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Anti-Terrorism Financing


Lists of Names subject to the Regulations Establishing a List of Entities made under subsection 83.05(1) of the Criminal Code, and/or the Regulations Implementing the United Nations Resolutions on the Suppression of Terrorism (RIUNRST) and/or United Nations Al-Qaida and Taliban Regulations (UNAQTR).

Click Here for the most recent posting http://www.osfi-bsif.gc.ca/Eng/fi-if/amlc-clrpc/atf-fat/Pages/default.aspx


Fintrac Requirements in a Nut Shell


Client Identification

1.  Individual:  Face to Face  

  • 1 piece of Original ID – MUST BE Government issued (OHIP and government employment ID are NOT accepted)
  • ID must be obtained from EVERY person involved in the transaction – Even your Mother!
  • Does not have to be photo ID
 

Example of some ID’s that are accepted:
(a) Driver’s License
(b) Passport
(c)
Birth Certificate
(d) Landed Immigrant status
     

> You need this form all the time "CLIENT INFORMATION RECORD" in PDF
Click Here

2. Receipt of Funds :

To be used everytime you are buyer's agent and have received a deposit cheque
Click Here

3.  Corporation:                  

  • Article of Corporation – with Full name of Directors
When dealing with a Corporation you need this form 
Click Here     
                                   

4.   Not Face to Face 

  • The above applies
  • Appoint someone to look at the Original document
  • Obtain an Affidavit to attest the identified document

When your client is buying or selling from abroad, and not physically here - please call the Office - you will have other forms to fill out and we'd like to walk you through step-by-step.  It does not happen often, so better to review with management.
 

Record Keeping

Client Information that MUST be kept for every purchase

  • Name of client                                                                                                                  
  • Address
  • Date of Birth
  • Nature of Principal Business
  • Occupation
  • The type of document used to confirm individual identity
  • Third party determination
  • Official Corporate documentation if it’s a Corporation
        


Fintrac Guidelines - Updated June 1st 2015


Real Estate

Your Obligations

The following summary of the legislative requirements under the PCMLTFA applies to you if you are a real estate broker or sales representative when you act as an agent regarding the purchase or sale of real estate. These requirements do not apply to your activities related to property management. A real estate broker or real estate sales representative means an individual or an entity that is registered or licensed in a province to sell or purchase real estate.

If you are a real estate developer, these requirements apply to you when you sell to the public a new house, a new condominium unit, a new commercial or industrial building, or a new multi-unit residential building. A real estate developer means an individual or an entity other than a real estate broker or sales representative who in any calendar year after 2007 has sold the following to the public:

  • at least five new houses or condominium units;
  • at least one new commercial or industrial building;
  • at least one new multi-unit residential building each of which contains five or more residential units; or
  • at least two new multi-unit residential buildings that together contain five or more residential units.

If you are an employee of a reporting entity, these requirements are the responsibility of your employer except with respect to reporting suspicious transactions and terrorist property, which is applicable to both.

If you are a real estate agent acting on behalf of a broker, these requirements are the responsibility of the broker except with respect to reporting suspicious transactions and terrorist property, which is applicable to both.

Additional Information for Real Estate Brokers, Sales Representatives, and Real Estate Developers

Reporting

  • Suspicious transactions
    You must report where there are reasonable grounds to suspect that a transaction or an attempted transaction is related to the commission or attempted commission of a money laundering offence or a terrorist activity financing offence.

    See Guideline 2: Suspicious Transactions and Guideline 3: Submitting Suspicious Transaction Reports to FINTRAC
     
  • Terrorist property
    You must report where you know that there is property in your possession or control that is owned or controlled by or on behalf of a terrorist or a terrorist group.

    See Guideline 5: Submitting Terrorist Property Reports to FINTRAC
     
  • Large cash transactions
    You must report large cash transactions involving amounts of $10,000 or more received in cash.

    See Guideline 7: Submitting Large Cash Transaction Reports to FINTRAC
     

Record Keeping

You must keep the following records:

  • Large cash transaction records
  • Receipt of funds records
  • Client information records
  • Copies of official corporate records (binding provisions)
  • Copies of suspicious transaction reports
  • Records of the purpose and intended nature your business relationships
  • Records on the measures you take to monitor your business relationships and the information you obtain as a result of your monitoring

See Guideline 6B: Record Keeping and Client Identification for Real Estate

Ascertaining Identity

You must take specific measures to identify the following individuals or entities:

  • Any individual who conducts a large cash transaction
  • Any individual or entity for whom you have to keep a client information record or a receipt of funds record
  • Any individual for whom you have to send a suspicious transaction report (reasonable measures and exceptions apply)

See Guideline 6B: Record Keeping and Client Identification for Real Estate

Use of personal information

The use of personal information in Canadian commercial activities is protected by the Personal Information Protection and Electronic Documents Act (PIPEDA), or by substantially similar provincial legislation. You have to inform individuals concerning the collection of personal information about them. However, you do not have to inform individuals when you include personal information about them in any of the reports that you are required to make to FINTRAC. You can get more information about your responsibilities in this area from the following:

Business Relationship

You enter into a business relationship when you conduct two or more transactions in which you have to:

  • Ascertain the identity of the individual; or
  • Confirm the existence of a corporation or other entity

See Guideline 6B: Record Keeping and Client Identification for Real Estate

Third Party Determination

Where a large cash transaction record is required, you must take reasonable measures to determine whether the individual is acting on behalf of a third party. When a client information record is required, you must take reasonable measures to determine whether the client is acting on behalf of a third party.

