Last month, we reported that a FINTRAC staff member’s comments at an OSC seminar created some uncertainty about what registrants should do when a document used for identification purposes at the time of account opening expires. On March 13, FINTRAC clarified its views as follows:
A. Keeping Client Information Up-to-Date
FINTRAC confirmed that a firm does not have to re-identify a client if the client identification (ID) information that it originally used has expired before conducting a transaction on the client’s behalf. As part of ongoing monitoring, the firm must keep client information (e.g. name, address, date of birth, occupation) up-to-date, but it does not have to re-identify the client, provided that the firm has kept the relevant records and has no doubts about the information used.
B. Client Identification and Beneficial Ownership
FINTRAC also clarified that securities dealers have obligations relating to beneficial ownership only when they have to confirm the existence of an entity. These obligations include, in general terms:
- Obtaining information that describes the entity’s ownership, control and structure (including the names and addresses of its beneficial owners);
- Taking reasonable measures to confirm the accuracy of information obtained; and
- Keeping records of the information obtained and measures used to confirm its accuracy.
Reasonable measures to confirm the accuracy of information obtained can include referring to official documentation or records and/or obtaining documentation signed by the client to confirm the veracity of the information. In some circumstances, a single document can be used to obtain the information and confirm its accuracy. If a firm is unable to obtain or confirm beneficial ownership of an entity, the firm must verify the identity of the entity’s most senior managing director. FINTRAC recommends, but not does not require, firms to use one of the methods described in its guidance document, Methods to Identify Individuals and Confirm the Existence of Entities.