Proposed reforms to Canada’s anti-money laundering and anti-terrorist financing regime would create inefficiencies within the mutual fund industry without furthering the government’s public policy objectives, says the Investment Funds Institute of Canada.
In a submission to a consultation paper published by the Department of Finance department, setting out proposed changes to the existing anti-money laundering regime, IFIC warns that certain proposals to eliminate existing exemptions and add new requirements would, “create inefficiencies within the mutual fund industry without furthering the government’s public policy objectives.”
In particular, IFIC opposes any changes that would mandate duplicative information collection, warning that firms are concerned that this “will contravene current privacy obligations, and increase their compliance expense, without any additional benefit to the structure that is currently working well.”
Under the current model, fund managers can largely rely on dealers to perform information collection obligations, which they don’t need to repeat. “This is an effective and cost-efficient method that also ensures that sensitive personal client information is not collected and maintained by more firms than is necessary to adequately perform the AML requirements,” it says.
“Our members would be very concerned about any changes, proposed or resulting, to the allocation of responsibilities between dealers and fund managers,” it says.
These additional administrative burdens would complicate business processes and, in one instance, establish a requirement that will be impossible to comply with, IFIC says in its letter. It also seeks clarification as to the precise intention of several of the paper’s proposals, so that fund firms and dealers can understand the additional requirements that would be created.
“Our industry takes its obligations under the anti-money laundering and anti-terrorist financing regimes very seriously. The exemption currently provided to fund managers is well-reasoned and incorporates existing business processes to avoid unnecessary duplication of administration,” says IFIC president and CEO, Joanne De Laurentiis, in a release. “The result is a very effective system within the mutual funds industry.”