If you are a “reporting entity” for purposes of Canada’s anti-money laundering legislation, you are subject to a compliance examination by FINTRAC officers. Reporting entities include securities dealers and portfolio managers. Also included are life insurance agents and brokers, and money service businesses.
The FINTRAC examination process typically begins with a telephone call to the chief compliance officer. A letter will follow, advising that the examination has commenced. The letter will generally advise that as the examination has begun, any reportable transaction that has occurred during the period under review and has not been reported is to be considered as not having been reported and could result in a deficiency. Likewise, any other “compliance program document”, including policies and procedures “found to have been created or adjusted after the date of the letter may result in a deficiency and potential violation.”
The message here is clear: a reporting entity cannot backfill inadequate policies and procedures, or complete an independent effectiveness review, or file reports that are past due, once the FINTRAC compliance examination begins. The time to complete those policies, procedures, risk assessments, independent review is before any examination begins.