Day says those using American bank accounts will have to follow U.S. rules

Peter Rakobowchuk - Canadian Press

Wednesday, January 17, 2007

MONTREAL (CP) - Consumers who are banking in U.S. dollars will have to follow rules set out by the United States and how they're applied by Canadian banks, Public Safety Minister Stockwell Day said Wednesday.

The Royal Bank (TSX:RY) had been tightly applying U.S. restrictions on who could open American dollar accounts as part of the effort to stop terrorism and money laundering, but will ease its policy.

"With some exceptions, RBC will provide a U.S. dollar account to dual citizens of sanctioned countries as long as they meet our 'Know Your Client' and 'Anti-Money Laundering' requirements, which include proof of residency in Canada," the bank said Wednesday.

The bank said it will work with clients who may be impacted by the requirements.

Citizens of Iran, Iraq, Cuba, Sudan, North Korea or Myanmar are prevented from having U.S. dollar accounts.

For people who are banking with American dollars and through the American banking system, the law applies to the country of jurisdiction, Day told a news conference.

"The bank here has made a decision between themselves, their clients and the situation in the United States," he said.

"So it's clearly a jurisdictional issue relating to the United States just as if a similar matter had to do with Canadian banks, it goes back to the country of jurisdiction."

Day said he will be in Washington on Thursday and Friday and the matter could come up for discussion with U.S. officials. He said Finance Minister Jim Flaherty is also dealing with it.

He made the comments after a funding announcement for the Montreal-based International Centre for the Prevention of Crime, an organization affiliated with the United Nations.

Day announced more than $400,000 in funding for the centre for such things as research on the study of street gangs and solutions to help tackle illegal activities by young people. The organization has an annual budget of $2 million.

Prevention programs are needed for those who are "at risk in getting involved in gang activity or perhaps are members of gangs and who would like to get out and never have to go back to that situation," he added.

The public safety minister also said members of ethnic communities should speak to their banks about the matter and that "other developments may transpire."

The Royal Bank has said the United States has tightened up existing rules which were put into place since the terrorist attacks in September 2001.

It has major bank and brokerage operations in the United States.

The national president of the Canadian Islamic Congress has urged Canadians to open foreign accounts in different currencies other than the U.S. dollar.

A spokesman for the TD Bank (TSX:TD) has said it's not the bank's policy to refuse to open a U.S dollar account in Canada for people with dual citizenship, but it carefully monitors the transactions of anyone with a U.S dollar account.

Several other banks, such as the Bank of Montreal (TSX:BMO) and Scotiabank (TSX:BNS), say they don't deny U.S. dollar accounts to citizens on the list as long as they meet normal requirements.

© The Canadian Press 2007

http://www.canada.com/topics/news/national/story.html?id=1b2265a2-5155-4569-8e57-b03994e82cc8&k=53287