Canada

CHAPTER 6. SUPERVISION
Risk-based supervision of compliance with AML/CTF requirements
252. The regulatory regime involves both federal and provincial supervisors. FINTRAC is
responsible for supervising all FIs and DNFBPs for compliance with their AML/CFT obligations
under the PCMLTFA. Other supervisors may incorporate AML/CFT aspects within their wider
supervisory responsibilities although the assessment team found that in instances where an
AML/CFT issue arose, the primary regulator would refer the issue to FINTRAC. Given the primary
responsibility held by FINTRAC for all REs and the federal and provincial division of powers for
financial supervision other than in the areas of AML/CFT, combined with the geographical spread of
the Canadian regulatory regime, the assessment team focused primarily on FINTRAC and OSFI’s
supervisory regime, but also met with provincial supervisors (e.g. AMF in Quebec) and other
supervisors (e.g. IIROC for investment dealers).
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253. FINTRAC has increased its resources and the level of sophistication of its compliance and
enforcement program (“supervisory program”) in recent years. In 2014/2015, there was 79 full-time
staff employed in FINTRAC’s supervisory program. Of this, 57 staff members were involved in direct
enforcement activities including outreach and engagement (10), reports monitoring (5),
examinations (37), and AMPs/NCDs (5). It has also developed, and continues to develop, its
supervisory capabilities on a RBA. Its understanding of the different sectors and business models
and of how AML/CFT obligations apply taking into account materiality and context is somewhat
limited. This was communicated to the assessors by REs in the banking and real estate sectors
during the on-site visit. FINTRAC has nevertheless increased its understanding of its different
reporting sectors which is a challenge given the large number and diverse range of entities it
supervises.
254. A range of supervisory tools is used by FINTRAC to discharge its supervisory
responsibilities and, for the most part, those tools are applied consistently with the risks identified. A
case management tool determines the level and extent of supervision to be applied to sectors and
individual REs scoping specific areas for examinations, recording supervisory findings and managing
follow-up activities. High-risk sectors are subject to on-site and desk examinations (details of which
are contained in this report). Less intensive supervisory tools are used for lower-risk sectors. These
tools include self-assessment questionnaires (Compliance Assessment Reports or CARs);
observation letters (setting out deficiencies that require action); Voluntary Self Declarations of Non-
Compliance (VSDONC); and policy interpretations on specific issues that require clarification. The
use of observation letters was piloted with the caisses populaires sector in 2013/2014. FINTRAC had
identified that caisses populaires were reporting large cash transactions of more than CAD 10 000
through automated teller machines which was not possible given the low limit on transactions
through such machines. Observation letters were used to correct a misinterpretation of reporting
obligations and clarify the correct way to report these types of transactions. FINTRAC also uses
outreach tools for lower-risk sectors assistance and awareness building tools among smaller REs
with limited resources, compliance experience and works with industry representatives. While
supervisory measures are generally in line with the main ML/TF risks, more intensive supervisory
measures should be applied in higher risk areas such as the real estate and DPMS sectors. FINTRAC
Anti-money laundering and counter-terrorist financing measures in Canada - 2016 © FATF and APG 2016
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