Regulators approve IDA anti money laundering measures

(May 17, 2004) Provincial securities regulators have rubber-stamped an IDA policy that requires increased disclosure of offshore account ownership. The move is an attempt by the brokerage industry association to combat international money laundering.

Under the new policy — an amendment to the IDA’s “know your client” requirements — member firms must identify the beneficial owner of private, or non-individual, corporate and trust accounts, many of which are held offshore.

The verification must be completed within six months of opening a new account. In cases of current accounts where the beneficial owner is not known, the information must be obtained within one year of the policy’s implementation.

“Implementation of these new requirements will send a clear message that Canada will not allow its financial intermediaries to be used to launder dirty money,” says IDA senior vice president Paul Bourque.

Last June, the international Financial Action Task Force issued a recommendation that beneficial owners of corporate accounts should be identified. Within two days, the IDA board had adopted the recommendation at its annual general meeting in New Brunswick.

The IDA says it will soon advise members of the policy’s implementation date and is also preparing guidance on how to comply with the new rule.

Money laundering is considered to be a serious problem in Canada. An IDA survey conducted in 2001 identified 13,000 offshore accounts in Canada.

In 2000, the federal government created the Financial Transactions and Reports Analysis Centre (Fintrac) to collect and analyze financial information related to money laundering and terrorist activities.

the year-ending March 31, 2003, Fintrac identified $460 million in suspect financial transactions. At an IFIC conference last week in Toronto, Fintrac’s Sandra Brown called Canada a haven for money launderers, citing lenient jail terms for financial fraudsters and privacy rules that can be used to help conceal criminal action.

Filed by Doug Watt, Advisor.ca, doug.watt@advisor.rogers.com