We are hoping to do these on a more frequent basis. If you want to get plugged into more current releases and other information, we highly recommend following us on Twitter and LinkedIn as we provide lots of information, news links, and regulatory updates there as they come out.
1. Money services business in Quebec obtains injunction to suspend de-risking by credit union
2. Presentations & Videos from Toronto session
3. Advisory Committee on Money Laundering and Terrorist Financing (ACMLTF) – May 1, 2019
4. New Retail Payment Framework may impact MSBs who hold "end-user funds held overnight"
5. Quebec revenue to be entrusted with MSB act over next 5 years from AMF
6. Government of Canada mandatory registration of individuals with significant control
7. Membership Portal update
And now for the updates there are a lot, so enjoy!
Money Services Business in Quebec obtains injunction to suspend de-risking by credit union
Our very own member of the board, Marc Lemieux recently provided an update in a recent decision in the matter of Net Xpress Intl. Inc. v. Fédération des Caisses Desjardins du Québec (« Net Xpress »), the Superior Court of Quebec issued an interlocutory injunction to prevent the de-risking of a money services business by a credit union.
Presentations & Videos from Toronto session
Below you will find the videos and approved public presentations. Note that the presentation by David Gray from the RCMP in Vancouver's session is not available to the public.
The actual video recording are only from the Toronto event.
We didn’t want to delay this going out any further, so the other video's of the panels discussions in Toronto will be available in the next newsletter.
Introduction – Joseph Iuso – Canadian MSB Association
ZED Network –Andre Flores/Joanna Simon
Writing Quality STRs – Dwayne King – Grant Thornton
Beneficial Ownership - Eric Hansen - Transparency International (Canada)
Video: Next newsletter
Advisory Committee on Money Laundering and Terrorist Financing (ACMLTF) – May 1, 2019
An event was held in Ottawa by the Department of Finance which also included members from various other industries.
What follows is a summary of this session, as well as the links to the information that was publicly made available.
Regulation package update: https://drive.google.com/open?id=1MJbWAXZYCk4lkVwIkBg8lxxvnZtVDz9O
Budget 2019 Announcements: https://drive.google.com/open?id=1W07Ffi1jSmx74lM4av7J71UWbHpNKXox
Federal Budget 2019: AML Proposals and their Potential Impacts
AML Action, Coordination and Enforcement (ACE) Team is being setup as a pilot project with the RCMP and law enforcement in Canada to the tune of $25M over five years
- Their scope is to be able to triage and prioritize ML investigations and prosecutions Canadian Border services will get $28M over 5 years to tackle Trade based ML over the borders
- In addition, there is not much understanding of this type of ML with the CBSA and as such, much may be to provide training and tools to deal with it $68.9M for the RCMP to upgrade the Federal response for Money Laundering/Terrorist financing
- In addition to coordinating federal efforts, it also supports ACE initiative as per above $16.9M over 5 years for FINTRAC to focus on strengthening regulatory oversight with Casino's in BC
Proceeds of Crime, Money Laundering Terrorist Financing Act (PCMTFA) Regulatory Amendments
Beneficial Ownership registry
- Focused on providing Law Enforcement and Government Agencies with the ability to request information on shareholders (phase 1)
- Phase 2 - will be considered after this and will involve how to make it available to a broader scope including regulated entities who have to check. No timeline provided Changes to the criminal code to strengthen the "recklessness" definition. Mostly to give law enforcement more power to prosecute professional Money Launderers.
- There was a comment that there was a concern that this would lead to unfair prosecutions as the bar has been lowered to who and what could be considered. 4 new teams will be created to evaluate real-estate and ML issues specifically for Ontario, BC, and Quebec
- FINTRAC disclosures have been expended to include the ability to report to Revenue Quebec and the Competition Bureau especially for fraud cases.
- Mandatory disclosure by FINTRAC for entities that are found in violation of regs and are AMP'd (Administrative Monetary Penalty). Challenge becomes how to deal with confidentially orders from the court and until its tested, there is not much that is known.
- FINTRAC to start the process of reviewing the FINA recommendations directly related to the PCMLTFA
- Quick refresh on all the other changes and the fact that the hope is they are approved by the Treasury board to be ready for publication by June. If not, then this would most likely be released after the fall elections. They also mentioned the other changes that were taken into considerations such as the 24 hour rule, reporting requirements, 3rd party determination, EFT changes, STR changes, an the addition of the new sectors under FINTRAC being Virtual Currency, Prepaid and Foreign MSBs.
