Submissions to Government

PMAC Submission on Department of Finance Anti-Money Laundering Consultation


The Portfolio Management Association of Canada (PMAC), through its Industry, Regulation & Tax Committee, is pleased to have the opportunity to provide the Department of Finance Canada (Finance) with comments on the consultation paper titled, Reviewing Canada’s Anti-Money Laundering and Anti-Terrorist Financing Regime (the Consultation).

General Comments

As background, PMAC represents over 250 investment management firms that collectively manage over $1.8 trillion in assets under management, all of whom are registered as portfolio managers with one or more of the Canadian Securities Administrators (CSA).  PMAC members manage investment portfolios for private individuals, institutions, foundations, universities and pension plans[1].

PMAC’s members are financial entities that generally fall under the definition of “securities dealers” and are required to comply with specific obligations under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA), including anti-money laundering and anti-terrorist financing (AML)-specific know your client identification requirements, training staff on AML issues, implementing and maintaining a AML compliance program, and maintaining records in connection therewith.

PMAC is supportive of Finance’s focus on reviewing Canada’s AML laws to ensure that they continue to fulfil international commitments, espouse best practices, and safeguard Canada’s capital markets by enhancing integrity and stability. PMAC applauds Finance for its commitment to ensuring that this review of AML laws will also take into consideration the balance between compliance burden and compliance costs, as well as Finance’s focus on the need to safeguard investors’ rights and privacy concerns.

PMAC appreciates the efforts of Finance to give full consideration to potential unintended consequences, including increased compliance challenges, that reporting entities could face as a result of the measures in the Consultation as well as those that may be caused by the timing of the implementation of such measures. In particular, in the body of this letter, PMAC has highlighted what we feel to be a negative unintended consequence of new beneficial ownership reporting requirements proposed in Budget 2018 that would unfairly impact investors in pooled funds that do not qualify as mutual fund trusts for purposes of the tax statute. This is important because, according to a 2017 report by Strategic Insight, Canadians invest $65 billion in pooled funds, and the main source of this investment is employer-sponsored defined contribution pension plans.

PMAC believes that standardizing and centralizing AML reporting through an on-line, federal database is an important way to reduce regulatory burden and to improve AML reporting, as we view the current system of monthly reporting to the various members of the CSA as inefficient. We also believe that FINTRAC should provide up-to-date, online, searchable AML reporting lists to increase clarity, improve compliance, and reduce regulatory burden for the benefit of the AML regime.

PMAC’s comments on certain of the Consultation topics and questions that are most relevant to our members, as financial entities, are set out below for your consideration.

 Read the letter.