In cases where a third party is involved, you must obtain specific information about the third party and their relationship with the individual providing the cash or the client.

See Guideline 6B: Record Keeping and Client Identification for Real Estate

Compliance Regime

The following five elements must be included in a compliance regime:

  • The appointment of a compliance officer
  • The development and application of written compliance policies and procedures
  • The assessment and documentation of risks of money laundering and terrorist financing, and measures to mitigate high risks
  • Implementation and documentation of an ongoing compliance training program
  • A documented review of the effectiveness of policies and procedures, training program and risk assessment

See Guideline 4: Implementation of a Compliance Regime

Penalties for Non-compliance

Non-compliance with Part 1 of the Proceeds of Crime (Money Laundering) Terrorist Financing Act may result in criminal or administrative penalties.

FINTRAC Interpretation Notice

FINTRAC issues FINTRAC interpretation notices (FINs) to provide technical interpretations and positions regarding certain provisions contained in the Proceeds of Crime (Money Laundering) and Terrorist Financing Act and associated Regulations.

For more information on your obligations and on FINTRAC, you can also consult our Frequently Asked Questions.

Compliance Assessment Report

Part of FINTRAC's mandate is to ensure compliance by financial intermediaries and other reporting entities with their obligations under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act and regulations. To do this, we can inquire into your business and examine records, including those relating to your compliance regime.

The compliance assessment report is one of the ways that FINTRAC can inquire into your business. FINTRAC will advise you in writing when you are required to complete it.

If you have received a request from FINTRAC, you need the access code provided in that request to be able to log on to the secure Compliance Assessment Report System ( https://www22.fintrac-canafe.gc.ca/cars-srec/).

For any questions about this, please contact us by e-mail at CARS-SREC@fintrac-canafe.gc.ca. If you do so, be sure to indicate your company/organization name as well as your reporting entity sector.


 

Or you can read the full guideline...

 

Guideline 6B: Record Keeping
and Client Identification for Real Estate Brokers
or Sales Representatives

February 2008

This replaces the previous version of Guideline 6B: Record Keeping and Client Identification for Accountants and Real Estate Brokers or Sales Representatives issued in June 2005. The changes made to this version are indicated by a side bar to the right of the modified text in the PDF version. These changes take effect June 23, 2008.

Table of Contents

  1. General
  2. Record Keeping and Client Identification Obligations
  3. Records To Be Kept
    3.1 General Exceptions to Record Keeping
    3.2 Large Cash Transaction Records
    3.3 Receipt of Funds Records
    3.4 Client Information Records
    3.5 Suspicious Transaction Report Records
    3.6 Identification Information on all Records
  4. Client Identity
    4.1 When and How Do You Have To Identify Clients?
    4.2 General Exceptions to Client Identification
    4.3 Client Identity for Large Cash Transactions
    4.4 Client Identity for Suspicious Transactions
    4.5 Client Identity for Other Records
    4.6 How to Identify an Individual
    4.7 Client Identity for Corporations and Other Entities
    4.8 Keeping Client Identification Information Up To Date
  5. Third Party Determination and Related Records
    5.1 Third Party Determination
    5.2 Third Party Records
  6. How Should Records Be Kept?
  7. Penalties for Non-Compliance
  8. Comments?
  9. How to Contact FINTRAC

 

1. General


The objective of the Proceeds of Crime (Money Laundering) and Terrorist Financing Act is to help detect and deter money laundering and the financing of terrorist activities. It is also to facilitate investigations and prosecutions of money laundering and terrorist activity financing offences. This includes reporting, record keeping, client identification and compliance regime requirements for real estate brokers or real estate sales representatives. This means an individual or an entity that is registered or licensed in a province to sell or purchase real estate.

If you are a real estate broker or real estate sales representative, you are only subject to the obligations explained in this guideline when you act as an agent regarding the purchase or sale of real estate. This includes the buying or selling of land, buildings, houses, etc. Such activities trigger these obligations whether or not you get a commission for the real estate transaction and whether or not you have fiduciary duties regarding it.

These obligations do not apply to you for activities related to property management. This means that if you only deal in rental property transactions, not purchases or sales, the obligations explained in this guideline do not apply to you.

This guideline has been prepared to help you meet your record keeping and client identification obligations. Information is included about new obligations or changes to existing obligations that take effect on June 23, 2008. If you need information about any earlier requirements in effect before June 23, 2008, consult the previous version of this guideline (June 2005).

This guideline uses plain language to explain the most common situations under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act as well as the related Regulations. It is provided as general information only. It is not legal advice, and is not intended to replace the Act and Regulations.

