compliance puzzle

The Investment Industry Regulatory Organization of Canada (IIROC) is updating its guidance to dealers on complying with their anti-money laundering (AML) requirements.

IIROC said it’s revising the guidance to reflect changes to AML obligations that have been adopted over the years, including changes to securities laws, regulatory requirements and federal AML demands. IIROC first issued AML compliance guidance in 2010.

“We are publishing this guidance to focus on the relationship between federal AML/ATF laws and IIROC client due diligence requirements to assist our dealers in meeting their regulatory obligations,” the self-regulatory organization said in a guidance note.

For instance, the guidance spells out various red flags for investment dealers, including clients with complex ownership structures; clients trading in over-the-counter (OTC) securities and/or penny stocks; trading in shell companies; early redemption activity; and clients using accounts to transfer funds without legitimate securities transactions.

Ensuring that dealers fulfill their AML obligations is a responsibility shared between IIROC and the federal AML agency, the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC).

Among other things, the revisions aim to incorporate amendments to IIROC’s client identification and verification rules, which take effect next June, and to eliminate duplication with FINTRAC guidance.

IIROC’s guidance has also been redrafted in plain language.

The new guidance takes effect June 1, 2020.