Financial Crime World

Canada’s Financial Regulators Emphasize Importance of Compliance with Regulations

The Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) has released guidelines to help businesses and individuals understand their obligations under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (the Act) and associated regulations.

Compliance Program Requirements

A Comprehensive Compliance Program is Essential

To meet reporting entity obligations under the Act, a comprehensive compliance program is crucial. This includes:

  • Conducting a risk assessment to identify potential money laundering or terrorist financing risks
  • Verifying the identity of clients for certain activities and transactions
  • Keeping accurate records of account, transaction, and client identification information

Knowing Your Client

Reporting entities are required to verify the identity of their clients for certain activities and transactions. FINTRAC provides guidance on methods to verify client identity, including:

  • Business relationship requirements
  • Ongoing monitoring requirements
  • Beneficial ownership requirements
  • Third-party determination requirements

Transaction Reporting

Financial Institutions Must Report Certain Transactions

Financial institutions are required to report certain transactions to FINTRAC, including:

  • Suspicious transaction reports
  • Large cash transaction reports
  • Electronic funds transfer reports
  • Reports on terrorist property and other financial transactions

Record Keeping

Accurate Records Are Essential

Reporting entities must keep accurate records of account, transaction, and client identification information for a minimum period of five years. These records must be available to FINTRAC within 30 days upon request.

Other Requirements

  • Financial institutions operating in Canada must register with FINTRAC before commencing operations
  • They are required to maintain prepaid payment product accounts and correspondent banking relationships
  • Foreign branches, foreign subsidiaries, and affiliates of reporting entities must establish policies for record keeping and retention, as well as client identification

Ministerial Directives

Guidance on Ministerial Directives

FINTRAC provides guidance on ministerial directives issued by the Minister of Finance, which aim to restrict financial transactions with designated foreign jurisdictions or entities. These directives include measures to counter money laundering and terrorist financing risks associated with specific countries.

For further information, please visit FINTRAC’s website for related links, including:

  • Glossary
  • Interpretation notices
  • Policy interpretations database
  • Video tutorials on verifying client identity

Date Modified: June 24, 2024