Canada Deposit Insurance Corporation: FAQs on new rules in effect April 2022
As of April 30, 2022, changes to rules governing insurance protection for deposits held “in trust” at CDIC member institutions come into effect. Under the new rules, before April 30, 2022, lawyers, law partnerships and law corporations must designate their trust accounts as Professional Trustee Accounts, which have less onerous disclosure requirements than for the general trust account category or their trusts account will remain general trust accounts with more onerous disclosure requirements (each beneficiary’s full name and address and the amount, or percentage of each beneficiary’s interest) and possible lost or reduced insurance coverage for failure to provide required beneficiary information. Lawyers should advise their clients of these new requirements and obtain their consent to disclose their name and address to CDIC if a member institution fails and CDIC needs the information to make payments to depositors (see CDIC Professional Trustee Data Requirements). For more information about the changes and the process, see CDIC’s website and contact your member institution.
Frequently Asked Questions
What does this mean to me?
If you have a trust account that is covered by CDIC, you must designate your trust account as a Professional Trustee Account (PTA) with your financial institution. Contact your financial institution if they have not yet sent you information about these changes.
Once your account is designated as a PTA, you must file an annual attestation in April each year. The attestation will not require you to list your client’s name, address or the amount or percentage of funds held.
If you do not have a trust account or if you hold a trust account that is covered by Credit Union Deposit Insurance Corporation of BC, the new rules are not applicable.
What do I have to do?
Contact your financial institution to designate your trust account as a PTA and file an attestation by April 30, 2022. Going forward, file an attestation in April each year.
When do the new rules come into effect?
April 30, 2022.
What if I don’t designate my trust account as a Professional Trustee Account?
Your trust account will revert to a general trust (or trustee) account. An account holder with a general trust account must disclose each beneficiary’s full name, address and the amount or percentage of each beneficiary’s interest. Account holders of a general trust account will no longer be permitted to use an alphanumeric identifier for the beneficiary’s name. If an account holder does not provide the required information for each beneficiary, there may be lost or reduced insurance coverage.
However, note that BC Code rule 3.3-1 requires lawyers to guard against breaching confidentiality of clients’ personal information, including their names and addresses. Disclosing such information to your financial institution, without the client’s consent, may render you in breach of the Code. In addition, if you hold funds in a general trust account, you must apprise the financial institution of any changes to the beneficiary information to ensure the financial institution’s records remain up-to-date. CDIC will rely on the latest information on the financial institution’s records to determine deposit insurance coverage for a general trust account.
What if I don’t file my annual attestation in April each year?
Your trust account will revert to a general trust (or trustee) account, requiring disclosure of each beneficiary’s full name, address and the amount or percentage of each beneficiary’s interest.
Can I continue to file the CDIC report as I have in the past?
To ensure that lawyers maintain confidentiality and proper insurance coverage, lawyers should be designating their trust accounts as a PTA and file an attestation in April of each year. The new CDIC rules will no longer allow the financial institutions to accept an annual report with alphanumeric identifiers.
Did the date of reporting change?
Yes. The new CDIC rules require you to file an attestation in April of each year. In the past, the annual CDIC report was due by May 30. We recommend you create a reminder so that the attestation is filed by April 30.
Do these new rules apply for Coast Capital Savings Federal Credit Union trust accounts?
Yes. Coast Capital is a federal credit union and is insured by CDIC. Therefore, the new CDIC rules are applicable.
Where can I find more information?
The CDIC website will provide up-to-date information about the new rules: www.cdic.ca. We also recommend you contact your financial institution as they may require you to take additional action not covered in this FAQ.