With face-to-face meetings no longer viable in a world of social distancing, building a book this quarter may mean going digital, with processes varying by firm.
New clients can be set up via virtual meetings, IIROC confirmed in an emailed statement.
“Whether it is an [order-execution-only] account or advisory account, there is nothing in our rules that prohibits beginning a new client via a virtual meeting,” the regulator said.
“IIROC rules are technology neutral and allow for end-to-end electronic onboarding of clients.”
One potential challenge is that firms must meet requirements for verifying client identification remotely.
IIROC cited guidance from the Transactions and Reports Analysis Centre of Canada (FINTRAC) that permits the use of technology to authenticate digital copies of government-issued ID. The guidance was updated last year in connection with amendments to modernize Canada’s anti-money laundering regime.
Michelle Alexander, vice-president and corporate secretary at the Investment Industry Association of Canada, said in an email that most firms don’t have that technology. Still, some do, and others are planning to acquire it, she said.
After client ID is authenticated, during a virtual meeting the advisor would compare the name and features of the client in the live video with the name and photo on the ID, per the guidance.
Alternatively, the new client could take a selfie that facial recognition technology could compare with the photo on the authenticated ID, assuming a firm had such tech.
Alexander said firms are using another accepted — and less tech-reliant — technique: the dual process method, where a client’s identity is verified using information from two reliable sources, such as governments or banks.
FINTRAC’s guidelines also include the credit method, whereby the firm conducts a search on the client’s credit file at the time it verifies the client’s identity.
In an emailed statement, the Mutual Fund Dealers Association of Canada said its members continue to verify ID in accordance with FINTRAC requirements, and it highlighted the heightened risk of fraud during the pandemic.
“It is important for members to have robust ID procedures particularly when receiving requests to change banking info or to redeem funds,” it said.
When onboarding a new client via a virtual meeting, IIROC said firms should also ensure the client is set up for electronic document delivery, as well as e-signatures, to facilitate review and signing of client account opening documents.
By signing the client up for e-delivery, the firm can provide monthly account statements, disclosures, trade confirmations, performance reports and charge reports by email, IIROC said.
The regulator also said it was flexible in its regulatory approach, given the pandemic.
“It is important for IIROC to provide clear direction and leadership as a regulator, and to provide the most responsible solutions under the current circumstances,” said Irene Winel, senior vice-president of member regulation and strategy at IIROC, in an email.
“We will continue to demonstrate flexibility to investment firms and their advisors in the way that our rules are interpreted and applied.”