Know Your Client Requirements of Federal Trust Companies

For many years, the federal government has made considerable efforts to combat money laundering and terrorist financing. In addition to creating FINTRAC, the Financial Transactions and Reports Analysis Centre of Canada, a financial intelligence unit whose goal is to detect, prevent and deter these activities, the federal government has passed a law called the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (the "PCMLTFA").

Under the act and its associated regulations, all Canadian financial entities must fulfill specific obligations in order to help the government and FINTRAC combat money laundering and terrorist financing in Canada.

As a federal trust company, TSX Trust Company ("TSXT") is subject to the PCMLTFA and is required to implement an anti-money laundering and anti-terrorist finance program ("AML/ATF Program").

In response, TSXT has established and implemented a comprehensive and effective AML/ATF Program that encompasses extensive record keeping, such as signature cards (i.e. Certificate of Incumbency), client identification, know your client ("KYC") details as well as reporting requirements as set out in the PCMLTFA and associated regulations. The PCMLTFA clearly specifies when financial entities need to identify an individual or confirm the existence of an entity, and how to do this.

Knowing your client includes identifying them in accordance with the regulations, but also includes other obligations, such as determination of beneficial ownership, whether the client is a politically exposed or a related person, the head of an international organization, as well as requiring an ongoing monitoring of the business relationship.

TSXT is also required to obtain and maintain identifying information about all of its clients. TSXT is required to demonstrate to FINTRAC that it understands the true identities of its clients, has identified their authorized officers, their source(s) of funds and the nature of their various businesses. KYC is not limited to the account-opening stage, but is an on-going requirement. In addition, KYC rules require that TSXT complete and keep current an AML KYC Risk Assessment which takes into account such details as each client's organizational structure, TSXT's role as vendor, as well as the geography and the nature of each client's business.

It is TSXT policy that a business relationship should only be entered into with a potential client or maintained with an existing client if we are satisfied that the KYC information we have gathered meets the federal requirements.

The more TSXT knows about you, our client, the better we can serve you, meet your needs and support Canada's efforts to combat money laundering and terrorist financing. KYC is an ongoing requirement that requires periodic updates to client information. As we approach the three-year anniversary of receiving our federal trust license, we are entering into a period where we expect to review all of our KYC information on file in order to ensure that it meets the federal requirements. As a result, it is very likely that we will reach out to you shortly to ensure that this information is both correct and current.

Should you have any questions, please feel free to reach out to your relationship manager.