Update and consultation on OSFI’s activities on anti-money laundering/anti-terrorist financing (AML/ATF) supervision

  • Type of Publication: Industry Letter
  • Date: October 16, 2020
  • To: Federally Regulated Financial Institutions (FRFIs)

This letter provides an update on the Office of the Superintendent of Financial Institutions’ (OSFI) revised approach to supervising FRFIs’ anti-money laundering/anti-terrorist financing (AML/ATF) programs.

Over the past year, OSFI and the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) have entered a new phase in their collaboration on AML/ATF supervision, as part of on-going efforts to eliminate duplication and manage the regulatory burden on FRFIs. Going forward, FINTRAC will be the primary agency conducting AML/ATF assessments of FRFIs to ensure compliance with the Proceeds of Crime (Money Laundering) and Terrorist Financing Act and associated regulations (PCMLTFA/R). OSFI will focus on the prudential implications of FRFIs’ AML/ATF compliance, as part of its on-going assessment of FRFIs’ regulatory compliance management frameworks. OSFI and FINTRAC will coordinate on the state of the AML/ATF regime relative to their respective mandates and as it relates to FRFIs. This is consistent with Basel Committee guidance on cooperation and information exchange among prudential and anti-money laundering and countering financing of terrorism (AML/CFT) supervisors for banks.

In June 2019, OSFI and FINTRAC met with FRFIs to communicate an incremental transition to this new approach. This transition began in 2019 and is expected to occur over a minimum two-year period. In March 2020, as a result of the COVID-19 pandemic, OSFI put a temporary pause on both policy development work and the transition of AML supervisory activities to FINTRAC, but we have now restarted this effort.

On July 13, 2020, the Superintendent announced that OSFI would gradually restart policy development work in the fall. On August 6, 2020, the OSFI Pillar described the policy restart, including an upcoming review of Guideline E-13 (Regulatory Compliance Management) to incorporate expectations for managing compliance in relation to AML/ATF. As part of this review, we are also assessing the ongoing relevance of OSFI’s Guideline B-8 (Deterring & Detecting Money Laundering and Terrorist Financing) which replicates elements of the PCMLTFA/R and does not align with OSFI’s new supervisory approach.

OSFI has initiated this review and is considering specific adjustments to Guideline E-13. The goal of this review is to ensure greater clarity about OSFI’s mandate in relation to AML/ATF and to prevent any overlap with FINTRAC’s role. OSFI is also considering whether Guideline B-8 should be rescinded.

OSFI is seeking FRFI views on the nature and timing of any potential guidance amendments, including:

  • Whether amendments to Guideline E-13 are needed, and the extent any such changes in relation to AML/ATF supervision or clarifying OSFI’s expectations for compliance risk management more broadly; and
  • Whether Guideline B-8 should be rescinded in full, or if elements of Guideline B-8 should be incorporated in a revised Guideline E-13.

Please submit comments to AML-ATF@osfi-bsif.gc.ca by November 30, 2020.