeriodicconfirmationthattheclientisnotinatypeofbusinesstowhichtheFRFIhasdecided,asamatterofpolicy,nottoprovidefinancialservices.Under-andover-InvoicingofGoodsandServicesTheFATFhasadvisedFootnote53thatthelaunderingoffundsthroughunder-andover-invoicingisoneoftheoldestmethodsoffraudulentlytransferringvalueacrossborders,andremainsacommonpractice.Thekeyelementofthetechniqueisthemisrepresentationofthepriceofthegoodorserviceinordertotransferadditionalvaluebetweentheimporterandexporter.ManysuchcaseshavebeenidentifiedbytheFATF.MultipleInvoicingofGoodsandServicesByinvoicingthesamegoodorservicemorethanonce,amoneylaunderermaybeabletojustifymultiplepaymentsforthesameshipmentofgoodsordeliveryofservices,especiallyifmorethanonefinancialinstitutionisused.Multipleinvoicingavoidstheneedtomisrepresentprices.Over-andUnder-ShipmentsofGoodsandServicesAthirdmethodofillicitlymovingfundsistomovemore,less,ornogoods.OtherandMoreComplexTrade-basedMoneyLaunderingTechniquesTheforegoingtechniquescanbecombinedinmorecomplexseriesofarrangements.Forexample,theso-calledBlackMarketPesoExchangeisaknowntechniqueusedtolaundertheproceedsofthesaleofdrugs.Formoredetailedinformationontechniquesandtypologiesassociatedwiththisandothertrade-basedmoneylaundering,FRFIsarerequestedtoconsultFATFmaterialavailableontheFATFwebsite.AssessingtheRisksinTradeFinanceServices,andEnhancedMeasurestoMitigateAssessedRiskWheretheassessedriskofMLorTFintradefinanceservicesiselevated,FRFIsshouldtakereasonablemeasuresdesignedtomitigatetheriskofmisuseoftradefinancingmechanisms.Reasonablemeasurescouldinclude:Conductingperiodicon-siteassessmentoftherisksposedbyclientsandtheprocedurestheyfollow;Reviewingtheroutingofshipmentsandnoteportsofcallortranshipmentpointsthatareinconsistentwithastandardcommercialtransaction,forexample,ashipmentofsteelfromCanadatoAsiaroutedviaaEuropeanportoracountrywherethereisnoapparentbusinessrationalefortherouting,orwheretheroutingorthecarrierislocatedinahighriskcountry;Subjectingrequestsinvolvinglettersofcredittocovershipmentsofgoodsthatarenotconsistentwiththeapplicant’snormalbusinesspatternstomoredetailedreviewandnotingtheresultsintheclient’srecords;Identifyingsignificantdifferences(eitherbetweendifferentclients,differentshipmentsormarketquotes)inpricesofagoodorcommoditybeingfinancedunderaletterofcredit,anddeterminingthebusinessrationaleforthedifferences;andMakingadditionalenquiriesaboutthebusinessrationaleoftransactionsinvolvingmultiplebanksandpaymentsflowingthroughintermediariesasopposedtodirectlyfromtheimporter’sbanktotheexporter’sbank.NewandDevelopingTechnologiesDevelopmentsintechnologyfrequentlydrivethecreationofnewfinancialproductsandservices.Suchdevelopmentscanlowercosts,improveclientserviceandexpandmarkets.FRFIsshouldhavepoliciesandproceduresinplacetoensurethatnewanddevelopingtechnologiesareincludedintheFRFI’sinherentriskassessmentprocess.InthiswayFRFIscanensurethatappropriateAML/ATFcontrolsareinplace,and,whereappropriate,developoramendcontrolstotakenewrisksintoaccount.Examplesofnewanddevelopingtechnologiesincludestoredvaluecardsthatmaypermitclientstosubsequentlydownloadthosefundsdirectlyintoadepositoracreditaccountandmobiletelephonetechnologyandvariouse-moneyservicesthathavesimilarcharacteristics.RECORDKEEPINGANDRETENTIONProceduresforkeepingpaperandelectronicrecordsofpertinentinformationaboutclientsandtransactionsmustensurethattheFRFIcomplieswithalloftherecordkeepingrequirementsofthePCMLTFAandPCMLTFR.Theseinclude:forclientsthatareentities:prescribedinformation,ifobtained,aboutbeneficialownersofcorporateclientsandotherprescribedinformationoncorporationsandotherentitiesFootnote54;forlargecashtransactions:largecashtransactionrecords