Canadian Anti-Money Laundering Measures Slammed

by Mike Godfrey, Tax-News.com, Washington

22 October 2001

The Canadian authorities don't seem to be able to put a foot right over the issue of anti-money laundering measures at the moment, and hot on the heels of the announcement of new initiatives by the Royal Canadian Mounted Police (RCMP) and the country's top securities regulator last week, came a barrage of criticism from the country's financial sector.

Internationally, there have been fears that Canada was likely to be somewhat less than cooperative in the hunt for terrorist assets, given that the jurisdiction came 27th out of a list of 29 countries rated for compliance by the multilateral Financial Action Task Force.

However, the RCMP and other agencies attempted to calm those fears last week, and in a conference organised to discuss the issue, outlined plans for the establishment of a new national anti-money laundering task force, and a reporting analysis centre. The proposed measures have not been well received by the financial sector, and a report in the Canadian Financial Post deemed them 'another exercise in regulatory overkill, if not illegality.'

Then there was further outrage when the Ontario Securities Commission announced proposals to compel Canadian investment dealers to report on the ownership and operation of all the offshore accounts of their clients. In a draft discussion paper leaked to the Canadian press, the self-regulatory industry body, the Investment Dealers Association, vehemently expressed its disapproval of the measures, and stated that there were already sufficient 'rules and procedures' in place.

However, the chief of the Ontario Securities Commission seems to feel that the outrage being expressed by the financial sector and media is disproportionate to the situation, and has stressed that his organisation has no intention of shooting Canada in the foot by forcing it to impose rules and take on extra costs if other countries refuse to.

'We in Canada are not going to put our industry at a competitive disadvantage and we are going to make sure that whatever we agree to is justified on a cost/benefit basis,' he explained in an interview on Thursday.

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