February 26, 2002
For Immediate Release

Securities Regulators Announce Results of Survey on Investment Dealers' Procedures Relating to Off-shore Accounts

Toronto - A national survey has revealed that Canada's investment dealers have been revising their policies and procedures to address regulators' concerns about the use of off-shore accounts to circumvent legislation governing financial transactions.

On October 30, 2001, staff of the British Columbia, Alberta, Quebec and Ontario securities commissions sent requests for information to members of the Investment Dealers Association of Canada (IDA). The requests focused on two areas:

  • the number of client accounts held by the member firm which originate from each of the countries or territories identified as current or former non-cooperating jurisdictions by the Organization for Economic Co-operation and Development's Financial Action Task Force on Money Laundering (the FATF), and
  • the member firm's policies and procedures for discharging account opening, know-your-client and account supervision obligations for these accounts.

The survey responses indicated that approximately 13,000 accounts located in FATF non-cooperating jurisdictions are serviced by IDA member firms. The vast majority of the firms have less than one per cent of their total client account base located in FATF non-cooperating jurisdictions, but for firms with large retail operations, this percentage may represent several hundred accounts.

Although member firms state that they have adopted policies and procedures to comply with existing rules and regulations governing account opening, know-your-client and account supervision obligations, few firms have adopted specific controls on opening accounts from off-shore jurisdictions. In addition, the responses indicated that member firms have adopted disparate practices and procedures to comply with existing regulations. For example, only some firms stated that they make detailed inquiries regarding the source of a client's funds and the identities of persons or companies who may have a financial interest in the client's account.

Almost all member firms said that they have revised or are revising existing policies and procedures in light of such regulatory developments as the Proceeds of Crime (Money Laundering) Act, recent Canadian tribunal decisions concerning know-your-client obligations, proposed changes to IDA regulations governing account opening and supervision, and changing international standards.

Member firm responses and the findings of the questionnaire will be sent to the appropriate regulators to assist in risk-based oversight and compliance reviews. The Commissions will also use the findings for national and international discussions about the level of account opening due diligence needed to mitigate the risks from servicing client accounts, particularly accounts located in FATF non-cooperating jurisdictions.

For more information:

British Columbia Securities Commission:
Andrew Poon
Media Relations Officer
1-800-373-6393 (B.C. & Alberta only)

Sasha Angus
Director, Enforcement

Alberta Securities Commission:
Joni Delaurier
Communications Coordinator

Wayne Alford
Director, Enforcement

Ontario Securities Commission:
Frank Switzer
Director, Communications

Michael Watson
Director, Enforcement

Commission des valeurs mobilires du Qubec:
Denis Dub
Public Relations Manager
514-940-2199 ext. 4441
1-800-361-5072 (Quebec only)