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Aegon Canada's Submission in Response to Finance Canada's Enhancing Canada's Anti-Money Laundering and Anti-Terrorist Financing Regime consultation:
September 27, 2005
Department of Finance
140 O'Connor Street
Attn: Diane Lafleur - Director, Financial Sector Division
Re: Enhancing Canada's Anti-Money Laundering and Anti-Terrorist Financing Regime - Comments from AEGON Canada on behalf of Transamerica Life Canada and AEGON Fund Management.
AEGON Canada is pleased to provide comments on behalf of Transamerica Life Canada (TLC) and AEGON Fund Management (AFM) with respect to the Consultation Paper "Enhancing Canada's Anti-Money Laundering and Anti-Terrorist Financing Regime" (the "Consultation Paper") published for comment by the Department of Finance, on June 30, 2005.
AEGON Canada Inc. provides through subsidiary operations investment and insurance solutions and is a member of the AEGON Group, a leading international financial services group with over 25,000 global employees and $230 billion U.S. in total assets. Both Transamerica Life Canada (TLC) and AEGON Fund Management (AFM) are subsidiaries of AEGON Canada.
Since 1927, Transamerica Life Canada (TLC) and its predecessor organizations have offered Canadians a wide range of wealth management and insurance solutions including term and universal life policies, segregated funds, guaranteed interest accounts, RRSPs/LIRAs, RRIFs/LIFs, and annuities.
Established in 2002, AEGON Fund Management offers a breakthrough approach to wealth and investment solutions in Canada through its offering of mutual funds.
The proposed changes to the current anti-money laundering (AML) and anti-terrorist financing (ATF) regime will have an immediate and lasting impact on the operations of TLC and AFM.
AEGON Canada supports the objectives set out in the Consultation paper. However, we believe that it is important to accomplish them in a way that does not place an unnecessary burden on reporting entities.
Our comments on the Consultation Paper are set out below.
PROPOSAL 1.4 - Suspicious Transactions and Doubtful Client Information:
It would be difficult to "identify and verify" customer information for individual clients post sale. It is not normal procedure for life companies or fund companies to go back to the client and ask to re-verify ID. The likelihood of tipping off the client is very great. In addition, it is unclear as to what is expected of reporting entities in terms of "verifying" customer information.
PROPOSAL 1.5 - Politically Exposed Persons:
The definition of PEPs is not clear and will lead to any requirements around PEPs being difficult to implement. Will an international list of PEP's be made available for organizations to rely on? If not, what criteria will organizations be expected to use in defining who is or is not a PEP?
An international list of PEPs, and the requirement to identify PEPs be limited to the names of PEPs published on this list, would be the most reasonable way to fulfill this requirement.
PROPOSAL 1.8 - Agents or Introducers:
Currently, agents have their own obligations under the Act and related regulations. We believe that these obligations should continue.
PROPOSAL 1.9 - Non-Face-to-Face Customer Identification Measures:
This proposal should be extended to include life and health insurers in the list of reporting entities that may establish non face-to-face client identification procedures.
PROPOSAL 1.10 - Identification of Third Parties and Beneficial Owners:
The added requirement to verify third-party information is problematic and could be expensive relative to the acquisition cost of the business and/or the size of the account. Also, the statement in the proposal that reporting entities "take reasonable measures to verify this information" is unclear. Clarification is needed.
Obtaining the required information for private corporations will be challenging and would likely require subscription to an external service like Equifax or D&B, adding costs. The verification of third party information should be limited to information that is publicly readily available and should exclude large public companies. The establishment of a national registry for entities to facilitate the verification of third party identification through a national identification number upon which financial institutions could rely for identification purposes would assist in fulfilling this requirement.
PROPOSAL 2.1 - Attempted Transactions:
Agents generally do not collect client information before anything else is discussed and trying to collect any information once the client decided not to proceed would be extremely difficult.
PROPOSAL 3.2 - Dealing with Individuals or Entities that do not Comply with the Proceeds of Crime (Money Laundering) and Terrorist Financing ("PCMLTF") Act
An appeal process needs to be detailed that will prevent an organization's name from being posted without a) having first been informed of the breach, and b) being given an opportunity to explain and address the problem. The naming of organizations should only take place for flagrant non-compliance.
PROPOSAL 5.1 - Creating a New AML/ATF Advisory Committee:
The committee should also serve as a means to (a) escalate concerns about the applicable legislative regime, costs/benefits, improvement needs, and (b) recommend alternative means to achieve objectives when increased regulation is under consideration.
How much weight would legislators and regulators give to this committee's insights and recommendations?
PROPOSAL 6.5 - Canada Revenue Agency-Issued Business Numbers:
Finance should consider dropping the requirement for verifying existence and replace it with the CRA business number if the CRA business number is considered a better piece of information.
AEGON Canada appreciates this opportunity to provide comments on behalf of Transamerica Life Canada and AEGON Fund Management regarding the proposed changes to Canada's PCMLTF Act. We hope that you find our comments helpful.
Please contact Serge Cecchetto, Chief Compliance Officer at (416) 883-5169 email@example.com or Andrew MacDonald, Sr. Manager, Regulatory Compliance at (416) 883-5424 firstname.lastname@example.org should you have any questions.
Paul Reaburn, President and CEO, AEGON Canada
Jim Falle, Executive Vice President and Chief Financial Officer, AEGON Canada
Glenn Daniels, Vice President, General Counsel and Secretary, AEGON Canada
John W. Murray, Vice President, Regulation & Corporate Affairs, The Investment Funds Institute of Canada ("IFIC")
Aamir Mirza, Legal Counsel, Regulation, The Investment Funds Institute of Canada ("IFIC")
J-P Bernier, Vice President and General Counsel, Canadian Life and Health Insurance Association Inc. ("CLHIA")
Appendix A: AEGON Canada Corporate Structure Effective January 1, 2005
1 Appendix A: AEGON Canada Corporate Structure Effective January 1, 2005 [return]