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28/11/2011 –Canada proposes changes to their anti-money laundering regime
On 7 November 2011, the Department of Finance of Canada released the Consultation Paper setting out significant proposed changes to the customer due diligence (CDD) requirements contained in the Proceeds of Crime (Money Laundering)and Terrorist Financing Regulations (“PCMLTF”).
The proposed amendments are intended to get Canada’s anti-money laundering regime in line with the Financial Action Task Force's 40+9 Recommendations on Money Laundering and Terrorist Financing, with the main focus on improving the country’s compliance with Recommendation 5 relating to CDD. The other aim of introducing the proposed amendments is to enhance the ability of reporting entities to follow risk-based approach when fulfilling their statutory duties.
According to the Financial Institution Bulletin issued by law firm Fasken Martineau, if the amendments were full adopted, the extended obligations on reporting entities would become significantly more onerous, especially for small reporting entities. Accordingly, various representatives of reporting entities express their concern and urge the Canadian government to reconsider the implications of the proposed changes.The due date for submitting comments on the Consultation Paper is 16 December 2011.
Even though Canada is currently having public consultations on amending its anti-money laundering regime, in our understanding legal professionals will still not be covered by these regulations. Following the litigation challenging constitutionality of the PCMLTF’s application to legal professionals started in November 2001, the Supreme Court of Canada had affirmed that lawyers should not be used as archives for the State and issued interim injunction prohibiting application of the legislation to lawyers.
In his presentation at the Annual IBA Conference in Dubai, Ronald J. MacDonald, Q.C., President of the Federation of Law Societies of Canada, outlined the whole process of making lawyers subject to anti-money laundering obligations without infringing the Canadian Constitutional Law and without the involvement of national policymakers. In order to meet the standards set out in the FATF Recommendations, lawyers in Canada agreed on self-imposed regulatory obligations. The effectiveness of self-regulation is carefully scrutinised by provincial and territorial law societies, reinforcing the Principle of Independence of the Bar.
To access the full presentation ‘Anti-Money Laundering Regulation – What Can be Learned from the Canadian Experience’ by Ronald J. MacDonald Q.C. please click here.
IBA Legal Projects Team
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04/11/2011 –Second stage of the review of the FATF Standards completed
At its Plenary meeting in Paris held on 27-28 October 2011, the FATF announced that it has significantly advanced its work to revise the 40+9 Recommendations, as the second stage of its public consultation has been completed. The new standards are believed to be ready for release in the early months of 2012.
This stage of consultations focused primarily on beneficial ownership requirements. In the FATF’s view ‘there is broad agreement on the principles and proposed revisions to the FATF Standards’. It also reported that there has been a significant number of responses received from the second round of public sector consultation and that they all were considered and discussed when reviewing the FATF Standards.
To display its commitment to constructive engagement, the FATF is currently planning to run the final round of consultations with the private sector and other stakeholders again through the FATF Consultative Forum in December 2011. The International Bar Association will take part in the final round of consultations, representing the global voice of the legal profession as one of the stakeholders at the meeting with the FATF that will take place in Milano on 5-6 December 2011.
After closing the third round of discussions on the proposed revisions, the FATF will hold a Special Plenary meeting in January 2012 to finalise the process of reviewing the Recommendations and agree on the final shape of the revised Standards with a view to finally adopt them in February 2012.
IBA Legal Projects Team
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