The Investment Dealers Association have announced an action plan regarding offshore accounts held at some Canadian investment dealers.

In October 2001, the IDA and the Canadian Securities Administrators conducted a survey of IDA firms to identify the number of client accounts that originated in jurisdictions identified as ‘non-cooperating’ by the OECD’s Financial Action Task Force on Money Laundering. The survey also asked firms to describe their policies and procedures for discharging account opening, ‘know your client’, and account supervision obligations for such accounts.

IDA analysis of the 13,000 offshore accounts identified in the survey indicates that some 3,000 are in FATF non-cooperating jurisdictions. Of these accounts, 2,281 are registered in their beneficial owners’ names and 35 are in the names of various institutions. The survey identified a remaining 684 accounts in the name of entities (corporations, trusts, foundations, etc.) where the beneficial owners may or may not be fully disclosed.

The IDA member regulation division will be examining these 684 accounts to identify any signs of suspicious activity and to follow up with firms if there is any evidence that an account has not been properly supervised. In many instances, it will be possible to immediately identify the beneficial owners from the firms’ other records. With the remainder, more extensive inquiries might be required, including a trading examination and investigation by compliance staff. Enforcement action may result, based on the evidence.

Last fall the IDA approved amendments to increase the accountability for opening corporate accounts and to place increased account supervision when the beneficial owner of a private corporate account is not known. These amendments were sent to the CSA for review, comment and approval.

The IDA says that it is prepared to make further enhancements in accordance with international developments and the desire of regulators. “The beneficial ownership of private corporate brokerage accounts in the FATF jurisdictions designated by the FATF as non-cooperating is a significant regulatory concern,” said IDA SVP member regulation Paul Bourque.

“We are committed to meeting international standards. That’s why we indicated to the CSA that we intended to revise or amend our proposed by-laws appropriately in response to upcoming international regulatory developments. We will also move quickly and decisively to carry out our action plan in response to the survey findings.”