Answer: While it may be considered industry standard to conduct ongoing monitoring annually, FINTRAC allows registrants to determine the frequency with which a registrant will monitor its clients’ accounts. Accordingly, every firm should have policies and procedures that reflect what they have determined to be a reasonable process for conducting ongoing monitoring. In general, the frequency of ongoing monitoring will depend on the types of services provided to the clients, the type of relationship the firm has with its clients, and the risk level of the clients.
Of course, FINTRAC rules can not be viewed in isolation, and registrant firms must also consider the requirements set out in the Client Focused Reforms Amendments to NI 31-103 and Companion Policy 31-103CP (CFR Amendments) relating to know-your-client (KYC) information which come into force at the end of the year. For managed accounts, a review should occur at least every 12 months; if the registrant is an exempt market dealer (EMD), the review should occur within 12 months before making a trade for, or recommending a trade to, the client. In any other case, reviews are expected to occur no less frequently than once every 36 months.
For any high-risk client, FINTRAC would expect monthly or quarterly monitoring, as well as the close monitoring of all of that client’s transactions.
We recommend that firms make explicit note of the fact that AML information was considered as part of the client’s information update. For more specific guidance regarding what other information should be collected from clients as part of the AML ongoing monitoring requirements, please do not hesitate to contact us.
May 31, 2021