Ethical rules and the Act respecting the protection of personal information in the private sector require the advisor to protect the personal information they keep on their clients.
However, the Proceeds of Crime (Money Laundering) and Terrorist Financing Act ((the “Proceeds Regulations”) stipulates an exemption from civil or criminal prosecution when a person, acting in good faith, discloses information related to suspected money laundering or terrorist financing.
This exemption from the confidentiality obligation may apply when an advisor sends certain information to FINTRAC. It is also an essential exception to support the fight against money laundering and terrorist financing. The advisor may therefore send required information without violating the standards of good practice in terms of confidentiality.
The section Personal information (provides more details on the standards of good practice that the advisor must follow for protecting personal information.
The main objectives of the Proceeds Regulations are to:
- Plan and implement measures for detecting and discouraging criminals
- Conduct investigations and prosecutions under this law
- Establish obligations for keeping documents and identifying clients that allow suspicious transactions to be detected
- Create a “plan for mandatory declaration of suspicious financial transactions and cross-border movement of cash and goods”
- Create an organization to be responsible for examining this information: FINTRAC
- Fight organized crime by providing those responsible for applying the law with information that allows them to deprive criminals of the proceeds of their illegal activities.
The Proceeds Regulations specify a series of measures to counter money laundering attempts in the financial sector.
These measures must be established by firms, independent partnerships, independent representatives (advisors), and dealers. Advisors working for them must follow these measures, which are summarized below.
- Establish a compliance program that includes the following components:
- Naming a compliance agent who is responsible for implementing the program
- Creating and applying compliance measures and policies that must be subject to surveillance, noted in writing, and updated, when necessary
- Evaluating risks related to the practice – when the risk is high, create special surveillance measures for these at-risk operations
- Examining measures and policies every two years or when necessary to evaluate their efficiency
- Setting up a written continuing education program on compliance for employees and mandataries, tailored to their situation
- Notify FINTRAC of:
- Any cash transaction of $10,000 or more, within 15 business days of the transaction
- Two or more cash transactions for less than $10,000 each that total $10,000 or more, if they were made within a consecutive 24-hour period
- Any major cash transaction from or to a foreign location
- Any suspicious transaction or transaction attempt, within 15 business days of the transaction or attempt
- A report on the assets held by the company, firm, or dealer, when there are reasons to believe that they belong to a terrorist or a terrorist group
Procedure To Follow
On its website, FINTRAC provides forms that the firm, independent partnership, independent representative (advisor), or dealer must use to make these declarations, including:
- Major cash transaction declaration form
- Suspicious transaction declaration form
- Terrorist group asset declaration form
The advisor must be reasonably diligent to provide the requested information in the sections where the information is not required, such as regarding the following items:
- Transaction or transaction attempt as well as distribution of the money in question
- Identity of the person who completed the transaction or person for whom the person completed it
- Reasons that caused suspicion and measures taken, if applicable
It is important to know that FINTRAC standards are imperative and criminal or administrative sanctions may apply to a person who does not follow them.