Footnote55;relatedclientrecordsFootnote56;foraccountopening:prescribedinformationaboutclientindividualsandentitiesfornon-creditcardaccountopeningFootnote57;andprescribedinformationaboutcreditcardholdersforcreditcardaccountopeningFootnote58;foraccountoperation:accountoperatingagreements Footnote59andotherprescribedinformationFootnote60fornon-creditcardaccounts;andcreditcardaccountrecordsforcreditcardaccounts;Footnote61;forcredittransactions:newcreditfilesFootnote62;forcurrencyexchange:foreigncurrencyexchangetransactionticketsFootnote63;fortransactionsof$3,000andmorewithnon-accountholders:prescribedinformationfortraveller’scheques,moneyordersorsimilarnegotiableinstrumentsFootnote64forprescribedincomingEFTs:prescribedinformationFootnote65;fortrustswithrespecttowhichtrustcompaniesaretrustees:copyoftrustdeedandotherprescribedinformationFootnote66;foraccountsofPEFPs:PEFPofficeorpositionandotherprescribedinformationFootnote67;fortransactionsofPEFPs:PEFPofficeorpositionandotherprescribedinformation Footnote68;forcreditcardaccounts,accountopeningandaccountsofPEFPs:PEFPofficeorpositionandotherprescribedinformation Footnote69;forforeigncorrespondentbankingrelationships:nameandaddressandotherprescribedinformationFootnote70;forpurchasesfromlifeinsurancecompaniesofimmediateordeferredannuitiesorlifeinsurancepoliciesforwhichtheclientmaypay$10,000ormoreoverthedurationoftheannuityorpolicy:clientinformationrecordFootnote71;andforsuspicioustransactionsandsuspiciousattemptedtransactions:investigationsandconclusions.FRFIsareexpectedtouserecordkeepingmethodologiesandformatsthatareappropriateintheirparticularcircumstances,providedthatrecordsrequiredtobekeptbythePCMLTFAandPCMLTFRmust,asageneralrule,bekeptforatleast5yearsFootnote72andtheymustbemadeavailabletocompetentauthoritiesonatimelybasis,whichiswithin30daysafterarequestismade Footnote73.ClientinformationshouldbekeptcurrenttoreflectregulatoryrequirementsandtheFRFI’scontinuingknowledgeoftheclient,clientactivitiesandpurposeoftheclientrelationship,whichfacilitatesmonitoringforsuspicioustransactionsandattemptedtransactions.Aprocessshouldbeimplementedfordealingwithincompletedocumentationwithaviewtomakingitcompleteandcurrentbeforedoingmoretransactionsorunrestrictedtransactions.TRANSACTIONREPORTINGGeneralThePCMLTFAandPCMLTFRprescribereportingtoFINTRAConLCTRs,EFTs,STRsandTPRs.FRFIsshouldensurethatinternalreportingprocessesaredesignedtoensurecompliancewithregulatoryreportingrequirementsastheyrelatetotransactionreportingsystems.Systemiccomplianceissuesshouldbedocumented,escalatedtotheCAMLOandbroughttotheattentionofFINTRAC.Controlmeasuresshouldincludetheidentificationofremedialactiondesignedtoeliminatecomplianceissues.Forexample,FRFIsshouldnotifyFINTRACpromptlyofanyinternallyidentifiedLCTR,EFTorSTRreportingerrorsoromissions.FRFIsshouldpayspecialattentiontoFINTRAC’serrorcodeswhenfilingreports,andtakeremedialactiononatimelybasiswhenFINTRACindicatesfilingerrorsorothercomplianceissues.FRFIsshouldconfirmtoFINTRACwhenremedialactioniscomplete.SuspiciousTransactionsandSuspiciousAttemptedTransactions,andReportsonTerroristPropertySuspicioustransactionsandattemptedtransactionsaredefinedinthePCMLTFAasthoseinrespectofwhichtherearereasonablegroundstosuspectthatthetransactionorattemptedtransactionisrelatedtothecommissionorattemptedcommissionofaMLoffenceoraTFoffence.Footnote74Thereisnomonetarythresholdapplicabletosuspicioustransactionsorsuspiciousattemptedtransactions.AtransactionorattemptedtransactionthattheFRFIreasonablysuspectsisrelatedtoamoneylaunderingoffencemustbereportedtoFINTRAC.PropertyinthepossessionorcontrolofaFRFIthattheFRFIsknows,orhasreasonablegroundstobelieve,isownedorcontrolledbyoronbehalfofaterroristoraterroristgroup,mustalsobereportedtoFINTRAC.Thisincludesinformationaboutanytransactionorproposedtransactionrelatingtothatproperty.Theobligationtoreportsuspicioustransactions,suspiciousattemptedtransactionsandterroristpropertyFootnote75isdesignedtoassistCanadianlawenforcementauthoritiesintheirinvestigationandprosecutionofMLandTFoffencesandpredicateoffences.Robustongoingmonitoring,examinationandreportingprocessesinFRFIsarecrucialinassistingtheselawenforcementefforts.SuspicioustransactionsandsuspiciousattemptedtransactionsshouldbeidentifiedbyFRFIsfromunusualactivityortransactions.Procedurestoidentifyunusualactivitiesshouldcapturethebackgroundandpurposeofthetransaction(s),whowasinvolved,whenandwhereitoccurred,whatproductsorserviceswereinvolvedandhowthetransactionwasstructured,andshouldberecorded.STRsmustbefiledpromptlyinaccordancewiththeregulatoryrequirements.SupportingdocumentationFootnote76mustberetainedasprescribedandmadeavailabletoassistlawenforcementauthoritieswithinprescribeddeadlines.FRFIsmustensurethatinformationconcerningSTRs,includingthefactthatthereisasuspicionand/oranSTR,iskeptstrictlyconfidential.Theclient(s)involvedmustnotbetippedofftoadisclosure,andinformationwithintheFRFImustbestrictlylimitedtotheCAMLOandothersona“needtoknow”basis.ThePCMLTFRFootnote77requirethat,exceptwhereidentityhasbeenpreviouslyascertainedinaccordancewiththeRegulations,FRFIsmusttakereasonablemeasurestoascertaintheidentityofeverypersonwithwhomasuspicioustransactionorsuspiciousattemptedtransactionisconducted.Whilereasonablemeasuresmayincludenormalclientidentificationpractices,caremustbetakentoensurethatsuchpractices,ifused,donothavetheeffectoftippingofftheclient.AggregationofCashTransactionsThePCMLTFRprovidesFootnote78thatwheretwoormorecashtransactionsoflessthan$10,000eacharemadewithin24consecutivehoursthatintheaggregateamountto$10,000ormore,theaggregatedtransactionsareconsideredtobeasingletransactionof$10,000ormoreforreportingpurposesifaFRFIknowsthatthetransactionsareconductedby,oronbehalfof,thesamepersonorentity,oranemployeeoraseniorofficeroftheFRFIknowsthatthetransactionsareconductedby,oronbehalfof,thesamepersonorentity.Forthepurposesofinterpretingthisrequirement,FRFIsthathavesystemsinplacethatpermittheFRFItoknow,bymakingarecordofmultiplecashtransactionsreferredtointhisrequirement,thatthetransactionsareconductedbyoronbehalfofthesameclientshouldensurethatsuchtransactionsareaggregatedandreportedtoFINTRACasLargeCashTransactions.TRAININGEffectivetrainingprogramsforstaffandothers(asrequired)isanimportantandstatutorilyrequiredelementofFRFIs’AML/ATFprograms.FRFIsshouldensurethatwrittenAML/ATFtrainingprogramsaredevelopedandmaintained.AppropriatetrainingshouldbeconsideredforSeniorManagement,employees,agentsandanyotherpersonswhomayberesponsibleforcontrolactivity,outcomesoroversight,orwhoareauthorizedtoactontheCompany’sbehalfpursuanttothePCMLTFRFootnote79.ThenatureandcontentshouldbeappropriatetotheAML/ATFresponsibilitiesofandtheFRFI'srelationshipwith,eachintendedrecipientgroup.Inparticular,trainingshouldbetailoredtoprovidethetypesandgranularityofinformationandskillsthatarenecessaryforeffectiveperformanceoftheAML/ATFfunctionineachcase.TrainingprogramsforSeniorManagementshouldprovidesufficientbriefingwithrespecttoinherentrisksandcontrolstoenablethemtoassessinformationreportedbytheCAMLOandAuditor,andexerciseeffectiveoversightovertheAML/ATFprogram.SELFASSESSMENTofCONTROLSFRFIsshouldensurethataselfassessmentofcontrolmeasuresisconducted,preferablyonanongoingbasis,butatleastannually.TheassessmentofAML/ATFcontrolsisanimportantcomponentofAML/ATFprogrambecauseofitsqualityassuranceoutcome.Whiletheassessmentsinbusinessareascanandshouldbeconductedbyindividualsinthosebusinessareas,FRFIsshouldensurethattheassessmentprocessisdesignedtoenableresultsineachareatobeconsolidatedforanalysisandotherpurposes.TheselfassessmentineachrelevantareaoftheFRFIshouldcover,ataminimum,theadequacyoftheinherentriskassessment,AML/ATFpoliciesandprocedures,trainingandothercontrolsimplementedtomitigateMLandTFrisks.FRFIsshouldensurethattheselfassessmentisneithertoonarrownortoobroad.Forexample,anarrowlegal/regulatory-basedassessmentcouldfailtocoverbroaderMLandTFcontrols.Similarlyanoperational-basedassessmentmightfailtocoverprescribedcontrols.Allsignificantinformationusedintheselfassessmentprocessshouldbeverifiedorreadilyverifiable.Methodsusedtoensurethatinformationisverifiedorverifiablewilldependonthesize,complexityandgovernancestructureoftheFRFI.ReasonablyeffectivemeasuresobservedbyOSFItendtofallintooneormoreofthefollowingcategories:BusinessareasarerequiredbytheCAMLOtoprovideinformationonthemethodologytheyusedtoassessorre-assessMLandTFcontrolsintheirareas,insupportofassessmentresults;BusinessareasarerequiredbytheCAMLOtoprovideevidenceofhavingdocumentedsupportfortheresultsoftheirassessments;TheCAMLOreviewsandconfirmstheassessmentresults;orAcombinationoftheabove.TheselfassessmentofcontrolsshouldprovideFRFIswith:InsightintotheefficacyofcontrolsintheAML/ATFprogram,andtheoverallextenttowhichtheprogramadequatelymitigatestheidentifiedinherentrisksofMLandTF;andInformationtoaidinprioritizingremediationeffortsifcontrolsareunder-performingandopportunitiestocaptureeconomiesofscaletobetterallocateresourcestoareasofhigherrisk.EFFECTIVENESSTESTINGLiketheassessmentsofinherentriskandriskmanagementcontrols,effectivenesstestingoftheAML/ATFprogramisanimportantcomponentofAML/ATFprogramqualityassuranceandisastatutorilyrequiredpartoftheFRFI’sAML/ATFprogram.ThePCMLTFRFootnote80requirethatthefollowingAML/ATFprogramcomponentsbereviewedforthepurposeoftestingtheireffectivenesseverytwoyears:PoliciesandProcedures;Riskassessments;Trainingprograms.ThePCMLTFRFootnote81alsoprescribeminimumcontentandtimingforreportstoaseniorofficeroneffectivenesstesting.Inaddition,itwouldbeprudentforFRFIstoensurethatallotherelementsoftheAML/ATFprogrambetestedforeffectivenessonasimilartimescale.FRFIshaveaccesstointernalorexternalauditors(orboth)andthereforeFRFIsshouldensurethattheAuditorisresponsibleforeffectivenesstesting.However,thisdoesnotprecludetheAuditorfromoutsourcingallorpartoftheeffectivenesstestingtoqualifiedthirdparties,althoughremainingresponsiblefortheeffectivenesstestingprogram.FRFIsshouldensurethateffectivenesstestingoftheAML/ATFprogramisincludedintheAuditor’smandateandauditprogram.Effectivenesstestingmaybecarriedoutonastand-alonebasis,orembeddedinbroaderauditswithotherauditwork.Whicheverapproachistaken,testingmustcoverallkeyAML/ATFprogramcomponents,includingpoliciesandprocedures,riskassessmentsandtrainingprogramsatleasteverytwoyears.FRFIsshouldensurethateffectivenesstestingis:inadditionto(notasubstitutefor)assessmentsofinherentrisksandriskmanagementcontrols;appropriatelyriskbased,withtestingmorefrequentlyand/orthoroughlyinhigherriskcategoriesthroughouttheFRFIasidentifiedintheFRFI’sInherentRiskAssessment;plannedandperformedbyanauditororauditorswhohavehadappropriateAML/ATFtrainingandexperienceinrespectofMLandTFriskandanappropriatelevelofknowledgeoftheregulatoryrequirementsandguidelines;andreportedtoappropriateSeniorManagement,includinginformationontestingscope,findingsandrecommendationsorrequirementsforremedialaction,andmanagement’sresponsesthereto.EffectivenessTestingComparedToAssessmentofRisksandControlsThefollowingtablecomparesthedifferentpurposes,content,responsibilityandoutcomesofeffectivenesstestingandselfassessmentsofrisksandcontrols:EffectivenessTestingAssessmentsofrisksandControlsPurposeTesttheadequacyandeffectivenessofAML/ATFprogramcomponentsinallrelevantareas.AssessingthescopeandcontentofAML/ATFprogramcomponentsinallrelevantareas.BywhomInternalorExternalAuditorEachrelevantareaAndcoordinatedacrosstheenterprisebytheCAMLOFrequencyPeriodic;howeverataminimumtheFRFImustensuretheprescribedelementsoftheAML/ATFprogramaretestedatleasteverytwoyears.Ongoing.Reporting:timingandrecipientsWithin30daysafterworkiscomplete,toSeniorManagement.Withinareasonabletimeafterworkiscomplete,toSeniorManagement.AtleastonceayearonaFRFI-widebasisbytheCAMLOtoSeniorManagement.INTERPRETATIONThefollowingmeaningsapplyinthisGuideline:AMLAnti-moneylaunderingAML/ATFprogramAFRFI’sAML/ATFprogramdesignedtocomplywiththisGuideline,andincludestheprogramreferredtoins.71ofthePCMLTFRATFAnti-terroristfinancingAuditorTheinternalorexternalauditoroftheFRFIresponsibleforeffectivenesstestingrequiredbyparagraph71(1)(e)ofthePCMLTFRBoardBoardofDirectors.Referencesto“Board”shouldbereadasreferencestothePrincipalOfficerofforeignbankbranchesandtheChiefAgentofbranchesofforeignlifeinsurancecompanies,asappropriateCAMLOThepersondesignatedresponsibleunderPCMLTFRs.71(1)(a)forimplementingtheFRFI’sAML/ATFprogram,referredtobyOSFIastheChiefAnti-MoneyLaunderingOfficerCRACanadaRevenueAgencyDTIDeposittakinginstitutionEFTElectronicfundstransferasdefinedinsubsection1(2)ofthePCMLTFRFATFFinancialActionTaskForceonMoneyLaunderingFIUFinancialintelligenceunit,andincludesFINTRAC,asappropriateFINTRACFinancialTransactionsandReportsAnalysisCentreofCanadaFRFIFederallyRegulatedFinancialInstitution-includesbanks,authorizedforeignbanksinrespectoftheirbusinessinCanada(foreignbankbranchesorFBBs),companiestowhichthe