Canadian Lawyer InHouse

Oct/Nov 2008

Legal news and trends for Canadian in-house counsel and c-suite executives

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INDUSTRY SPOTLIGHT COMPLIANCE HEIGHTENED FOR LIFE INSURERS By Daryl-Lynn Carlson Anti-money-laundering and anti-terrorist- financing legislation is top-of-mind for corporate counsel in Canada's insurance industry. A t fi rst blush, it's a complex and seemingly vague piece of leg- islation, although, in practice, Bill C-25 is enabling large in- surance companies to be far more eff ective in managing their risks. Th e amendment to Canada's Proceeds of Crime and Terrorist Financing Act, which took eff ect last June, requires fi - nancial institutions, securities dealers, and life insurance companies, brokers, and agents to reduce their vulnerability to money launderers and terrorist fi nancing. Th e legislation brings the Canadian anti- money-laundering and anti-terrorist- fi nancing regime in line with the revised international standards of the Paris-based Financial Action Task Force. General counsel and compliance law- yers at aff ected insurance businesses are charged with the responsibility of imple- menting the legislative obligations. "Th ere are a number of key areas that bring about fairly signifi cant changes for us," says Paul G. McKay, vice president and chief compliance offi cer with Manu- life Financial's Canadian division. He boils the changes down to four main areas, one being the onus to in- troduce means to identify "politically exposed foreign persons." A PEFP is a person who has held a civic or political position in a foreign jurisdiction and is deemed to be susceptible to money laundering or illegal fi nance schemes. Th ere are lists of names of poten- tial candidates for sale, which Manulife has purchased, and the lists are cross- referenced with the client's application. McKay acknowledges the categorization comes with a bit of a stigma. "Just be- cause you're a PEFP doesn't mean you're a bad person," he points out. "Th ere are many people who just because they have had political exposure are perfectly good people that we want to do business with." C ANADIAN Lawyer INHOUSE OC T OBER 2008 35

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