- The Canadian Securities Administrators (CSA) recently issued Staff Notice 31-352 Monthly Suppression of Terrorism and Canadian Sanctions Reporting Obligations (the Staff Notice) dealing with monthly reporting and other requirements arising from current or future legislative measures under Canadian federal laws governing terrorist financing and sanctioned individuals and entities (the Federal Provisions). The Staff Notice replaces the former CSA Staff Notice 31-317.
- The notice reminds registrants, exempt dealers and exempt advisers (including foreign firms relying on the international dealer and adviser exemptions in Canada) of their obligation to comply with Federal Provisions at all times, noting that these rules may be added to, modified or repealed at any time.
- To help promote compliance with these obligations, the CSA have created the CSA Guide to Monthly Suppression of Terrorism and Canadian Sanctions Reporting (the STCS Guide).
A person or entity associated with terrorism or otherwise subject to Canadian sanctions may be listed in a Federal Provision as a Designated Person. Any dealings with a Designated Person must be reported. A Designated Person may be described differently in the various Federal Provisions. The STCS Guide should be referred to for a consolidated list of Designated Persons and further guidance.
Overview of Certain Duties
By way of reminder, the notice reiterates that the duties imposed under Federal Provisions as set out in the STCS Guide include the following:
- Duty to disclose. A covered firm has a duty to determine on a continuing basis whether it is in the possession or control of property owned or controlled by or on behalf of a Designated Person. Findings or Nil information must be reported in a monthly Suppression of Terrorism or Canadian sanctions report (Monthly STCS Report) on the 14th day of each month.
- Freezing property. Generally, any person in Canada (and any Canadian outside Canada) is prohibited from knowingly dealing, directly or indirectly with property of a Designated Person, entering into or facilitating, directly or indirectly, any transaction in respect of such property, or providing any financial or other services for or for the benefit of a Designated person.
- Duty to disclose – RCMP and CSIS. Any property held for any Designated Person and any information about transactions or proposed transactions regarding that property must be reported to the Royal Canadian Mounted Police and/or the Canadian Security Intelligence Service by any person in Canada and any Canadian outside Canada.
New Consolidated STCS Reporting Form
In order to cover current and future Federal Provisions, the CSA have issued a new form of Monthly STCS Report which no longer lists specific Federal Provisions by name. The new form is available on the websites of the CSA regulators. Reports may continue to be filed by e-mail or electronically with the principal regulator or in the jurisdiction where most of the firm’s clients reside. Members of the Investment Industry Regulatory Organization of Canada (IIROC) are requested to use the forms issued by IIROC and file those with IIROC. Only one monthly consolidated report should be filed in respect of all Federal Provisions.