FEDERAL REG

SOR/2016-207: Regulations Amending the Regulations Amending Certain Regulations Made Under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act, 2016

REGISTRATION OF FEDERAL REGULATION - VIA OIC DATABASE, PRIOR TO PART II OF THE GAZETTE

Registered
June 30, 2016


REGULATORY IMPACT ANALYSIS STATEMENT (This statement is not part of the Regulations.) Issues On June 17, 2016, the Governor in Council made regulatory amendments to the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (the Act). These regulations were initially published with a coming into force date one year later than originally intended. The coming into force for the regulation... (Click for more)


Published on June 30, 2016

Bill Summary

SOR/2016-207: Regulations Amending the Regulations Amending Certain Regulations Made Under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act, 2016

REGULATORY IMPACT ANALYSIS STATEMENT (This statement is not part of the Regulations.) Issues On June 17, 2016, the Governor in Council made regulatory amendments to the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (the Act). These regulations were initially published with a coming into force date one year later than originally intended. The coming into force for the regulations was inadvertently tied to the Order in Council for the coming into force of the legislative provisions. The result is that stand-alone regulatory provisions that were intended to come into force immediately are inadvertently delayed until June 2017. Objectives The objective of this amendment is to remove an additional year delay that is currently written into the Regulations Amending Certain Regulations Made Under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act, 2016. All other impacts mentioned in the June 29, 2016, version of the Regulatory Impact Analysis Statement (RIAS) stand. Description This amendment will change the coming-into-force date of the Regulations Amending Certain Regulations Made Under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act, 2016. Certain provisions need to come into force immediately as they are burden relieving measures and stakeholder groups have been expecting them for some time. In addition, Canada made a commitment to implement certain Recommendations of the Financial Action Task Force, the international standards to combat money laundering and terrorist financing. Canada’s anti-money laundering and anti-terrorist financing regime was subject to a mutual evaluation by the Financial Action Task Force in 2016. Amending the coming into force provisions would improve compliance with these international standards This amendment removes a one-year delay that was initially in place. Regulations that were previously set to come into force one year from registration will now come into force on June 30, 2016, or if the amending regulations are registered after, on that later date. Regulations that were set to come into force with a two-year delay will now come into force on June 17, 2017. For further clarity the chart below outlines a high level description of which regulatory requirements will be coming into force on June 30, 2016, or if the amending regulations are registered after, on that later date, and which will come into force on June 17, 2017. This table outlines a high level description of which regulatory requirements will be coming into force June 30, 2016, or if the amending regulations are registered after, on that later date, and which will come into force on June 17, 2017. Regulatory Requirements Coming-into-force date Expand the definition of a signature to more broadly include electronic signatures June 30, 2016, but if the amending regulations are registered after, on that later date Clarify application of section 63 in the Regulations as it relates to the basis for recognizing an individual June 30, 2016, but if the amending regulations are registered after, on that later date Clarify that a reporting entity that relies on an agent to verify client identity on its behalf could use identification measures that were previously undertaken by that agent on behalf of another reporting entity or itself with respect to the same client June 30, 2016, but if the amending regulations are registered after, on that later date Expand the designated information that FINTRAC can disclose to disclosure recipients June 30, 2016, but if the amending regulations are registered after, on that later date Where a securities dealer is a reporting entity under the Act, any brokers employed by that securities dealer would not be considered reporting entities in their own right June 30, 2016, but if the amending regulations are registered after, on that later date Update the circumstances under which an entity is considered to be affiliated with another entity to align with a similar legislative amendment June 30, 2016, but if the amending regulations are registered after, on that later date Update the provision dealing with foreign currency conversion to ensure it is done "using" an exchange rate rather than "based" on an exchange rate, to ensure other factors are being considered when converting currency June 30, 2016, but if the amending regulations are registered after, on that later date Update the existing list of provisions for which FINTRAC can issue an AMP June 30, 2016, but if the amending regulations are registered after, on that later date, and delayed one year (varies by provision) Making a determination for domestic politically exposed person or head of international organization June 17, 2017 Periodically determine whether existing account-holders are politically exposed foreign persons June 17, 2017 Extend the time within which a reporting entity must make a determination that a client is a politically exposed foreign person from 14 days to 30 days June 17, 2017 Clarify the records that must be kept with respect to a client’s credit file June 17, 2017 Paragraph 71(c) of the Regulations lists the elements that should be considered in a reporting entity’s risk assessment June 17, 2017 Clarify reporting obligations to improve the financial intelligence that FINTRAC receives June 17, 2017 Require reporting entities to keep a record of any "reasonable measures" they have taken (as required under the Act) June 17, 2017 Require reporting entities in a financial conglomerate to, as part of their compliance programs, take into consideration the risks resulting from the activities of their affiliates June 17, 2017 Update the definition of casino June 17, 2017 Various technical and consequential amendments June 17, 2017, and June 30, 2016, but if the amending regulations are registered after, on that later date (varies by measure) Update the existing list of methods that reporting entities must use to verify the identity of their clients Transitional (Regulations will now allow the new identification requirements to be used immediately while still allowing the old identification requirements to be utilized for a period of 12 months.) “One-for-One” Rule As these amendments only clarify the coming-into-force dates of the regulations as initially intended and do not introduce new or incremental administrative costs, the “One-for-One” Rule does not apply to this amendment. Small business lens The small business lens does not apply to this proposal, as there are no costs to small business. Consultation Stakeholders commented on the coming-into-force dates on the June 17, 2016, version of the regulations where they were inadvertently set for one year later than planned. These amendments address their concerns by providing clarity and are in line with the original intent. Stakeholders were extensively consulted with the original set of the regulatory amendments that can be found in the June 29, 2016, publication of the RIAS. This amendment will not result in objections from stakeholders, as the amendment is in line with the original intent of the coming-into-force provisions. Rationale This amendment to the Regulations is needed to ensure the Government’s commitments to combating money laundering and terrorist financing are not unduly delayed. Stakeholders and the international community are expecting these amendments to come into force one year earlier than what was published. There are no additional impacts, costs or burden as a result of this change. Implementation, enforcement and service standards The regulatory amendment will be implemented on June 30, 2016, but if the amending regulations are registered after, on that later date. FINTRAC has already issued necessary guidance for some of these measures. Additional measures will contain its originally intended one year delay of coming into force. FINTRAC will be following up with additional guidance. Contact Lisa Pezzack Director Financial Systems Division Financial Sector Policy Branch Department of Finance 90 Elgin Street Ottawa, Ontario K1A 0G5 Email: [email protected] Footnote a S.C. 2014, c. 20, ss. 294(2), (4) and (6) Footnote b 2006, c. 12, s. 40 Footnote c 2006, c. 12, s. 40 Footnote d S.C. 2000, c. 17; 2001, c. 41, s. 48 Footnote 1 SOR/2016-153

This Bill does not amend any statutes.

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