The flashcards below were created by user glamourboots on FreezingBlue Flashcards.

  1. Canadian Securities Administrators
    The CSA is a* forum* for Canada's provincial securities regulatory authorities to improve, coordinate, and harmonize regulation of the Canadian capital markets. The *CSA is a policy-making body composed of members from each provincial securities commission*
  2. Duties - Provincial Securities Commission
    -establishing strict standards for disclosure of information before new securities can be offered to the public

    -reviewing and approving mutual fund and new issue prospectuses before they are offered for sale in that province

    -registering the companies and individuals who sell securities in their province

    -registering the companies and individuals that manage mutual fund portfolios established in their province

    -enforcing securities regulations governing the buying and selling of securities

    -investigating investor complaints against companies and their employees

    -disciplining companies or individuals found to contravene the regulation
  3. Duties - Canadian Securities Administrators
    -to protect investors from unfair, improper, or fraudulent practices

    -to foster fair and efficient capital markets

    -to reduce risks to the market's integrity and to investor confidence in the markets

    once these are approved by the CSA, they are enforced by the provincial securities commissions
  4. National Instruments
    National instruments are *harmonized regulations* made by the securities commissions through the CSA. The main instruments affecting mutual funds are:

    • Mutual fund prospectus disclosure
    • Mutual Funds(main Instruments)
    • Commodity Pools
    • Mutual Fund Sales Practices
    • Investment Fund Continuous Disclosure
    • Independent Review Committee for Investment Funds
  5. Mutual Fund Prospectus Disclosure -101
  6. Enures that mutual funds disclose the information which investors should consider when deciding to invest, or remain invested in a fund. The *2 key disclosures are the simplified prospectus and the annual information form
  7. Mutual Funds - 102
    • Is the *main instrument *regulating mutual funds. It:
    • Covers the operation and administration of mutual funds, including the kinds of investments a mutual fund can make, how units are redeemed, how the mutual fund manager can make changes to the mutual fund, and how the mutual fund can advertise

    -Sets out restrictions on how mutual funds invest its assets

    -Prohibits managers from acting as custodians of the fund and specifies that the custodian must be a bank, a trust company or subsidiary of either

    Specifies how performance fees should be calculated

          • -Ensures investors money are received promptly by the fund

          • -prohibits misleading sales communications and provides a formula to calculate standard performance data
  8. Commodity Pools - 104
    Deals with commodity pools which are special types of mutual funds. They have the same regulations as other mutual funds. Gives commodities permission to invest in commodities
  9. Mutual funds Sales Practices - 105
    Ensures that mutual finds are sold on the basis of what is suitable for, and in the best interests of, investors rather than on the basis of incentives received by dealers and their sales reps. It prohibits payment of any non monetary or monetary compensation

    Covers mutual fund sales practices, which all mutual fund distributors and managers must follow.
  10. Investment Fund Continuous Disclosure - 106
    Disclosure for any security that is issuing to the public. Ie must provide financial statement, management reports of fund performance, proxy voting, quarterly portfolio disclosure, information circulars and material changes
  11. Independent Review Committee for Investment funds - 107
    Prescribes for mutual funds an Independent Review Committee (IRC) to review all matters involving a conflict between the manager's own interests and its duty to manage the fund in the best interest of the fund.

    All reporting issuer investments funds must have a committee. Changes to mutual funds require approval of the IRC
  12. IIROC - Investment Industry Regulatory Organization of Canada,*
    Is the national self-regulatory organization for the securities industry.

    IIROC's main objective is to create a favorable environment for the investing public by encouraging high practice standards and enforcing regulatory compliance in its membership.
  13. Duties - IIROC
    • -protection of the investing public
    • -self-regulation
    • -liaison with provincial securities commissions
    • -public policy representation
    • -maintenance of orderly marketing and trading
    • -education
    • -publication of statistical information
    • -liaison with other financial institutions

  14. MFDA - Mutual Fund Dealers Association
    • The MFDA is the *self-regulatory organization for the distribution side of the Canadian mutual funds industry.* All mutual fund dealers outside the province of QuĂ©bec are required to be members of the MFDA.
    • The MFDA performs its regulatory role in broadly the same way as IIROC

    Duties - MFDA

    • -admit members
    • -perform compliance reviews
    • -enforce rules through a transparent disciplinary process that can result in fines, suspension, or termination of membership

