The Investment Dealers Association says that the federal government should rewrite its proposed new anti-money laundering legislation.
In a report to its members, the IDA strongly encourages “member firms to call on Ottawa to undertake an extensive rewrite of the proposed legislation and for the subsequent proposal to be subject to a comment period.”
In its report, the IDA lists five main objections to the legislation, saying:
- it creates unnecessary duplication in identification procedures;
- it fails to recognize the anti-laundering legislation of foreign jurisdictions, also creating unnecessary duplication;
- it requires firms to determine whether foreign jurisdictions have equivalent anti-laundering regulations, and whether foreign firms are complying with them;
- it requires firms to verify the client’s identity with at least three people authorized to trade the account of a foreign financial institution, the IDA says “this serves no purpose in preventing money laundering”; and
- it keeps a restrictive list of exemptions, the IDA would prefer to see all companies on all major global exchanges included in the exemptions; and a general lack of clarity in legislation’s language.
Although the IDA agrees that the securities industry needs to support stronger anti-laundering regulations, it argues that the proposed rules will create superfluous bureaucracy. “Unnecessary red tape and duplication will drive foreign institutions away from the Canadian marketplace, which will have a significant negative impact on the capital markets in Canada.”