IIROC Proposes Early Adoption of Client Identification Rules

August 26, 2020

Under changes to the Dealer Member Rules, the beneficial ownership threshold at which client identification and verification rules are triggered would be increased from 10% to 25%.

  • IIROC proposals would increase the beneficial ownership threshold in the existing Dealer Member Rules from 10% to 25% and amend proficiency and education requirements consistent with those scheduled to be implemented through the adoption of the IIROC Dealer Member Plain Language Rule Book (IIROC Rule Book) scheduled for December 31, 2021.
  • The IIROC Rule Book was initially schedule to come into force on June 1, 2020; however, due to the COVID-19 pandemic, implementation of the IIROC Rule Book was pushed back to December 31, 2021.

The Investment Industry Regulatory Organization of Canada (IIROC) has proposed the early adoption of amendments to the Dealer Member Rules respecting client identification and verification. Specifically, the proposals would amend Rule 1300 of the Dealer Member Rules to require dealers to ascertain the identity of the beneficial owners who own more than 25% of a corporation when opening an account for a corporation or similar entity. This would increase the beneficial ownership threshold from the current 10%, and alleviate the necessity to request exemptive relief from the existing threshold.

While a beneficial ownership threshold of 25% is already scheduled to be implemented at the end of next year as part of the IIROC Rule Book, the proposals would see the changes incorporated into the existing Dealer Member Rules in the interim.

IIROC’s proposals would also amend proficiency and education requirements with the intention of providing dealers and individual registrants and with the flexibility to meet certain requirements. These changes would be consistent with the IIROC Rule Book.

IIROC is accepting comments on the proposals until September 8, 2020. For more information, see IIROC Notice 20-0162.

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