    Suspension or termination of MFDA membership means the suspended or terminated dealer firm cannot engage in trading in mutual fund securities.
  15. Money Laundering
    Under Canadian law, money laundering is any act intended to disguise the source of money or assets derived from criminal activity inside or outside Canada, such as illegal drug trafficking, bribery, fraud, forgery, murder, robbery, counterfeit money, and stock manipulation. The dirty money produced through criminal activity is transformed into clean money by making its criminal origin difficult to trace by integrating it into the legitimate economy.
  16. Terrorist Financing
    Terrorist financing provides funds for terrorist activity. A successful terrorist group must develop sources of funding and ways to obscure the links between those sources and the activities the funds support. The sums needed to mount terrorist attacks are not always large and the associated transactions are not necessarily complex.There are two primary sources of financing for terrorist activities:

    • -countries, organizations, or individuals
    • -revenue-generating activities
  17. PCMLTA - Proceeds of Crime (Money Laundering) and Terrorist Financing Act
    -help detect and deter money laundering and terrorist financing activities, and to facilitate the investigation and prosecution of money laundering and terrorist financing offenses

    -to respond to the threat posed by organized crime by providing law enforcement officials with the information they need to investigate and prosecute money laundering or terrorist financing offenses, while ensuring appropriate safeguards to protect the privacy of persons with respect to personal information

    -to assist in fulfilling Canada's international commitments to participate in the fight against multinational crime, particularly money laundering, and the fight against terrorist activities
  18. FINTRAC - The Financial Transactions and Reports Analysis Centre of Canada
    The Anti-Money Laundering Act established the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC). *FINTRAC is an independent government agency*. It operates at arm's length from law enforcement agencies, and collects, analyzes, and discloses information to help detect and prevent money laundering and the financing of terrorist activities in Canada and abroad.

    As a mutual fund representative, you must report suspicious transactions and certain other financial transactions to FINTRAC. You and your employer also have to keep certain records, ascertain client identity and implement a compliance regime.
  19. FINTRAC - Mandatory Reports
    Suspicious Transactions

    Large Financial Transactions - 10000 or more or transfers of 10000 or more. Cash means notes or coins and does not include cheques, money orders, or similar negotiable instruments.r if 2 or more transactions equaling 10000 in 24 hours occurs

    Terrorist Property
  20. Record Keeping - Mandatory
    Large cash transaction records

    • Account-related records
    • -account opening records
    • -certain records created in the normal course of business
    • -client statements

    • Other Records
    • -beneficial ownership records
    • - third-party determination records
    • -politically exposed foreign person records

    Records must be kept in such a way that they can be provided to FINTRAC within 30 days of a request to examine them.

    As a general rule, *records have to be kept for a period of at least five years* following the date they were created. Employees who keep records for an employer are not required to keep those records after the end of their employment. The same is true for individuals in a contractual relationship after the end of that contractual relationship.
  21. Other records
  22. Identification
    Clients must be identified when:

    • -when opening an account
    • -when a client conducts a large cash transaction
    • -when a client conducts a suspicious transaction
    • -when an individual is authorized to give instructions for an account that you have to keep a record about
  23. Proper Identification
    • Birth certificate
    • Driver's license
    • Passport
    • Record of landing
    • Permanent resident card
    • Social insurance number
    • Old age security card

    Provincial identification card or similar document.

    *The documents may be Canadian or foreign equivalents*.
  24. Improper Identification
    Health cards from Ontario, Manitoba and PEI

    • If you are unable to identify an individual or entity at the time of opening an account, *you are allowed to accept the initial deposit but you are not allowed to carry out any other transaction until you have identified the client*.

    If a client is evasive or unwilling to provide sufficient information for adequate identification, you should inform your compliance department.

    In general, if you have confirmed the identity of a client once, you do not need to do so again at the time of future transactions.

    Client identification information must be kept up to date.
  25. Third Party Determination
    In cases where a third party is involved, you must obtain specific information about the third party and the relationship with the individual providing the cash or account holder.
  26. Individuals not physically present
    Special procedures apply when identifying an individual who is not physically present.
  27. Politically Exposed foreign Person
    A politically exposed foreign person is an individual who holds or has ever held one of the following offices or positions in or on behalf of a foreign country:

    a *head of state or government*a *member of the executive council of government or member of a legislature*

    a *deputy minister* (or equivalent)

    • an *ambassador or an ambassador's attachĂ© or counsellor*
    • a *military general* (or higher rank)
    • a *president of a state-owned company or bank*
    • a *head of a government agency*
    • a *judge*
    • a *leader or president of a political party in a legislature

    *Measures applying to a politically exposed foreign person also apply to his or her immediate family.
Card Set
Mutual fund Course
Show Answers