Question

QUESTION #5 (10 Marks) The Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA) plays a very important role in maintain the health and credibility of financial markets in Canada. REQUIRED: In your own words, describe the four responsibilities that mutual fund dealer representatives have with respect to the PCMLTFA.  

Answer 1

Mutual fund dealers and other securities dealers are required to fulfill certain specific obligations under the PCMLTFA in order to combat money laundering. These responsibilities include verifying the identify of their client, implementing the compliance program, certain record-keeping and reporting guidelines etc. The four responsibilities that the mutual fund dealer representatives have with respect of the PCMLTFA are as follows :

1. Verifying the identity of their client (Know your client) : Before processing any transaction, the dealers must first verify the identity of his clients by performing some set of activities as part of PCMLTFA. This is important to make sure that the client is not hiding any information which might undermine the transaction.

2. Record-keeping : The dealers are required to keep a record of client identification documents as discussed in point 1 above and also the record of the transactions entered into on behalf of the client. These records are required to be kept in such a way that they can be provided to the authorities within a period of 30 days, whenever the authority requests for them.

3. Reporting requirements : As discussed in point 2 above, the dealers are required to keep a record of various documents and transactions and they are also required to report such records on request of the authorities. The quality of reporting and records is very important for the law enforcement agencies as they carefully analyze such records and find frauds on basis of same. The act also states certain types of transactions which the dealers are required to report on an immediate basis such as terrorist property transactions and large cash transactions.

4. Compliance program : This program is important as it is the basis for meeting all the above mentioned responsibilities. When the authorities might check with you for compliance with this Act, it is important to demonstrate that you have kept all the required records and documents and reported the same accurately whenever required otherwise you might face some serious penalties. Hence it is important for dealers to implement a compliance program to ensure that all of the regulations and rules required to be complied with as per the Act has been complied with. The dealer can review the same on a timely basis with the help of a compliance program.