1. CF Canada Financial Group
Monthly Compliance Training Section 7 – Reporting Requirements Reporting Procedure Record Keeping & Client Identification Implementation of Compliance Regime Written Policies and Review Thursday 4 July 2019

2. FINTRAC (The Financial Transactions and Reports Analysis Centre of Canada)
Canada’s financial intelligence unit which was created in 2000
- an independent agency, reporting to Minister of Finance and to
enforce the Proceeds of Crime (money laundering) and Terrorist
Financing Act and its Regulations.

3. FINTRAC (The Financial Transactions and Reports Analysis Centre of Canada)
Mainly deal with Proceeds of Crime in Canada in two major area:
- Money Laundering
- Terrorist Financing

4. FINTRAC (The Financial Transactions and Reports Analysis Centre of Canada)
Money Laundering:
- any act or attempt to disguise the source of money or assets derived
from criminal activity
Goals of Money Laundering:
- conceal the true ownership & origin of criminal proceeds
- maintain control of the criminal proceeds during the money
laundering process
- change the form of criminal proceeds
- ultimately use the proceeds for legitimate purposes of terrorist
financing

5. Entry of illegal funds into financial system
FINTRAC (The Financial Transactions and Reports Analysis Centre of Canada)
Three Stages of Money Laundering:
Placement
Entry of illegal funds into financial system
Layering
Hiding of the origin of the funds through multiple and or complicated transactions
Integration
Exit of clean funds from the financial system without attracting suspicion

6. Entry of illegal funds into financial system
FINTRAC (The Financial Transactions and Reports Analysis Centre of Canada)
Stage 1 - Placement:
Purposes: (1) relieve the criminal of holding or guarding their dirty money
(2) places the money in the legal financial system
Placement
Entry of illegal funds into financial system

7. FINTRAC (The Financial Transactions and Reports Analysis Centre of Canada)
Stage 2 - Layering:
Intent: - obscure the trial by illegitimate proceeds and sometimes even
the owner
Layering
Hiding of the origin of the funds through multiple and or complicated transactions

8. FINTRAC (The Financial Transactions and Reports Analysis Centre of Canada)
Stage 3 - Integration: Intent: - create the perception of legitimacy for the illicit funds
Integration
Exit of clean funds from the financial system without attracting suspicion

9. FINTRAC (The Financial Transactions and Reports Analysis Centre of Canada)
Two Common Methods of Money Laundering:
(1) Smurfing aka structuring deposits:
deposit $5,000
Account
Balance
= $25,000

10. FINTRAC (The Financial Transactions and Reports Analysis Centre of Canada)
Two Common Methods of Money Laundering:
(2) Designating Nominees:
- uses family members, friends or associates
- advisors must refuse to open such accounts if they become aware that the
beneficial owner is not the client attempting to open the account

11. FINTRAC (The Financial Transactions and Reports Analysis Centre of Canada)
Terrorist Financing:
- is the process by which funds are provided for terrorist activity – thus
proceeds for crime
Purposes of Terrorist Financing:
- facilitate or carry out any terrorist action which needs continuing
source of funds to support those activity
- can involve Individuals, Groups, Trusts, Partnerships and Organizations

12. FINTRAC (The Financial Transactions and Reports Analysis Centre of Canada)
Responsibilities of entities in life insurance industry:
5 Independent broker / AGAs / MGAs are required by law to create and maintain a
documented Anti-Money Laundering Compliance Regime, consisting of 5 key
requirements.

13. FINTRAC (The Financial Transactions and Reports Analysis Centre of Canada)
Responsibilities of entities in life insurance industry:
Your compliance regime has to include the following 5 requirements:
(1) The appointment of a compliance officer
(2) A written and kept up to date compliance policies and procedures. For an entity,
have to be approved by a senior officer
(3) An assessment and documentation of risks related to money laundering and terrorist
financing, as well as how to implement measures to deal with those risks
(4) Ongoing training to employees and agents in writing and maintained
(5) Once every two years to review, reassess on compliance policies and procedures
as well as their effectiveness on risks related to money laundering and terrorist
financing

14. FINTRAC (The Financial Transactions and Reports Analysis Centre of Canada)
Responsibilities of entities in life insurance industry:
- In addition to the 5 requirements, the following penalties for
non-compliance may against you as a reporting entity
(a) failure to report a suspicious transaction or failure to make a terrorist property
report – conviction of this could lead to up to 5 years imprisonment, to a fine of
$2,000,000, or both
(b) failure to report a large cash transaction or an electronic funds transfer – conviction
of this could lead to a fine of $500,000 for a first offence and $1,000,000 for each
subsequent offence

15. FINTRAC (The Financial Transactions and Reports Analysis Centre of Canada)
Responsibilities of entities in life insurance industry: (continued)
(c) failure to retain records – conviction of this could lead to up to 5 years imprisonment,
to a fine of $500,000, or both
(d) failure to implement a compliance regime – conviction to this could lead to up to
5 years imprisonment, to a fine of $500,000, or both

16. Privacy Update New Requirement: 1 January 2019
- Guidelines for obtaining meaningful consent
- 7 guiding principles
- Advisor Commitment and Client Form
information/consent/gl_omc_201805/

17. Licensing Requirement Update
Life licensee:
- Must file renewal or before 1 June with required CE credits
- Must have continuous E&O coverage without any gap
- Must inform CF, council and contracted suppliers within 5 days if ceased
of E&O coverage or no longer licensed for any reasons
- New licensee must have completed ‘council rules course’ prior to obtain
their first life license
- New licensee supervisor has to sign, complete a new business review form for every new application signed by new licensee (24 months)

18. Licensing Requirement Update
Life licensee:
- Not sure?
“ASK”

19. Thank you!
ANY QUESTIONS?

20. Next Compliance Training
Thursday 15 August 2019
INTRODUCTION OF PRIVACY