October 1st is almost here and so is Beneficial Ownership Discrepancy Reporting ⏰
As of October 1st, FINTRAC reporting entities will be required to report to Corporations Canada any material discrepancies identified between the beneficial ownership information that they have obtained and the information related to individuals with significant control (ISC) that is available in Corporations Canada's database.
Reporting entities will have to submit discrepancy reports when they determine that an active corporation incorporated under the Canada Business Corporations Act (CBCA) poses a high risk of a money laundering offence or terrorist activity financing offence.
Reports are made directly to Corporations Canada, via their website and will need to be made within 30 days of discovering the discrepancy, unless the discrepancy has been resolved within 30 days of being identified. 🗓️
Now here’s the fun part where we break down the process and explain what could indicate a material discrepancy…
ENROLL IN FINTRAC’S WEB REPORTING SYSTEM
In order to submit a discrepancy report, the reporting entity must first be enrolled in FINTRAC’s Web Reporting system. If you are not yet enrolled, you must work with FINTRAC directly. 🤝
CREATE A “MY ISED ACCOUNT”
Once enrolled in the FINTRAC Web Reporting System, reporting entities will also be required to create a “My ISED Account” - you can find instructions for doing so here.
CROSS-CHECK AND DETERMINE DISCREPANCIES
When you have a high risk client, you will cross check your high risk client Beneficial Ownership records information with the ISC information found in Corporation’s Canada’s database. If there are any discrepancies related to the ISC information, you will scroll to the bottom of the corporation’s results page, log into your My ISED Account and follow the instructions for submitting the discrepancy report. ☑️
HOW TO DETERMINE IF A DISCREPANCY IS A “MATERIAL DISCREPANCY”
Although FINTRAC and Corporations Canada have not yet formally released a list of material discrepancies, here are some examples of situations where a material discrepancy could arise:
🟠 Beneficial Owners found in the registry are different individuals vs. your records
🟠 You spot any differences in stated percentage of ownership or control of the corporation
🟠 Identity Information does not match what your client has provided to you. For example: addresses, names, dates of birth or citizenship of owners
🟠 Any indication or information that suggests public records are inaccurate
And if any of the above occur in tandem with a high risk client, this is when your obligations to report a discrepancy are triggered.
NEXT STEPS
Recently, Corporations Canada released some guidance to help reporting entities with these new obligations and reporting material discrepancies. We strongly encourage you to review in advance of October 1st.
And of course, like many things in AML, there are interpretations and nuances when it comes to figuring out what constitutes a material discrepancy and when risk is present. That’s why the safest bet is always to leave it to the experts! 🤓
Our AML team has helped numerous clients reduce the regulatory burden associated with beneficial ownership, using technology led approaches that minimize client friction. ✅
Reach out to us today if you have any questions about these upcoming changes to your obligations or if you want to learn more about how We Help Keep FINTRAC Happy.