Anti-Money Laundering (AML) & Anti-Terrorist Financing (ATF) – Know your Obligations
Changes to the Act, effective June 23, 2008 - visit www.fintrac.gc.ca for full details
The objective of the Proceeds of Crime (Money Laundering) and Terrorist Financing Act is to help detect and deter money laundering and the financing of terrorist activities. It is also to facilitate investigations and prosecutions of money laundering and terrorist activity financing offences.
As an independent insurance Agent or Agency working directly with the public, you are considered to be in a front-line position to detect AML/ATF situations. Each National Best Member must ensure they are aware of and comply with their obligations under the AML Regulations. It is your responsibility to ensure that you have appropriate procedures in place and that you are prepared in the event you are audited by FINTRAC staff.
For more information or details regarding your obligations, we encourage you to visit the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) at www.fintrac-canada.gc.ca.
Some of the changes that have affected your business are: client identification requirements, source of funds, third party determination, suspicious transaction reporting, development of AML/ATF procedures and auditing compliance and enforcement of the procedures.
This summer, FINTRAC announced that it will begin auditing life insurance Brokers in order to see who is complying -- and who isn't. If you're found to be non-compliant, there may be hefty financial penalties levied. If you have delayed implementing a formal FINTRAC compliance regime because you did not think it applied to you, now is the time to act!
What the Act Requires:
The Proceeds of Crime (Money Laundering) and Terrorist Financing Act requires Brokers to adopt a compliance regime and ensure that employees and those who act on their behalf comply with the Act. According to FINTRAC, your compliance regime needs to be tailored to fit your individual business needs. It should reflect the nature, size and complexity of your operation. The Act’s five requirements include:
1. Appointing a Compliance Officer. (Compliance Officer should be someone senior, in a decision-making role) 2. Developing detailed written, auditable compliance policies and procedures for reporting and record-keeping. 3. Ongoing review of the effectiveness of the compliance program through self-assessments and / or audits. 4. Compliance training for employees, Brokers or others acting on behalf of your Agency plus an on-going training plan. (You must evidence that you and your staff review the training program and update as necessary.) 5. Assessing and documenting the money laundering and terrorist financing risks unique to your business. (Risk mitigation is about implementing controls to limit the potential money laundering and terrorist financing risks you have identified -- stay within your risk tolerance level.) Verification of Client Record & Third Party Determination
Detailed are the written policies & procedures to capture this information properly for National Best client records. You will find a template (prepared by CLHIA) with which you can prepare your own business FINTRAC Policy & Procedure document in the NB Agent Resources – Compliance; FINTRAC tab.
FINTRAC Agent/Agency Audit Steps: What to Expect from FINTRAC and National Best
Questionnaire: You will receive a letter with instructions to complete an online questionnaire. There is a 30 day time period to complete the questionnaire. [email protected] should be provided a copy of this questionnaire if/when you are contacted by FINTRAC staff.
Be prepared; educate yourself first and read the full CHLIA 2008 – 30 page manual. Assess your practice: Know the requirements. Understand your responsibilities. You must have compliance to the FINTRAC regime approved by National Best. You must have AML Policies and Procedures (you can adapt the CHLIA manual to fit your business) You must test your team procedures. You must have ongoing training for administration staff and any other outside Insurance Brokers working with you.
Audit: If you are selected for an audit, you will need to provide FINTRAC with a copy of the following:
Compliance policies and procedures Reporting policies, procedures and protocols Training program for staff and or brokers Risk assessment for money laundering and terrorist financing Any external review Organization Chart List of all non-registered investment cases for the previous 12 months Any large cash transaction records Access to all client information and records
Deficiency Letter: You will receive a letter 30 – 45 days after the audit which will outline any deficiencies. It will request that you submit an action plan within 30 days to address all deficiencies identified. Please supply this too the [email protected] for creation of the Action Plan Response.
Action Plan Response: You will be required to submit an action plan addressing the deficiencies identified in the audit. Your action plan should provide a timeline which identifies planned implementation of any required changes to your procedures.