Exempt Market Dealers
Most exempt market dealers think of the major banks or
IIROC member firms when thinking about compliance with
Anti-Money Laundering and Terrorist Financing (AML/ATF) laws
and regulations. Many exempt market dealers don’t realize that
there is a lot more to AML/ATF laws and regulations than filing
of monthly ‘nil’ reports to the securities regulators to verify new
clients aren’t on one of the UN or other watch lists.
It has been three years since the implementation of National
Instrument 31-103 – Registration Requirements and Exemptions
(NI 31-103) and the introduction of the exempt market dealer
(EMD) registration category. Most EMDs have adapted to or are at
least aware of the requirement to comply with securities legislation.
However, the creation of the EMD category of registration made
all participants in the exempt market subject to Canadian AML/
ATF legislation. Too many EMD’s are still not aware of their AML
obligations, and the significant risk of being offside.
Under The Proceeds of Crime (Money Laundering) and
Terrorist Financing Act (the Act) and accompanying regulations
(the Regulations) a “securities dealer” is defined as:
The Financial Transactions and Reports Analysis Centre of
Canada (FINTRAC), the agency responsible for the administration
and enforcement of the Act and Regulations, has taken the
position that the authorization “to engage in the business of
dealing in securities” can take the form of either registration or
an exemption from registration under provincial legislation. As
a result of this interpretation, the AML/ATF laws and regulations
apply to all participants in the exempt market whether they are
registered as EMDs or operate under the “Northwest Exemption”.
The AML/ATF laws serve important purposes:
• detecting and deterring money laundering and financing of
• ensuring crime doesn’t pay; and
• fulfilling Canada’s international commitments to fight crime.
By David Gilkes, EMDA Vice Chair and President of North Star Compliance & Regulatory Solutions Inc.