- New changes for Federal government to be able to provide the data to law enforcement and government agencies came into force June 2018, and slowing being implemented across the board. Federal Government does not have control over provincial counterparts and looks like the June 1/19 date will come and go, but efforts continue to be pushed forward.
- Boarder access to regulated entities is part of phase 2 and discussed above.
- Concern that some provincial bodies are not fully understanding the requirement and its causing some of these initiatives to be inconsistent with Financial Action Task Force (FATF) recommendation. More effort is need to educate provincial counterparts.
Discussion of FINTRAC Compliance Assessment Manual
Most of the group echoed that this guidance was much appreciated and asked that more be provided on what will be requested during examinations to allow for entities to be able to be better prepared with system changes to effectively provide the data being requested as part of the examination process. FINTRAC took it under advisement, but suggested that this would be difficult as there are so many sectors and variants on what is asked. FINTRAC noted that it does allow for extensions to provide data if the entity requests it and can provide adequate reasons.
Working with Royal United Services Institute (RUSI) to Improve Information Sharing
International cooperation and efforts to coordinate are underway and is a slow and steady process given the diversity of legislation around the work, but it is progressing.
Privacy, Digital ID and AML – Two Presentations
There is lots of talk about the duplicity and conflicts relating to the Personal Information Protection and Electronic Documents Act (PIPEDA), Canadian anti-spam legislation (CASL), and provincial privacy regs. The federal privacy commissioner acknowledges that most of the identity solutions and privacy regs are mis-aligned with other regulations. They are looking at expanding the ability to various initiatives in the virtual asset/ crypto space.
New Retail Payment Framework may impact MSBs who hold "end-user funds held overnight"
In 2017, work began on updating the Canadian Payments Act. The net result to date has been a proposed framework, not yet in force or finalized, which would create "Retail payments oversight". The biggest challenge seen to MSBs is that there may be a consideration to come under this framework given the bar is "end-user funds held overnight". We are keeping an eye out on this one, and suggest that those who are interested give the proposal a read (link below). Those that hold funds overnight will have to;
- Mitigate operational risks as the oversight framework would require entities to comply with principles related to establishing security and operational objectives, policies, and business continuity planning. These would include comprehensive physical and information security policies that address all major vulnerabilities and threats.
- To safeguard user funds, entities would be required to place end-user funds held overnight or longer in a trust account at a deposit-taking financial institution that is either a member of the Canadian Deposit Insurance Corporation or covered under a provincial deposit insurance regime or to provide similar levels of protection.
- Understand market conduct measures and would have to disclose to end users' information on the key characteristics of the service or product.
- Refund the payor for losses resulting from unauthorized transactions or errors.
- Apply for registration with the designated federal retail payments regulator.
Link to proposed framework: https://www.fin.gc.ca/activty/consult/rcpa-elcp-eng.asp
Quebec revenue to be entrusted with MSB act over next 5 years from AMF
According to the Quebec Budget Act 2019, the administration of the Money Service Business Act will be entrusted to Quebec Revenue from the AMF it cites this "will enable departments and bodies to better prevent the risks and more effectively combat incidents of fraud by leveraging the Sûreté du Québec's expertise in penal and criminal investigations". See pages 41, 43 & 45
Government of Canada mandatory registration of individuals with significant control
As of June 13, 2019, all Canada Business Corporations Act (CBCA) corporations ― except some distributing corporations ― will be required to create and maintain a new type of register. This is in addition to the registers corporations maintain for shareholders and directors.
Membership Portal update
The membership portal is coming! We are slowly working out the kinks and look forward to having it ready the beginning of September 2019. More information to follow.
In order to allow all those who support the Canadian MSB Association to take part in membership we have created three membership categories to choose from.
Here is a sneak peek of the soon to be launched Canadian MSB Association memberships.
- Full Membership as a FINTRAC registered MSB you can take advantage of the full benefits of membership, including voting rights at the Canadian MSB Associations Annual General Meetings, access to members only web portal, training, past conferences, training sessions, industry updates and much more.
- Partial Memberships are non-voting memberships and are available to all MSB Agents and related industry participants.
- Advisory Members have non-voting rights, with three categories to choose from, benefiting from a variety of perks, including:
- Listing on the CMSBA website as an Advisory Member with services available to CMSBA members
- Ability to post employment opportunities on the CMSBA online job board
- Complimentary booth sponsorship at the annual Fall Conference
- Discounted prices on sponsorship of CMSBA events
- Opportunity to distribute pre-approved marketing material at CMSBA events
For more details on these exciting new membership options go to https://www.canadianmsb.org/association-of-incorporation/
Phew, that was a lot of updates! As mentioned above, to get more timely updates, please follow us on Twitter and/or LinkedIn.