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Taheri Exchange Submission in Response to Finance Canada's Enhancing Canada's Anti-Money Laundering and Anti-Terrorist Financing Regime consultation:

September 30, 2005

Dear Sir/Madam:

My name is Sunny Taheri and I am a compliance officer at Taheri Exchange. Taheri Exchange is an MSB operating in Canada for over a decade.

Due to the fact that we have the most experience in the Iranian MSB industry in Canada, and because we are well aware of the correct and incorrect practices of MSB's in the general MSB industry both inside and out of Canada, I feel that our institution should be further consulted after this consultation period because we are always open to offering advice that is in contribution to the best interest of the public.

There are proposals that will make the requirements less stringent. For example, there is the issue of non-face to face transactions. Most people in the industry (myself not included) feel that if an individual has already been identified by a deposit taking financial institution that has reporting responsibilities and is accountable to the PCMLTFA, then they should not be required to be identified again. They feel that if the funds are coming from a bank account of a Canadian bank then that person has already been identified and there is no uncertainty about that person's identity. I on the other hand believe that for now ID's should be checked by our own agents, but I do see where everybody else is coming from on this issue. It is not easy or practical for small MSB's to put agents everywhere. From a business point of view, it would be nice to be able to accept payments from anybody that has a bank account. Nevertheless, there are problems with letting the bank conduct identifications on our behalf, or relying on the fact that a client has been identified by the bank. One example is, if the bank makes a mistake, who will be responsible? If our agent identifies somebody on our behalf and makes a mistake we are held responsible. That is reasonable because we are responsible for selecting and training that agent. But we are not responsible for selecting and training the banks employees, and while we do believe that the bank does a good job of training its employees, should it fail to do so it would not be our fault and we should not be held responsible for it. I believe that there is further clarification required for this proposal. I would be happy to contribute to the decision making process that sort out the details on this issue.

Also among the proposals that would make existing requirements less stringent is proposal 6.1. Currently when an EFT message contains instructions in respect of a transfer from a single customer to several beneficiaries (bundled EFT), it would be reportable as a single transaction if the aggregate amount exceeds $10,000. Proposal 6.1 would clarify that bundled EFT's will not require an EFT report but any individual EFT contained therein will require an EFT report on an individual basis if it exceeds $10,000. I think that a bundled EFT should be reportable if the aggregate amount exceeds $10,000, even if the individual transactions don't exceed that amount. It is my understanding that if an individual posses large sums of proceeds of crime they can move the funds out of the country and avoid reporting by dividing the funds among numerous recipients into transactions which equal less than $10,000 if this proposed amendment is made official. The proposal also states that "The provision would apply in respect of institutional and commercial transactions such as salary and pension payments." Does that mean that it would only apply in respect of institutional and commercial transactions such as salary and pension payments?

Then there are the proposed amendments that are attempting to cover loopholes and we welcome them. For example, there is no reason why a company operating in Canada that is an agent of a company whose parent is located outside of Canada should not be subject to and held accountable for the same requirements that Canadian companies are subject to and accountable for, and proposal 6.11 will hopefully be the solution to that issue.

Further, at current time, an individual can open an MSB, not follow any regulations, close the business, open another one and that individual can not be held responsible for the non-compliance violations of the non-existent business. Those non-compliance violations may have been related to any criminal activity. That is not right, and it is a part of the law that leaves the industry vulnerable to abuse, and it is a problem that will hopefully be solved when proposed amendment 6.16 is made official.

Speaking from the perspective of a member of the money service business industry, I think that the proposals are reasonable and the industry will be better off when they are made official. Some of the proposed amendments are more important than others and I am looking forward to seeing them made official. I also have a suggestion; I believe that if an MSB is operating in Canada it should be licensed to operate in any other country where it is operating, by the country in which it is operating. It is not right that an MSB have a license in Canada and have a counterpart operating illegally in other countries.

I would also like to bring another matter to your attention. As you know there have been problems between banks and MSB's as banks have been rescinding the banking services that they had been providing to MSB's. This in effect pushes the MSB industry out of the formal banking sector and into the black market where it is not only vulnerable to abuse by criminals; it is probably inevitable, which is in no way conducive to the public good. The banks therefore have a social responsibility to offer banking services to legitimate MSB's. There should be legislation that would require banks to provide banking services to legitimate MSB's that meet a set of established requirements. Such legislation is necessary and overdue.

Truly Yours,

 

Sunny Taheri
Compliance Officer
Taheri Exchange
5775 Yonge Street, Toronto, ON
M2M 4J1