Canada: CSA Staff Notice 31-317 Reporting Obligations Related to Terrorist Financing for Registrants, Exempt International Dealers and Exempt International Advisors

On April 16, 2010, the Canadian Securities Administrators (CSA) issued Staff Notice 31-317 to registrants, exempt international dealers and exempt international advisers regarding their monthly review and reporting obligations, and introducing a new consolidated CSA reporting form to be submitted by the 14th day of each month via e-mail to their principal regulator, commencing May 14, 2010. The new consolidated CSA reporting form is available on the websites of the CSA regulators. A list of CSA regulators e-mail addresses, websites and inquiry details is provided below. Members of the Investment Industry Regulatory Organization of Canada (IIROC) should continue to report monthly to IIROC using IIROC's form. All monthly reports should be signed by a senior officer of the firm, preferably the Chief Compliance Officer.

The Office of the Superintendent of Financial Institutions (OSFI) maintains on its website (http://www.osfi-bsif.gc.ca) two consolidated lists of designated persons under federal laws.  The first list relates to terrorist financing and the second list relates to United Nations sanctions. These lists are regularly updated by OSFI and are available in downloadable and printable formats.

Registrants, exempt international dealers and exempt international advisers are required to:

• review their records on a continuing basis to determine whether they are in possession or control of property owned or controlled by or on behalf of a designated person, and to report their findings on a monthly basis;
• take appropriate measures to determine if their clients are designated persons. Once a determination has been made that a client is a designated person, in addition to filing the monthly report with their principal regulator or IIROC, as applicable, they must "freeze" the property and report the details to the Royal Canadian Mounted Police (RCMP) [fax: (613) 993-9474] and the Canadian Security and Intelligence Service (CSIS) [fax: (613) 231-0266). A terrorist property report to the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) may also be required (for instructions see http://www.fintrac-canafe.gc.ca ); and
• file a Nil report with their principal regulator or IIROC, as applicable, where they have determined for that monthly period that none of their clients is a designated person.

OSFI has indicated that the "freezing" of property extends to the debiting of service charges and crediting of interest and/or if the frozen property is a securities portfolio, the crediting of interest, dividends or other entitlements and the charging of custodial fees, transaction fees or any other debits or credits to the account.

The Staff Notice contains summary information only. The CSA encourages registrants and exempt international firms to subscribe to the notification service on the OSFI website http://www.osfi-bsif.gc.ca in order to receive new updating e-mail notices and reminders concerning new developments and reporting requirements.

List of CSA Regulators E-mail Addresses, Websites, and inquiry details for Monthly Reporting

(Please send the reports to the e-mail address of your principal regulator only- Attention: UN Reports)

www.fasken.com

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.