Response to the Consultation Paper on Anti-Money Laundering and Anti-Terrorist Financing Regime Issued June 2005

The Federation of Canadian Independent Deposit Brokers Position Papers- October 3, 2005
Response to the Consultation Paper on Anti-Money Laundering and Anti-Terrorist Financing Regime Issued June 2005

Diane Lafleur
Director, Financial Sector Division September 29th 2005
Department of Finance By fax and courier
140 O'Connor Street
Ottawa On
K1A 0G5

Dear Ms. Lafleur,

Re: Response to the Consultation Paper on Anti-Money Laundering and Anti-Terrorist Financing Regime Issued June 2005

The Federation of Canadian Independent Deposit Brokers (FCIDB), established in 1986, is a Professional Standards Organization (PSO) with membership from all regions across Canada. The Deposit Brokers and their representatives comprise a distribution channel for the Canadian consumer to access over 30 various Federally Regulated Financial Institution members and their various deposit products.

Both the financial institution members and deposit broker members of the FCIDB recognize the importance of establishing appropriate rules and regulations to minimize the potential exposure to money laundering and terrorist activities. In support of this, the FCIDB has set Anti-Money Laundering (AML) Standards for their members to adhere to, standards that are higher than required under FINTRAC guidelines.

We would like to make comment on Non-Face-to-Face Situations. We understand the importance of taking reasonable action to collect identification when ID requirements are triggered and to the extent possible, the financial institutions and their agents should meet with the customer in person. In our industry, we have encountered many circumstances where it is not physically possible to meet face-to-face. In those circumstances the AML requirements have placed the Canadian consumer in a situation where they might lose hundreds of dollars because these requirements restrict the number of financial institutions they can deal with and they are therefore forced to accept lower interest rates than generally available. We do not believe it is the intention of our Department of Finance to prevent the Canadian investing public from having access to the opportunities of the capital markets.

We agree with the Government Proposal 1.8, which proposes to amend the PCMLTF Regulations to allow any reporting entity to rely on another person or entity, agents or introducers, to ascertain the identity of their customer provided a contractual arrangement with the person or entity is in place. We would propose this includes deposit brokers and their representatives.

However, this does not cover situations whereby the customer can see neither the reporting entity nor contractual agent of the reporting entity.

Sample Identity Verification Record

Information re: Identity Verification Record

Therefore, in response to Proposal 1.9 Non-Face-to-Face Customer Identification Measures, we propose including an amendment to extend the requirements of identification to include a Customer "Identity Verification Record" Form (attached) that would be completed much like a Canadian Passport application which would allow the customer to have a guarantor physically see the customer identification and witness the customer signature. The guarantor should be in the same approval category as the Canadian Passport requirements and should know the customer for at least two years, or have that same customer's bank branch provide the same process and attach its branch stamp on the form. This would facilitate situations where the customer wants to open an account at a financial institution other than their personal banker in order to purchase a guaranteed investment certificate (GIC) or like product to obtain the best rate of return on their investment.

The ultimate responsibility for complying with the requirements would remain with the reporting entity.

We have noted the Consultation Paper does not address the concerns of the investing public who are United States residents or citizens and do not meet the identification requirements because they do not have valid Canadian Government issued identification. We would propose the acceptance of United States Government issued forms of identification.

We grant you permission to post our comments on your website. We are pleased to provide the following contact information:

Sincerely,

David Newman
President

Federation of Canadian Independent Deposit Brokers
49 High Street, Suite 408-2,
Barrie, On
L4N 5J4
705-730-7599
fcidb@on.aibn.com

c: FCIDB Response to Consultation Paper June 2005-1