Unravelling Canada’s new deemed ownership rule in sanctions compliance


RegTech firm Sigma Ratings recently provided a guide for companies to stay ahead of changing sanctions in the Canadian market.

With the evolving geopolitical landscape, governments are becoming increasingly stringent with their regulatory frameworks.

Sanctions compliance is one such domain where there’s a heightened emphasis. Instead of relying on mere 50% checks, firms are now expected to adopt a broader and more comprehensive perspective to identify potential risks. Canada recently showcased this shift in approach when they introduced the “deemed ownership” regulations in July. These regulations have significantly altered the expectations regarding sanctions compliance.

The new Deemed Ownership rule in Canada has introduced specific criteria for sanctions compliance. It states that if an individual has control over an entity (other than a foreign state), any property under that entity’s ownership is considered to be owned by that controlling individual.

So, what exactly qualifies as “control”? Under this new rule, Sigma Ratings claims an individual is considered to have control over an entity if they hold over 50% of the shares, ownership interests or voting rights of that entity. Other requirements include if they possess the power, either directly or indirectly, to influence or alter the entity’s board of directors and if, given the surrounding circumstances, it’s reasonable to infer that the individual has the means to direct the actions of the entity.

This interpretation of control surpasses the 50% rule observed in many other countries. The implications are profound. It paves the way for other nations to potentially adopt similar regulations, not only for sanctions compliance but also in other realms. A robust mechanism to define control and related parties is now deemed imperative in the battle against illicit finance, urging firms to adopt a more nuanced approach to risk determination.

Sigma, a leading name in FinTech, has developed Sigma360, an AI-powered platform designed to assist firms in seamlessly adapting to these regulatory changes. The software offers real-time insights, aiding businesses in making informed decisions in risk and compliance domains. Whether it’s integrating with your existing systems or functioning alongside your internal datasets, Sigma360 promises a robust tech-driven risk management solution.

With a myriad of features including persistent updates on global risk data, exhaustive real-time coverage from investigative sources, proprietary data attributes like global high-risk address linkages, and a configurable platform that includes scalable scoring, Sigma360 stands out as an invaluable asset for any firm navigating the complex waters of sanctions compliance.

Read the full post here.

Keep up with all the latest FinTech news here.

Copyright © 2023 FinTech Global

Enjoying the stories?

Subscribe to our daily FinTech newsletter and get the latest industry news & research


The following investor(s) were tagged in this article.