Last week, the CRTC (Canadian Radio-television and Telecommunications Commission) levied a $1.1 million fine against a Canadian corporate training company for violating CASL (Canadian Anti-Spam Legislation). CASL signifies a sea-change in the way businesses in Canada can communicate with existing and/or prospective customers and business partners and, as such, represents a real and growing risk to those businesses from a potential financial penalty perspective.
Financial Institutions (FIs) are largely in the business of managing risk on numerous levels. The regulatory environment in Canada is a continuously evolving landscape for FIs and regulatory risk is one of the many risks they need to address – the repercussions of non-compliance can be significant. Starting with the oversight imposed by the Office of the Superintendent of Financial Institutions (OSFI) to supervise, monitor and administer a regulatory framework for financial institutions, FIs in Canada bear an extraordinary regulatory burden, far exceeding what our financial counterparts in the U.S. experience. While this framework is a necessary form of governance, it is also fundamentally, from a business standpoint, a form of risk that needs to be monitored, managed and mitigated.
As Canadian FIs are all too aware, OSFI may be the primary regulator, but is far from the sole party involved in the broader regulatory environment. For example, the after-effects of the 9/11 terrorist attacks combined with increasing incidences of significant levels of criminal and terrorist activities in leveraging money laundering saw a significant change in the regulations surrounding AML (anti-money-laundering). So much so that in 2001, the Proceeds of Crime (Money Laundering) Act (PCMLA) was amended to include anti-terrorist financing (ATF) and was subsequently re-named the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA). As a result, the Financial Action Task Force (FATF) was formed to battle money laundering and terrorist financing both nationally and internationally.