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Aml Procedures for Banks in Canada

The Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) has provided guidance on the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (the Act) and associated Regulations, outlining the requirements for reporting entities to comply with anti-money laundering (AML) regulations.

Implementing a Compliance Program

A comprehensive compliance program is essential for meeting all reporting entity obligations under the Act. This includes risk assessment guidance, as well as documentation of policies and procedures.

Knowing Your Client

Reporting entities must verify the identity of clients for certain activities and transactions according to the Proceeds of Crime (Money Laundering) and Terrorist Financing Regulations. Methods for verifying identity vary depending on the sector, including:

  • Accountants
  • British Columbia notaries
  • Casinos
  • Dealers in precious metals and stones
  • Departments and agents of the Crown
  • Financial entities
  • Life insurance companies and brokers
  • Money services businesses
  • Real estate brokers and developers
  • Securities dealers

Transaction Reporting

Reporting entities are required to submit certain transactions to FINTRAC, including:

  • Suspicious Transaction Reports (STRs)
  • Terrorist Property Reports
  • Large Cash Transaction Reports
  • Electronic Funds Transfer Reports
  • Casino Disbursement Reports
  • 24-hour rule reports
  • Financial entities must report large virtual currency transactions and electronic funds transfers.

Record Keeping

Reporting entities are responsible for maintaining accurate and detailed records of accounts, transactions, and client identification. Records must be kept in a way that they can be provided to FINTRAC within 30 days upon request.

Other Requirements

Money services businesses or foreign money services businesses must register with FINTRAC before operating in Canada. Financial entities, including life insurance companies and brokers, have specific requirements for prepaid payment products. Correspondent banking relationships require specific obligations, and reporting entities with foreign branches, subsidiaries, or affiliates must establish policies for record keeping and retention.

Ministerial Directives

The Minister of Finance has issued directives to restrict financial transactions coming from or going to designated foreign jurisdictions or entities. FINTRAC provides guidance on these directives, including:

  • Ministerial Directive on Financial Transactions Associated with Russia
  • Islamic Republic of Iran
  • Democratic People’s Republic of Korea (DPRK)

For further information, reporting entities can consult the following resources:

  • FINTRAC glossary
  • Interpretation notices
  • Policy interpretations database
  • Interpretation policy
  • Videos demonstrating various methods for verifying client identity.

Date Modified: 2024-06-24