Foreign branches, foreign subsidiaries and affiliates requirements


March 2021

This guidance comes into effect on June 1, 2021.

This guidance explains the foreign branches, foreign subsidiaries and affiliates requirements under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA) and associated Regulations that apply to financial entities, life insurance companies and securities dealers.

It answers the following questions: 

  1. When do I have requirements related to foreign branches and foreign subsidiaries?
  2. What are my requirements related to foreign branches and foreign subsidiaries?
  3. What foreign branches and foreign subsidiaries records do I need to keep?
  4. Do I need to notify Canadian authorities if the laws of a foreign state do not permit or conflict with the policies developed for foreign branches and subsidiaries?
  5. Who do the requirements related to foreign branches and foreign subsidiaries not apply to?
  6. When do I have requirements for affiliates?
  7. Who do the requirements related to affiliates not apply to?
  8. When am I affiliated with another entity?
  9. What are my requirements related to affiliates?

1. When do I have requirements related to foreign branches and foreign subsidiaries?

As a financial entity, life insurance company or securities dealer you have requirements related to your foreign subsidiaries when the subsidiaries carry out activities similar to those of a financial entity, life insurance company, or securities dealer and they are wholly owned by you or they have consolidated financial statements with you, as well as for your foreign branches.Footnote 1

2. What are my requirements related to foreign branches and foreign subsidiaries?

As a financial entity, life insurance company or securities dealer, you must develop policies that establish requirements for your foreign branches and subsidiaries. These policies must be similar to your own obligations under the PCMLTFA for the following:Footnote 2

If you have a board of directors, it must approve the policies you have developed before they are applied.Footnote 3

You must ensure that your foreign branches and subsidiaries apply the policies to the extent permitted by, and not conflicting with, the laws of the foreign state where that branch or subsidiary is located.Footnote 4

3. What foreign branches and foreign subsidiaries records do I need to keep?

If a foreign branch or subsidiary cannot apply the above referenced policies you develop because they are not permitted by or they would conflict with the laws of the foreign state where the branch or subsidiary is located, you must keep a record of this fact and of the reasons why it is not permitted or would conflict.Footnote 5

Retention: You must keep foreign branch and subsidiary records for at least five years following the date they were created.Footnote 6

4. Do I need to notify Canadian authorities if the laws of a foreign state do not permit or conflict with the policies developed for foreign branches and subsidiaries?

If the laws of a foreign state do not permit or conflict with the application of a policy developed for your foreign branches or subsidiaries, then you must, within a reasonable time period, notify both FINTRAC and the principal agency or body that supervises or regulates your sector under federal or provincial law of the following:Footnote 7

5. Who do the requirements related to foreign branches and foreign subsidiaries not apply to?

The requirement to develop policies for foreign branches and foreign subsidiaries does not apply to:

6. When do I have requirements related to affiliates?

As a financial entity, life insurance company or securities dealer, you have requirements related to financial entities, life insurance companies, or securities dealers that you are affiliated with, or any foreign entities that you are affiliated with when these entities carry out activities similar to those of a financial entity, life insurance company, or securities dealer.Footnote 12

It is possible for you to be affiliated with another reporting entity that is covered under the PCMLTFA and associated Regulations.

7. Who do the requirements related to affiliates not apply to?

The requirement to develop policies for affiliates does not apply to:

8. When am I affiliated with another entity?

You are affiliated with another entity when one of you is wholly owned by the other, if both of you are wholly owned by the same entity, or if your financial statements are consolidated.Footnote 13

9. What are my requirements related to affiliates?

As a financial entity, life insurance company or securities dealer, you must develop and apply policies and procedures related to the exchange of information between yourself and your affiliates. The purpose of this exchange of information is to help you detect and deter money laundering and terrorist activity financing offences, and to help you assess the risk of any such offence occurring.Footnote 14

If your affiliates cannot implement policies for the exchange of information, as a best practice, you should keep a record of the reason why these policies cannot be implemented.

You are also required, as part of your compliance program, to assess the risks resulting from the activities of your affiliates.Footnote 15 For more information about these requirements, see FINTRAC's Compliance program requirements guidance.

Date Modified: