Changes to Monthly Sanctions Reporting Requirement
May 13, 2019
Recently, the federal government published amendments to the regulations made under the United Nations Act (UN Act) and the Special Economic Measures Act (SEMA), Canada’s key sanctions legislation. Among other changes, the amendments modify the monthly sanctions reporting obligation for Canadian-regulated financial institutions and securities dealers. On May 10, 2019, the Office of the Superintendent of Financial Institutions (OSFI) issued updated sanctions reporting forms for federally regulated financial institutions to reflect the legislative amendments.
Amendments to UN Act and SEMA
In March 2019, the federal government amended the regulations made under the UN Act and SEMA. Among other changes, these amendments modify the monthly reporting obligation to which Canadian regulated financial institutions and securities dealers are subject. Prior to the amendments, Canadian banks, authorized foreign bank branches, insurers, trust and loan companies, credit unions, securities dealers (both Canadian registered and those operating under an international exemption), and money services businesses offering account-based products (Financial Institutions) were required to disclose, every month, to their principal federal or provincial regulator whether or not they were in possession or control of property of a person designated under the following seven sanctions regulations:
- Regulations Implementing the United Nations Resolutions on Iran
- Regulations Implementing the United Nations Resolutions on the Democratic People’s Republic of Korea
- Regulations Implementing the United Nations Resolutions on the Suppression of Terrorism (Suppression of Terrorism Regulation)
- United Nations Al-Qaida and Taliban Regulations
- Special Economic Measures (Venezuela) Regulations
- Regulations Establishing a List of Entities, made under the Criminal Code (Code Regulation)
- Justice for Victims of Corrupt Foreign Officials Regulations (Magnitsky Regulation)
The amendments repeal, with immediate effect, the monthly reporting requirement for all of the above regulations, except for the Code Regulation and the Magnitsky Regulation. As a result, Financial Institutions are required to report monthly to their principal regulator only in respect of persons designated under the Code Regulation and the Magnitsky Regulation.
These amendments do not affect Financial Institutions’ other obligations under Canadian sanctions legislation, including the requirement to report property of a designated person to law enforcement and to conduct periodic screening of customers, where applicable. The obligation to file a terrorist property report in respect of the Code Regulation and the Suppression of Terrorism Regulation also continues to apply under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act.
The March 2019 amendments also introduce several other changes to the UN Act and SEMA regulations, which for the most part ensure consistency in the regulations under both acts.
For an overview of Canada’s sanctions regime, please see our updated Primer on Canadian Sanctions Legislation.
Federally regulated Financial Institutions submit their monthly sanctions reports to OSFI, their principal regulator, using forms OSFI-525 and OSFI-590. On May 10, 2019, OSFI published a revised version of these forms to reflect the March 2019 amendments to the regulations. Going forward, OSFI-525 form will be used to file monthly reports only in respect of names designated under the Code Regulation and OSFI-590 form will be used to file monthly reports only in respect of names designated under the Magnitsky Regulation.
The OSFI reporting instructions otherwise remain the same: a nil or a positive report on each form is due on the fifteenth day of each calendar month (or the next business day) and must be filed via OSFI’s Regulatory Reporting System.
OSFI’s notice did not indicate that it will discontinue maintaining updated lists of Iran, North Korea, and terrorism designations under the UN Act, following the repeal of the reporting requirement for these lists.
To assist securities dealers with their monthly sanctions reporting obligation, the Canadian Securities Administrators (CSA) has published a CSA Guide to Monthly Suppression of Terrorism and Canadian Sanctions Reporting as well as a form of Monthly Suppression of Terrorism and Canadian Sanctions Report. The Investment Industry Regulatory Organization of Canada (IIROC) has also published instructions for its dealer member firms. The CSA and IIROC reporting instructions and forms have not yet been updated to reflect the March 2019 amendments.
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