Financial Crime World

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Canada Introduces Stricter Banking Regulations to Combat Money Laundering and Terrorist Financing

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The Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) has released updated guidelines for banking regulations aimed at preventing money laundering and terrorist financing in the country.

Compliance Program Essentials

According to FINTRAC, a documented and comprehensive compliance program is essential for reporting entities to meet their obligations under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act. The organization provides guidance on implementing such programs, including:

  • Risk assessment
  • Knowing your client
  • Transaction reporting
  • Record keeping
  • Other requirements

Knowing Your Client

Reporting entities are required to verify the identity of their clients for certain activities and transactions. FINTRAC offers sector-specific guidance on methods to verify the identity of persons and entities across various industries, including:

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

Transaction Reporting

Reporting entities must keep records of transactions and client identification and provide them to FINTRAC within 30 days upon request. The organization also outlines specific requirements for record keeping across various sectors.

24-Hour Rule and Travel Rule

Financial institutions must report certain transactions to FINTRAC within 24 hours, as outlined in the 24-hour rule. Additionally, the travel rule requires electronic funds and virtual currency transfers to be reported.

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 also carry specific obligations, as do foreign branches, subsidiaries, and affiliates.

Ministerial Directives

FINTRAC has issued guidance related to ministerial directives on financial transactions associated with designated foreign jurisdictions or entities, including:

  • Russia
  • Iran
  • Democratic People’s Republic of Korea (DPRK)

The updated guidelines aim to enhance Canada’s anti-money laundering and terrorist financing measures, ensuring a safer and more secure financial system for the country.

For further information, visit FINTRAC’s website for glossaries, interpretation notices, policy interpretations, and videos on verifying client identities.