The Canadian Securities Administrators (CSA) and the Alberta Securities Commission (ASC) both conducted compliance sweeps recently, with the CSA reviewing small IFM, PM and EMD firms registered with the CSA, and the ASC reviewing EMD firms only.
The results of both sweeps were quite similar though, revealing a pattern of noncompliance in several key areas. Both the CSA Staff Notice 31-350 and ASC Notice 33-705 are useful reads as they identify common deficiencies that continue to plague all registrant categories and provide guidance for best practices.
The CSA provides a general formula for regulatory compliance at the outset, namely i) a comprehensive plan to address significant business interruptions and In Brief Common Reporting Standard Further to our October 2016 Bulletin, the Canadian government recently passed legislation implementing the Common Reporting Standard (CRS), an international standard that close to 100 countries (though not the United States) have signed on to. Under the CRS, cooperating tax authorities in participating countries will automatically exchange financial account information. The FATCA regime continues to govern the exchange of relevant financial account information between Canada and the U.S. In Canada, the responsibility of enforcing CRS will fall to 2 aumlaw.com succession issues; ii) monitoring systems that are likely to identify noncompliance early; and iii) supervisory systems that allow a firm to correct noncompliance. As well, the CSA emphasizes the importance of succession planning, especially with small firms. We will discuss succession planning further in next month’s Bulletin.
At a more granular level, both the CSA and ASC found that many firms were deficient in their collection of KYC and KYP information; their relationship disclosure information; reporting to clients; and sales and marketing materials, amongst other things. The CSA also focused on the inadequacy of firm policies and procedures and inadequate or missing CCO Annual Reports.
The above is only a selection of highlights from the Notices, both of which are worth reading in their entirety to assist firms in strengthening their compliance with their relevant securities laws. Regulators are stepping up their scrutiny of these areas, and after taking the time to provide detailed guidance on how to meet with these requirements, firms will have little excuse for non-compliance.