To Clients: New (anti) money-laundering rules

(August 2008) New anti-money-laundering legislation enacted in June adds a new layer of due diligence to client intake, monitoring and KYC obligations. If this weren’t enough, the rules, intended to bring Canada in-line with international standards, could push some very sensitive buttons by introducing elements that seem in conflict with privacy standards or that could be seen as a new move toward racial profiling by the industry.

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Inform your clients — let them know about the changes, tell them how they might affect your meetings going forward and give them some background to put things into context.

Dear [Client’s name],

It’s a sensitive subject, but I wanted to take this opportunity to let you know about recent legislative changes that could affect our planning relationship.

For most of you, it might seem like we’re being more nosy than usual about your background. Others might wonder why we’re suddenly asking to see your driver’s licence or other documentation to verify your identity at every meeting, even though we’ve known each other for years.

Please don’t take these changes personally.

In June, the government of Canada enacted new legislation to combat money laundering. Until recently, this country was apparently out of step with international standards.

Casinos, real estate agents and accountants have needed to comply with money-laundering rules for years now — compliance standards that are now being extended to financial services relationships as well.

For those of us at [firm’s name] to comply, it means we must report transactions deemed “suspicious” by the Financial Transactions Reports Analysis Centre of Canada (FINTRAC), identify “politically involved foreign persons,” their families and close associates — those with significant political involvement or position in other countries – and keep track of money sources for transactions made by clients who fit this profile. Certain transactions, large cash transactions in particular, will also be more closely scrutinized in the future. We also must meet all prospective clients face-to-face before opening new accounts for them.

All of this means we’ll be asking more questions than we have in the past. Please be assured that this message is not intended to cause alarm, merely to inform you about the changes made this summer. In all likelihood, the changes will not even apply to most client situations.

If the investment and planning we do for you and your family does fall into the realm of activities FINTRAC is interested in, however, you can be assured that we will do our best to answer your questions and file the appropriate paperwork needed for you.

If you have any questions at all, feel free to contact my office. I would be happy to hear from you.

Sincerely,

[Your name]

[Your signature]

Filed by Kate McCaffery Advisor.ca, kate.mccaffery@advisor.rogers.com

(08/21/08)