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Navigating The Complexity of Ownership From The Lens of Sanction By Extension

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Lapses in UBO Identification, Sanctions Compliance, and Corporate data

Tuesday, 30th April. 13:00 - 14:00 London Time (GMT+1)

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Mark Bain

Speaker

Louie Vargas

Speaker

Michael Harris

Blogs

Current State of Business Verification in Canada

11 April, 2024

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In the bustling marketplace of Canada, verifying the legitimacy of widespread business terrain is a challenge. For KYB Canada, the business information is scattered over the business registry of each province and territory. This dispersion of data adds to the challenges of business verification services in Canada. From exploring official databases to analyzing them with data scoring, this article will equip you with the knowledge to verify business in Canada to mitigate the risk of fraud and regulatory sanctions. 

Business Verification Challenges in Canada:

Business verification in Canada is subject to many challenges while performing the KYB checks during corporate screening. A few of them are listed below

  • Multiple Data Repositories:

Canada’s business landscape is scattered over federal, provincial, and territorial governments, each with its business registries. Business Information scatters over 10+ business registries across Canada, making navigating various platforms difficult. So, this poses significant challenges in business verification because collecting and accessing information from various registries is very difficult due to the time to navigate through these registries.

  • Regulatory compliance:

The legislation and regulations related to business information are very rigid in Canada, like the PIPEDA (Personal Information Protection and Electronic Documents Act), which is for the private sector. It protects information by ensuring the personally sensitive data. The limitations of data privacy imposed by such legislation are also a significant hindrance to validating business information in Canada.

  • Paid Business documents:

Many business documents in Canada are inaccessible. Instead, it can only be accessed by paying extra charges. Documents such as Certificate of status ($40), File Summary ($5), and Certificate of Good Standing are paid documents in Canada. Even after paying for these business documents, these are not available instantly; instead, it requires 4 to 5 or more working days, causing a delayed and prolonged business verification process, and resulting in missed opportunities.

  • Unavailability of UBO Information:

The Canadian Business registries do not provide any information about the beneficiary ownership of the businesses. UBO is a crucial aspect of corporate due diligence. Any red flag in the intricate ownership structure of the party business can drag the other business into sanctions, emerging as a significant challenge in Canada’s business verification services. 

Primary Regulatory Bodies for Compliance:

There are multiple regulatory bodies in Canada that are working to ensure compliance with regulations and maintain a risk-free business ecosystem. A few of them are stated below;

  • Canada Revenue Agency:

CRA aims to manage tax laws for the Canadian government and ensure individuals and businesses comply with tax obligations. Companies must use CRA portals for tax filings and payments and access vital information to maintain compliance and fulfil their tax responsibilities accurately and on time.

  • Office of the Superintendent of Financial Institutions (OSFI):

OSFI is the regulator overseeing federally regulated fiscal institutions in Canada. Financial services businesses must use OSFI portals to submit regulatory reports, adhere to prudential standards, and ensure compliance with financial regulations, maintaining stability and integrity within the sector.

  • Canadian Securities Administrators (CSA):

Regulatory authority facilitating in implementing regulation of the capital markets of Canada. Businesses involved in securities trading and investments must utilize CSA portals to file disclosure documents, register securities, and comply with securities laws, ensuring transparency, investor protection, and market integrity.

Data Score of Business Information:

Following is the Data Score for business information available on the official business registry of Canada. The table below is the business data available at the official provincial registries of Canada for KYB checks.

data score of business information in canada

Data score table for business registries of canada

Key Beneficial Ownership Information In Canada:

Following is the Ultimate beneficiary information available on the official business registry of Canada. No information is available about UBO Canada on the official business registry which leaves a loophole that can turn into a serious risk of regulatory non-compliance. 

Beneficial ownership information

How can The KYB help?

The KYB has consolidated business data from 200+ countries and states that gives access to multiple registries on one go. The KYB has retrieved data from 40+ official business registries and sources in Canada that provide access to the business information for corporate due diligence in a single place instead of navigating through multiple sources. Another critical aspect of The KYB that facilitates business verification in Canada is Ultimate beneficial owner identification. None of the business registries in Canada provide information about UBO except for Novia Scotia. It only gives information about owner names or the business registry of  King Edward Island as it provides information about the percentage of the ultimate beneficial owner only.

Furthermore, The KYB includes detailed information about owners to accurately know the intricate ownership structures and shield themselves from regulatory sanction. The KYB helps to comply with AML regulations by performing corporate due diligence before business onboarding.

Get in touch with us for further information.

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