Its decision to reprioritize financial crime is muddying the waters about whether OSFI or FinTRAC will get the final say on bank compliance
Canada ’s banking regulator is returning to anti-money laundering and anti-terrorism financing compliance after a three-year hiatus – an about-face that risks sowing more confusion for financial institutions.
Still, OSFI’s decision to get out of financial crime compliance was bewildering because banks are among the most vulnerable businesses when it comes to both money laundering and terrorist financing, according to the federal government’s threat assessment. Nomenclature aside, FinTRAC is responsible for ensuring that banks and other businesses comply with the Proceeds of Crime and Terrorist Financing Act and its associated regulations. OSFI, meanwhile, focuses on the “prudential impact” of financial crime weaknesses – or how those deficiencies affect the financial safety and soundness of banks.
“Overall, the implementation of the new approach was seen as relatively seamless and was well received by industry and the agencies alike,” states a FinTRAC report, dated Sept. 30, 2020. “The new approach delivers a strong and effective AML/ATF regime while reducing duplication through better alignment with FINTRAC and OSFI’s respective mandates and authorities.”
FinTRAC, meanwhile, has spent years modernizing its compliance program. Its requirements include client identification, recordkeeping and reporting certain types of financial transactions, including international electronic funds transfers, large cash transactions and suspicious transactions. That’s because prudential banking regulators and financial intelligence units view banking activities through different lenses.
Fintrac Laundering Bank Approach Financing OSFI Crime Globe Chrystia Freeland Canada
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