IRI can assess your regulatory readiness to ensure your compliance procedures and policies are up-to-date, relevant and in accordance with applicable securities law.
Did you know that the Ontario Securities Commission (“OSC”) announced in June 2012 that it will be conducting a compliance sweep directed at registered dealers and advisers, to assess their compliance with know-your-client (“KYC”), know-your-product (“KYP”) and suitability obligations? The likelihood of being included in the sweeps has increased over the years, particularly for new firms and firms operating in the exempt marketplace, including hedge funds. We anticipate that the OSC sweep will be one of the largest in OSC history.
Notice of review from the OSC, Financial Transactions Reports Analysis Centre of Canada (“FINTRAC“) (or one of its compliance partners), or any other regulatory body can be disconcerting. How prepared are you for a regulatory audit? What can you do to prepare for such an audit? Do you have the internal expertise to ensure that your company is prepared and can successfully pass an audit?
Independent Review Inc. together with its network of compliance experts, is experienced in preparing for and responding to regulatory examinations. Let IRI assist you by ensuring your compliance procedures and policies are up-to-date, relevant and in accordance with the applicable laws. Our independent review can help you uncover weaknesses in your present compliance regime. We will provide an action plan to help remedy deficiencies before an external audit occurs.
IRI provides advice and assistance on compliance matters. We offer a unique array of compliance services to registered investment fund managers, portfolio managers, exempt dealers and advisers including:
Code of Ethics
• Standard of Conduct
• Fairness and Ethics Policies
• Expense Allocation Policy
• Statement of Policies
Employee Attestations and annual training (compliance training & coaching of executives and staff)
Compliance Manuals (IFM and PM) including:
• Key Roles and Responsibilities Policies
• Financial Condition Policy
• Valuation and Portfolio Trading Policies
Conflicts of Interest Manual
Anti-Money Laundering (“AML”) Policy & Procedure including:
• Anti-Terrorism Policy
• Suspicious Transactions
Other Compliance Policies:
• Outside Business Activity Policy
• Privacy Policies Registrations and filings with the provincial securities regulators
• know-your-client (KYC)/know-your-product (KYP) policies & documents
• business continuity plans
• third party due diligence
• sub-advisor due diligence
Let IRI carry out your mock compliance reviews to ensure compliance readiness. We can assist you in regular assessments of compliance programs, develop, review and assess the remediation of written policies and procedures, and provide compliance training to all levels of staff.
FINTRAC requires that firms review their AML compliance regime every two years. Failure to comply with the AML regulations can result in several fines and penalties. In addition, it can damage your reputation, affect your banking relationships and reduce your chances of preventing crime.
Avoid Fines & Penalties
FINTRAC can issue on-the-spot penalties of up to $500,000 CAD for not filing a suspicious transaction report, and pursue criminal charges carrying jail sentences for reporting entities and their directors, officers, agents, and employees.
To date, FINTRAC has reported dozens of non-compliance referrals to law enforcement – with convictions. These non-compliance offenses can result in jail sentences of up to 5 years and fines of up to CAD 2 million. Officers, directors and agents of Reporting Entities can be liable for conviction on the described punishments if they directed, authorized, assented to, acquiesced, or participated in its commission (even if the Reporting Entity itself is not convicted).
Beginning on December 30, 2008, FINTRAC was granted the alternative to address non-compliance with monetary penalties (known as Administrative Monetary Penalties, or “AMPS”). The AML legislation act allows for maximum penalties of up to $100,000 for individuals and $500,000 for entities per violation. Penalties can be reduced by up to half by entering into and satisfying a compliance agreement with FINTRAC. If a Reporting Entity pays the fine, or enters into a compliance agreement with FINTRAC, they are deemed to have committed the violation, foregoing the right to appeal, and permitting FINTRAC to make public the Reporting Entity’s violation and the amount of the penalty imposed.
Due diligence is a legislated defense to criminal offenses and administrative violations.
Avoid Damage to Reputation
Published fines and penalties can alert clients, competitors, correspondents, and even criminals to control weaknesses. Directors and their designated managers are mandated to protect their businesses reputation from such incidents.
Establishment & Maintenance of Banking Relationships
Authoritative international standards, and state laws designed to meet them, compel traditional and non-bank financial institutions to conduct initial and ongoing due diligence of the clients to which they provide services, and other financial institutions with which they correspond. Due diligence is critical to protect the reputation of those providers from the potential taint of the lax regimes of their current or would-be clients. Accordingly, reporting entities seeking to establish and maintain relationships with other financial institutions must be capable of demonstrating their ongoing effective efforts to money laundering detection, deterrence and legislative compliance.
(1) Payment Providers
(2) Correspondent Banking
Studies have suggested that money laundering undeterred may:
• fuel further crime and socio-economic harms (violence, illicit drugs);
• undermine the legitimacy of the private sector through criminal price subsidies;
• destabilize the integrity of financial markets because of irrational and unpredictable investments and fund flows;
• complicate economic policy decisions, and;
• impact international relations.