7.17 Under Part XVIII, Canadian financial institutions are required to obtain self-certifications to establish whether an account holder is a specified U.S. person or to clarify the status of particular entities. …
7.18 Self-certification forms have been developed by the CRA to assist financial institutions in establishing the status of account holders under Part XVIII and Part XIX. ...
Reliance on self-certification
7.23A self-certification or documentary evidence cannot be relied upon if a financial institution knows or has reason to know that it is incorrect or unreliable.
Must take into account AML information
7.24 In assessing whether reliance can be placed on a self-certification, a financial institution must consider other information that it has obtained concerning the account holder in connection with the account opening, including any documentation obtained for purposes of the AML/KYC Procedures and any information that an account holder voluntarily provides to it.
Client-name accounts included
5.9 An investment fund unit held in client-name will be a financial account maintained by the fund for the purposes of Part XVIII even if that unit is also contained in an account of a dealer. ...
Dealer due diligence responsibility
5.10 In view of the current compliance practices between dealers and fund managers for client-name accounts, subsection 265(8) of the ITA and paragraph 5.13 are generally expected to apply in respect of such accounts. The CRA expects dealers to perform the due diligence and account classification and funds to perform the reporting, unless a fund is advised by a dealer that the dealer will take responsibility for its own reporting.
Dealer can also report
5.14 Rather than communicate its determination of the account holder’s status, a dealer can choose to perform the reporting obligations in respect of a unit. In that case, the dealer has to file any required Part XVIII Information Return with the CRA in respect of the unit and inform the fund in writing that the dealer is doing this. The fund can rely on this written notification and is not required to take additional steps in this regard unless the fund reasonably concludes that the dealer has not complied with its reporting obligations. ...
Example showing dealer responsibility for nominee-name accounts and dealer/fund duty division re client-name accounts
5.15 … Example – Identification and reporting on an interest in a fund
Two U.S. residents, Investor A and Investor B, seek to invest in Mutual Fund ABC (referred to in this example as the "Fund"). Investor A invests in the Fund through Dealer I. Dealer I acquires units in the Fund in the client-name of Investor A. Investor B invests in the Fund through Dealer II and acquires units in the Fund in nominee-name on behalf of Investor B. Dealer I, Dealer II, and the Fund are reporting Canadian financial institutions.
Dealer I and Dealer II have as account holders Investor A and Investor B, respectively, and both have Part XVIII responsibilities in connection with the financial accounts they maintain. This is the case irrespective of whether the fund units are held in client-name or in nominee-name.
The Fund maintains a financial account for each of Investor A and Dealer II by virtue of the fund units they hold. The Fund has Part XVIII responsibilities in respect of its account holders that are Investor A and Dealer II. If, in respect of Investor A, Dealer I communicates its determination of Investor A’s status to the Fund, Dealer I is not required to file with the CRA a separate Part XVIII Information Return to report Investor A’s interest in the Fund.
In respect of Investor B, the Fund has to understand whether Dealer II is a financial institution. The Fund can do this by verifying that the dealer has a GIIN (by referring to the IRS FFI list).