TrustandLoanCompaniesActapplies,andlifeinsurancecompaniesorforeignlifeinsurancecompanybranchestowhichthe InsuranceCompaniesActapplies;andincludesaFRFI’sbranchesandsubsidiariesworldwide,ifapplicable.LCMLegislativecompliancemanagementLCTRLargecashtransactionreportMLMoneylaunderingOSFIAct OfficeoftheSuperintendentofFinancialInstitutionsActPCMLTFA ProceedsofCrime(MoneyLaundering)TerroristFinancingActPCMLTFR ProceedsofCrime(MoneyLaundering)TerroristFinancingRegulationsPEPPoliticallyExposedPersonPEFPPoliticallyExposedForeignPersonasdefinedinsubsection9.3(3)ofthePCMLTFA.STRSuspicioustransactionreportandincludesareportofasuspiciousattemptedtransactionSeniorManagementIncludes,butisnotlimitedto,anypersonwhoisaseniorofficerasdefinedinthePCMLTFRTFTerroristfinancingTPRTerroristpropertyreport Footnotes Footnote1InJune2010,OSFIissuedaninstructionguideon DesignatedPersonsListingsandSanctionsLaws. Returntofootnote1referrerFootnote2PCMLTFRss.71(2) Returntofootnote2referrerFootnote3PCMLTFRp.71(1)(a) Returntofootnote3referrerFootnote4PCMLTFAss.9.6(2) Returntofootnote4referrerFootnote5PCMLTFRp.71(1)(b) Returntofootnote5referrerFootnote6PCMLTFRp.71(1)(d) Returntofootnote6referrerFootnote7PCMLTFRp.71(1)(e) Returntofootnote7referrerFootnote8PCMLTFAs.6,6.1and9.6 Returntofootnote8referrerFootnote9PCMLTFAss.9.7(1)ands.9.8 Returntofootnote9referrerFootnote10ss.71(2) Returntofootnote10referrerFootnote11PCMLTFAss.9.6(2) Returntofootnote11referrerFootnote12PCMLTFRp.71(1)(c) Returntofootnote12referrerFootnote13PCMLTFRp.71(1)(c) Returntofootnote13referrerFootnote14PCMLTFAss.9.6(3) Returntofootnote14referrerFootnote15PCMLTFRp.71(1)(b) Returntofootnote15referrerFootnote16PCMLTFAss.9.6(3)andPCMLTFRp.71.1(a) Returntofootnote16referrerFootnote17PCMLTFRs.71.1 Returntofootnote17referrerFootnote18PCMLTFRp.14(c.1) Returntofootnote18referrerFootnote19i.e.,anaccountwheretheFRFIhasnotascertainedtheidentityoftheclient(otherthancertainproductswhicharesubjecttospecificidentificationexemptionsunderthePCMLTFR) Returntofootnote19referrerFootnote20PCMLTFRss.63(1.1) Returntofootnote20referrerFootnote21PCMLTFRss.64(1) Returntofootnote21referrerFootnote22PCMLTFRss.65(1) Returntofootnote22referrerFootnote23PCMLTFRs.11.1 Returntofootnote23referrerFootnote24PCMLTFRss.54(1) Returntofootnote24referrerFootnote25PCMLTFAs.9.2 Returntofootnote25referrerFootnote26PCMLTFRss.9(1)DTIs;PCMLTFRss.10(1)lifeinsurancecompanies;PCMLTFRss.8(1)largecashtransactions Returntofootnote26referrerFootnote27PCMLTFRss.56(2) Returntofootnote27referrerFootnote28PCMLTFRs.53.1 Returntofootnote28referrerFootnote29PCMLTFAss.9.6(3) Returntofootnote29referrerFootnote30PCMLTFRp.54.2(b) Returntofootnote30referrerFootnote31PCMLTFRp.71.1(a) Returntofootnote31referrerFootnote32PCMLTFRp.71.1(b) Returntofootnote32referrerFootnote33PCMLTFRp.71.1(c) Returntofootnote33referrerFootnote34Referredtoas“agents”or“mandataries”ins.64.1ofthePCMLTFR