Certain individuals and companies affected by anti-laundering legislation; Although new anti-money laundering laws have been ins

Post Sept. 11 2001, terrorist financing and money laundering were brought under a more watchful eye. The amendments to the federal anti-money laundering legislation that came into effect on June 23, 2008, have had a great impact on many individual professionals and companies from a wide variety of industries--particularly securities and insurance brokers, financial advisors, and even retailers.

As a result of die legislative framework, certain companies and individuals are required to adhere to the following:

* Report attempted suspicious and large curb transactions to The Financial Transactions and Reports Analysis Centre of Canada (FINTRAC).

* Keep records of clients' personal information for five years' duration.

* Employ mandatory compliance regime, employee training and education.

* Revise agreements with business partners (e.g. between retailers and credit card companies) to ensure compliance.

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In addition to the new regulations, real estate developers are required to meet client identification, record-keeping and transaction-reporting requirements under the Proceeds of Crime (money laundering) and Terrorist Financing Act. Casinos need to report to the FINTRAC of any large disbursements and keep records in respect of these transactions.

Patrick Veilleux, a lawyer with McCarthy Tetrault and a member of the firm's litigation group that also specializes in anti-money laundering legislation, elaborates: "Compliance programs now require that policies and procedures be in writing and updated every two years. Employee training must be conducted. Within the compliance program, there must be a written evaluation which is risk-based. Every entity must be analyzed or established--which activities would be more susceptible to money laundering or terrorist activities. Identify which ones arc high risk, they must then put those through case studies and find a solution."

Veilleux adds that, industries with frequent client interaction and large monetary transfers, like real estate, need to perform identity checks on their clients and keep paper records of their findings, as well as use stricter judgment on presumed "suspicious" transactions.

The impact of these new requirements spans beyond business operations and raises serious questions and considerations regarding the capability of companies and individuals to meet these new requirements.

Particularly, industries such as retail will have issues with employees following the guidelines set forth in writing between the retail store and their affiliate credit card companies, who often rely on their retailers to ascertain the proper information they need to stay compliant.

"Often retailers call me and say 'I pay my employees $9 an hour, they aren't trained to do this,' " Veilleux comments.

While FINTRAC does gain more capability to perform compliance audits with these laws put into place, Veilleux insists that the Centre will not become a certification board.

"FINTRAC is there to provide guidance, but they will not certify that someone's practices are compliant," Veilleux says. "There are guidelines, online presentations, lots of literature, hut nobody will certify whether or not the regimes are compliant. The onus is on you to become compliant."

CMAs help clients comply with new amendments

Despite these stricter laws, Bob Parry, director of public accounting, CMA Canada, says "for most CMAs, it's business as usual."

"In most situations, the accountant is simply on the reporting end of things, and they definitely keep records--large cash transactions, copies of official corporate records, copies of suspicious transaction reports," he notes. "Accountants already comply with most of these rules, and they will make sure that their clients comply with their rules."

Parry is quick, however, to make the distinction between an accountant who is simply reporting finances and one who is serving in an advisory capacity to clients.

"Accountants are conditioned to inquire," Parry says. "That kind of behaviour is integrated throughout their accounting training. If a client is buying a building for $10 million, and you know he or she doesn't have access to that kind of money ... you would normally inquire as to where it came from."

While many of the facets of the anti-money laundering law are black and white, some grey area does exist--especially when dealing with suspicious transactions.

"A lot of reporting entities have expressed concern about suspicious transaction reporting because there are penalties that can be imposed for failure to report," Veilleux says. "Given a lack of a clear definition, some professionals are concerned of exposure to administrative penalties."

Veilleux adds that, transactions should still be reported even if a client who was about to engage in a suspicious transaction pulls out at the last minute.

It is still advisable that CMAs visit the FINTRAC website (http://www.fintrac-canafe.gc.ca/) to make sure the processes they are currently following and have in place at their companies fit into the guidelines put forth by FLNTRAC. As Parry suggests, many will find that they are already compliant and can continue with their daily activities, while others will need to tweak their practices to make sure they won't be susceptible to a compliance audit.

Arda Ocal is a Mississauga-based writer and on-air personality with Rogers TV.

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