An inspection is a verification process that is intended to ensure that financial sector participants are complying with current laws and regulations. Inspections play a vital preventative role in protecting financial consumers.
Inspection objectives
AMF inspections are intended to support supervised entities in taking a proactive approach to compliance. They are conducted to:
- Identify gaps between observed practices and current obligations
- Encourage continuous compliance improvement
- Promote dialogue between the AMF and supervised individuals
- Improve understanding of the risks that are present in Québec’s financial sector
- Help the AMF take appropriate actions in the event of significant or recurring breaches of requirements
Inspections contribute to the integrity and resilience of the financial sector.
They are a strategic tool in building consumer trust by ensuring that their interests are protected, practices are fair, and registrants are held to the highest standards.
Inspections and investigations: What are the differences between them?
The differences between an inspection and an investigation lie mainly in the approach used, what they cover and why they are carried out.
The AMF’s inspections use a risk-based approach and are intended o ensure that registered individuals and entities are complying with the applicable laws and regulations.
They rely on collaboration with the inspected entities and involve conducting interviews, checks and tests to assess the controls in place. Inspections promote continuous improvement and foster a culture of compliance.
They are preventative in nature but may lead to enforcement actions if an entity refuses to cooperate, there are significant or recurring breaches or undertakings are not complied with.
Unlike inspections, investigations are intended to detect and prove offences under the laws and regulations administered by the AMF.
Investigators seek to gather evidence showing that an (often unregistered) individual or entity is committing an offence.
The objectives of an investigation are to punish and deter offences.
A collaborative approach
The inspection process is conducted in collaboration with the individual or entity that is being inspected. It supports changes in practices and the development of a culture of compliance.
However, when significant or recurring breaches are observed, the AMF may take appropriate action to enforce the laws it administers.
Notes
The inspection is a legal requirement for all AMF-licensed and -registered individuals and entities. An inspection may not be refused.
Inspection criteria
The AMF uses an evolving, risk-based approach to determine which registered entities or licensed individuals will be inspected. While all registered entities or licensed individuals may be subject to inspection, how frequently they are inspected and how inspections are prioritized depends on their risk profiles.
Why this approach?
This approach enables the AMF to focus its efforts on where the highest risks are, while ensuring equitable coverage of all registrants.
Examples of criteria
The AMF assesses an entity’s level of risk using a combination of quantitative and qualitative criteria, such as:
- Type of business (e.g., insurance, mortgage brokerage, securities)
- Entity’s financial position of the entity
- Compliance history, including regulatory breaches
- Number and nature of complaints and reports received
- Size of the organization (number of representatives, employees, branches)
- Complexity of the business model (e.g., multiple rights to practise or business lines)
- Results of the last inspection, including the residual risk observed
What the inspector is authorized to do
During an inspection, the AMF inspector may:
- Enter the entity’s establishments at any reasonable hour
- Meet with employees to gather information
- Consult and copy books, registers, accounts, records and other relevant documents
- Require any document relating to the entity’s business
Types of inspections
The purpose of this type of inspection is to verify that a set of activities subject to laws and regulations are compliant, particularly as regards:
- control environment and compliance
- Supervision of representatives and employees
- Conduct of business
- Marketing practices
- Financial situation
- Financial needs analysis and know your client
- Transactions
Regular inspections are mainly conducted remotely but normally include a component that is conducted on-site at the registered firm’s premises. The duration of the on-site component may vary from a few hours to several days, depending on the nature and scope of the work to be performed.
A follow-up inspection is scheduled to verify that the corrective actions have been effectively implemented to address the gaps identified during a previous inspection.
This step is essential to ensure ongoing compliance and reduce risks. It allows the AMF to confirm improvements in practices, strengthen stakeholder trust and contribute to financial sector stability.
The follow-up inspection may be remote, on-site or a combination of the two.
The AMF may focus on a specific aspect of an entity’s business, such as:
- Management of separate accounts
- Close supervision
- Compensation
- New regulatory requirements
- Cybersecurity risks
- Commercial practices
A targeted inspection may be remote, on-site or a combination of the two.
This type of inspection is entirely remote and consists of a self-evaluation or thematic questionnaire designed to assess compliance practices, identify the risks associated with a specific theme or improve understanding of registrants’ distribution practices.
This approach enables the AMF to reach a larger number of registrants, communicate its expectations with respect to best practices and analyze the risks associated with specific issues.
Supervisory Framework for Financial Institutions and Credit Assessment Agents
The AMF uses a supervisory approach with efforts focused on risks having the most significant potential impacts on financial stability and the protection of client interests.
Refer to the applicable supervisory framework:
End of the Information