Splish splash

This month, we asked our experts: The Financial Transactions Reports Analysis Centre of Canada (FINTRAC) has audits underway to look at policies and procedures related to compliance with antimoney- laundering regulations at both insurance and securities firms. How can firms crash-test their operations to ensure they’ll fare well in these audits? And what are some best practices advisors should be engaged in when dealing with clients?

Jodi Angevine | FINTRAC has been conducting compliance examinations of life insurance intermediaries since early 2007. This is a continuous exercise, and not specifically related to new regulations. However, be mindful that we’ll be looking for the new elements to be part of your regime. For example, any reporting entity, be it an MGA, AGA or an individual advisor, should ensure it has written policies and procedures that are up to- date with current legislation. If you’re chosen for an examination, we’ll request a copy of your policies and procedures before we come on-site. Training should be ongoing, and staff needs to be trained on reporting, record keeping and client identification requirements. Any documentation that supports when the training was done, who received it, and what it entailed should be collected.

John Kelleway | The most important thing I believe we’ve done as a firm is to stress the need to educate on the new policy—what it means and what to look for. Both advisor and head office staff education have been our short-term priority.

JA | Firms should look at the client identification requirements, the records that they keep and where they keep them. FINTRAC will be requesting samples of your records to ensure you are abiding by your obligations. You need to be able to produce the requested records and have them available for review when we’re on-site. If you don’t already have them in your possession, you’ll need to obtain them either from the agent or the life insurer. Other things to consider: when reviewing application forms, prior to sending them to the insurance company, do you ensure all client identification information is recorded as required under the legislation? Have appropriate third party determination questions been asked and answered? Have corporate clients been properly identified and do you have copies of the articles of incorporation?

JK | We’ve taken advantage of our technology to design a risk matrix— on accounts that might be high risk—as it relates to money laundering. AML is best managed when you know the client you are dealing with, so the new account opening process is managed to make sure we have this well in place—identification, knowing the beneficial owners on corporations and trust accounts, and so on.

JA | When dealing with clients, agents should make it a best practice to know what information they’re required to collect from a client and advise them prior to a meeting what they should bring with them—such as a piece of government-issued identification, articles of incorporation, etc. JK | We have an internal audit team complete branch mock audits to ensure all of these issues are being managed by advisors, branch managers and the head office.

JA | Also, you may have noticed that most insurers have recently changed their application forms. This is largely due to the changes in the Proceeds of Crime legislation. Firms that haven’t already done so should order new stock immediately and throw out older versions of applications as they may be missing questions, or might not provide a place for information that must now be recorded. While it isn’t a requirement that the application form be used for your record-keeping purposes, it is during the application process that you have the best opportunity to obtain and document all the required information.