Returntofootnote34referrerFootnote35PCMLTFRs.64.1 Returntofootnote35referrerFootnote36FINTRACGuideline6G,section4.12 Returntofootnote36referrerFootnote37PCMLTFRs.64.1 Returntofootnote37referrerFootnote38PCMLTFAs.9.3 Returntofootnote38referrerFootnote39PCMLTFAss.9.3(3) Returntofootnote39referrerFootnote40PCMLTFRparagraph54.2(a) Returntofootnote40referrerFootnote41PCMLTFRparagraph54.2(b) Returntofootnote41referrerFootnote42PCMLTFRparagraph54.2(c),(d) Returntofootnote42referrerFootnote43PCMLTFRss.67.1(2) Returntofootnote43referrerFootnote44PCMLTFRss.67.2(3) Returntofootnote44referrerFootnote45PCMLTFRs.56.1 Returntofootnote45referrerFootnote46PCMLTFRss.67.2(3) Returntofootnote46referrerFootnote47PCMLTFRs.56.1 Returntofootnote47referrerFootnote48PCMLTFRp.54.2(c) Returntofootnote48referrerFootnote49PCMLTFAs.9.4andPCMLTFRs.55.1,55.2 Returntofootnote49referrerFootnote50PCMLTFRs.55.2 Returntofootnote50referrerFootnote51PCMLTFRss.15.1(3) Returntofootnote51referrerFootnote52PCMLTFAp.9.5(b) Returntofootnote52referrerFootnote53 TradeBasedMoneyLaundering,23June,2006,availableontheFATFWebsite. Returntofootnote53referrerFootnote54PCMLTFRss.11.1(1) Returntofootnote54referrerFootnote55PCMLTFRs.13 Returntofootnote55referrerFootnote56PCMLTFRp.50(1)(c),ss.50(3) Returntofootnote56referrerFootnote57PCMLTFRp.14(a)-(c) Returntofootnote57referrerFootnote58PCMLTFRs.14.1 Returntofootnote58referrerFootnote59PCMLTFRp.14(d) Returntofootnote59referrerFootnote60PCMLTFRp.14(e)-(h) Returntofootnote60referrerFootnote61PCMLTFRs.14.1 Returntofootnote61referrerFootnote62PCMLTFRp.14(i) Returntofootnote62referrerFootnote63PCMLTFRp.14(j) Returntofootnote63referrerFootnote64PCMLTFRp.14(k)and(l) Returntofootnote64referrerFootnote65PCMLTFAp.9.5(b) Returntofootnote65referrerFootnote66PCMLTFRss.15(1) Returntofootnote66referrerFootnote67PCMLTFRp.14(n) Returntofootnote67referrerFootnote68PCMLFTRp.14(o),s.20.1 Returntofootnote68referrerFootnote69PCMLTFRp.14.1(g) Returntofootnote69referrerFootnote70PCMLTFRss.15.1(2) Returntofootnote70referrerFootnote71PCMLTFRs.19 Returntofootnote71referrerFootnote72PCMLTFRs.69 Returntofootnote72referrerFootnote73PCMLTFRs.70 Returntofootnote73referrerFootnote74PCMLTFAs.7 Returntofootnote74referrerFootnote75PCMLTFAs.7ands.7.1 Returntofootnote75referrerFootnote76IncludingacopyoftheSuspiciousTransactionReport Returntofootnote76referrerFootnote77PCMLTFRss.53.1(1) Returntofootnote77referrerFootnote78PCMLTFRss.3(1) Returntofootnote78referrerFootnote79PCMLTFRp.71(1)(d) Returntofootnote79referrerFootnote80PCMLTFRp.71(1)(e) Returntofootnote80referrerFootnote81PCMLTFRss.71(2) Returntofootnote81referrer​ ModifiedDate: 2021-07-26 Secondarymenu RegulationandGuidance ActsandRegulations Guidance TableofGuidelines TableofAdvisories ApprovalsandPrecedents ApplicationandApprovalGuides RegulatoryandLegislativeAdvisories LegislativeRulings CapitalRulings NameRequest RiskAssessmentandIntervention SupervisoryPractices GuidetoIntervention TrustAgreements RegulatoryData FilingCorporateReturns FilingFinancialReturns ViewingFinancialData Anti-moneyLaunderingandCompliance Anti-moneyLaundering Anti-terrorismFinancing Sanctions Messages IndustryNotices WebTools WhoWeRegulate