From Anti-Money Laundering (AML) to challenges around cryptocurrencies and cybersecurity, our Regulatory Intelligence experts have identified the top 10 regulatory issues facing Canadian risk and compliance in 2018.
- Canada’s top 10 regulatory insights for 2018 are examined by Thomson Reuters Regulatory Intelligence.
- Anti-money laundering remains a high priority for financial regulators in 2018.
The Thomson Reuters webinar on March 22 highlighted the emerging compliance issues, including cybersecurity and cryptocurrencies.
Canadian risk and compliance officers hold a distinct advantage over their international peers. This is because financial regulators from across the country have been so forthcoming about their priorities for 2018.
This has enabled Thomson Reuters Regulatory Intelligence (TRRI) to compile an in-depth infographic highlighting the ten regulatory considerations of most significance for Canadian risk and compliance teams.
Watch: Five key risks for firms in 2018 with Susannah Hammond
- Systemic risks tied to unique Canadian economic factors.
- Rising risks in anti-money laundering and counter-terrorist financing (CTF) compliance obligations.
- Emerging compliance issues: regulating cryptocurrency, bolstering cybersecurity and more.
We have compiled a selection of the top 10 regulatory challenges faced by Canadian risk and compliance teams in 2018.
With increasing reliance on RegTech, regulators will continue cybersecurity reviews and will expect companies to surpass current cybersecurity best practice.
Firms should be prepared to demonstrate how their strategic approaches will ensure regulatory compliance.
Strengthening AML/CTF efforts
Canadian regulators fined a large financial institution for anti-money laundering/counter-terrorism financing (AML/CTF) breaches in 2016.
International critics have urged the Canadian government to strengthen AML/CTF enforcement and make regulatory reforms, including disclosure of beneficial ownership information.
RegTech may provide a helpful tool for firms to meet their regulatory obligations.
Watch: Ultimate Beneficial Ownership (UBO) and the risk of not knowing
Securities transactions frequently feature in Canadian cryptocurrency offerings.
As a result, these offerings must comply with Canadian securities laws, unless exempted, according to a 2017 staff notice from the Canadian Securities Administrators.
Improving investor protection
A focus on investor protection will continue.
Some regulators have initiated protections through education, targeted enforcement and harsher penalties.
In addition, in the wake of a recent ban on offshore binary options trading (already a restricted practice for Canadian firms), regulators are expected to monitor complex derivative products targeting retail investors, and to flag and address any resulting investor protection concerns.
Minding regional market risks
Canadian regulators have issued strong warnings about money laundering in real estate transactions, something their U.S. counterparts have tackled recently in the luxury home market.
In response to property market volatility, the Office of the Superintendent of Financial Institutions (OFSI) has flagged systemic risks for banks and insurers.
Scrutiny over these areas will continue. Meanwhile, regulators will place higher accountability on directors, which should encourage stronger working relationships between board executives and risk and compliance officers.
Enforcing disclosure obligations
Beyond the risk of losses resulting from disclosure breaches, senior executives now may be personally accountable for regulatory non-compliance.
As well, the creation by the Canadian government of a single national securities regulator, previously delayed until June 2018, now appears to be in doubt.
Securities issuers should ensure they keep up to date with the priorities set by those provincial regulators having oversight over them.
Disclosing gender-diversity policies
Canadian lawmakers are committed to gender diversity.
A federal initiative to improve transparency around the diversity policies governing senior management and boards at Canadian corporations — as submitted in 2016 in amendments to the Canadian Business Corporations Act — is still ongoing.
Revising board standards
Impending changes to OFSI’s Corporate Governance Guideline may ease regulatory compliance responsibilities, especially for small firms.
However, a shift to a more risk-based approach will require organizations to show they are complying and compel greater personal accountability from directors.