Securities dealers

Securities dealers must fulfill specific obligations as required by the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA) and associated Regulations, to help combat money laundering and terrorist activity financing in Canada. For the purposes of the PCMLTFA, a securities dealer means a person or entity authorized under provincial legislation to engage in the business of dealing in securities or any other financial instruments or to provide portfolio management or investment advising services.

Any person who acts exclusively on behalf of a securities dealer is not considered a securities dealer themselves. If you are a broker-dealer employed by and authorized to sell securities on behalf of a securities dealer firm, it is your employer that is considered to be the securities dealer under the PCMLTFA and has the obligations, except with respect to reporting suspicious transaction reports (STRs).

Securities dealers are responsible for the following requirements under the PCMLTFA and associated Regulations.

*Note: On June 1, 2021, regulatory amendments, which will create or change obligations for all reporting entities (REs) subject to the PCMLTFA and associated Regulations, will come into force. FINTRAC expects that REs will comply with the amended Regulations, but will exercise flexibility in assessing and enforcing compliance with certain record keeping and reporting requirements. See the Notice on forthcoming regulatory amendments and flexibility for more information.

Table 1—Summary of requirements for securities dealers
Category of requirement under the PCMLTFA and associated Regulations Requirements
Compliance program

Securities dealers must implement a compliance program. A strong compliance program will form the basis of meeting all of your regulatory requirements. For more information, see Compliance program requirements and the Risk assessment guidance.

Know your client

Securities dealers must verify the identity of persons and entities for certain activities and transactions, and carry out other customer due diligence activities, as described below:

When to verify the identity of persons and entities
Securities dealers must verify the identity of persons and entities for certain transactions and activities. For more information, see When to verify the identity of persons and entities – Securities dealers.

Methods to verify the identity of persons and entities
Securities dealers must verify the identity of persons and entities using the methods prescribed by the PCMLTFA and associated Regulations. For more information, see Methods to verify the identity of persons and entities.

Business relationship requirements
Securities dealers enter into a business relationship with a client when they open an account for the client or the second time they are required to verify the identity of a client. For more information, see Business relationship requirements.

Ongoing monitoring requirements
Securities dealers have ongoing monitoring requirements when they enter into a business relationship with a client. For more information, see Ongoing monitoring requirements.

Beneficial ownership requirements
Securities dealers must obtain and take reasonable measures to confirm the accuracy of beneficial ownership information for entities. For more information, see Beneficial ownership requirements.

Third party determination requirements
Securities dealers have third party determination requirements when they are required to submit certain reports and keep certain records. For more information, see Third party determination requirements.

Politically exposed persons (PEP) and heads of international organizations (HIO) requirements
Securities dealers are required to take reasonable measures to make PEP and HIO determinations for certain activities or transactions. If a securities dealer determines that a person is a PEP or a HIO then they have additional related requirements. For more information, see Politically exposed persons and heads of international organizations guidance and Politically exposed persons and heads of international organizations guidance for account-based reporting entity sectors.

Reporting

Securities dealers must submit the following reports to FINTRAC:

Suspicious transaction reports
For more information, see:

Terrorist property reports  
For more information, see:

Large cash transaction reports 
For more information, see:

Large virtual currency transaction reports 
For more information, see:

24-hour rule

Securities dealers have 24-hour rule requirements for large cash transaction reports and large virtual currency transaction reports. For more information, see Transaction reporting guidance: the 24-hour rule.

Record Keeping

Securities dealers must keep certain records, including records related to accounts, transactions and client identification. For more information, see Record keeping requirements for securities dealers.

Foreign branches, foreign subsidiaries and affiliates

Securities dealers have foreign branches, foreign subsidiary, and affiliate requirements. For more information, see Foreign branches, foreign subsidiaries and affiliates requirements.

Ministerial directives

Ministerial directive requirements apply to all reporting entity sectors. For more information, see Ministerial directives and transaction restrictions.

Penalties for non-compliance

FINTRAC has the legislative authority to issue administrative monetary penalties (AMPs) to reporting entities that are found to be non-compliant with the PCMLTFA and associated Regulations. For more information, see Penalties for non-compliance.

Glossary

The FINTRAC Guidance glossary includes terminology defined in the PCMLTFA and associated Regulations, as well as terms used throughout the guidance. For more information, see FINTRAC's Guidance Glossary.

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