Record keeping and client identification obligations for other types of reporting persons or entities are explained by sector in other versions of this guideline (accountants, financial entities, securities dealers, life insurance companies, brokers and agents, money services businesses, agents of the Crown that sell or redeem money orders, and casinos).

For more information about money laundering and terrorist financing, or other requirements under the Act and Regulations applicable to you, see the guidelines in this series:

  • Guideline 1: Backgrounder explains money laundering, terrorist financing, and their international nature. It also provides an outline of the legislative requirements as well as an overview of FINTRAC’s mandate and responsibilities.
  • Guideline 2: Suspicious Transactions explains how to report a suspicious transaction. It also provides guidance on how to identify a suspicious transaction, including general and industry-specific indicators that may help when conducting or evaluating transactions.
  • Guideline 3: Submitting Suspicious Transaction Reports to FINTRAC explains when and how to submit reports. There are two different versions of Guideline 3, by reporting method.
  • Guideline 4: Implementation of a Compliance Regime explains the requirement for reporting persons and entities to implement a regime to ensure compliance with their obligations under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act and associated Regulations.
  • Guideline 5: Submitting Terrorist Property Reports to FINTRAC explains when and how to submit terrorist property reports.
  • Guideline 6: Record Keeping and Client Identification explains the requirement for reporting persons and entities to identify their clients and keep records. There are several different versions of Guideline 6, with each one applicable to a particular sector.
  • Guideline 7: Submitting Large Cash Transaction Reports to FINTRAC explains when and how to submit large cash transaction reports. There are two different versions of Guideline 7, by reporting method.
  • Guideline 8: Submitting Electronic Funds Transfer Reports to FINTRAC explains when and how to submit EFT reports. There are three different versions of Guideline 8, by report type and reporting method.
  • Guideline 9: Submitting Alternative to Large Cash Transaction Reports to FINTRAC explains when and how financial entities can choose the alternative to large cash transaction reports. This is only applicable to financial entities.

If you need more help after you read this or other guidelines, call FINTRAC's national toll-free enquiries line at 1-866-346-8722.

Throughout this guideline, several references are provided to additional information that may be available on external Web sites. FINTRAC is not responsible for the accuracy, reliability or currency of the information contained on those external Web sites. The links provided are based on information available at the time of publishing of this guideline.

Throughout this guideline, any references to dollar amounts (such as $10,000) refer to the amount in Canadian dollars or its equivalent in foreign currency. Furthermore, all references to cash mean money in circulation in any country (bank notes or coins). In this context, cash does not include cheques, money orders or other similar negotiable instruments. Also, any references to the term "securities dealer" means an individual or entity authorized under provincial legislation to engage in the business of dealing in securities or any other financial instruments or to provide portfolio management or investment advising services.

Your policies and procedures may cover situations other than the ones described in this guideline, for purposes other than your requirements under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act. For example, your real estate regulating body may require you to apply additional policies and procedures or the retention period for your records may vary for purposes other than what is described in this guideline.

2. Record Keeping and Client Identification Obligations


As a real estate broker or sales representative, you have the following record keeping and client identification obligations when you act as an agent regarding the purchase or sale of real estate.

  • When you conduct a large cash transaction, your obligations are as follows:
    • Keep a large cash transaction record (see section 3);
    • Identify the individual (see section 4); and
    • Make a third party determination and keep related records (see section 5).
  • Effective June 23, 2008, when you receive funds in any form and any amount, your obligations are as follows:
    • Keep a receipt of funds record (see section 3); and
    • Identify the client from whom the funds are received (see section 4).
  • Effective June 23, 2008, for any purchase or sale of real estate, your obligations are as follows:
    • Keep a client information record (see section 3);
    • Identify the client (see section 4); and
    • Make a third party determination and keep related records (see section 5).
  • Effective June 23, 2008, when you have to submit a suspicious transaction report to FINTRAC, your obligations include the following:
    • If you have not already identified the individual who conducted the transaction, identify the individual (see section 4); and
    • Keep a copy of the report (see section 3)

There are some exceptions and these are explained throughout each section.

The use of personal information in Canadian commercial activities is protected by the Personal Information Protection and Electronic Documents Act, or by substantially similar provincial legislation. You have to inform individuals concerning the collection of personal information about them. However, you do not have to inform individuals when you include personal information about them in any reports that you are required to make to FINTRAC. You can get more information about your responsibilities in this area from the following:

3. Records To Be Kept


As a real estate broker or sales representative, you have to keep the following records in addition to the records described in section 5 when you act as an agent regarding the purchase or sale of real estate:

  • Large cash transaction records;
  • Receipt of funds records;
  • Client information records;
  • Suspicious transaction report records.

Details about each of these types of records are provided in subsections 3.2 through 3.5. Also, section 6 explains how your records should be kept.

See section 4 for information about identification requirements that may be associated to the events triggering record keeping requirements.

3.1 General Exceptions to Record Keeping

If you keep information in a record that is already readily available in any other record that you have kept under these rules (as described throughout this guideline), you do not have to keep that information again.

You do not have to keep any of the records described in subsections 3.3 or 3.4 if you conduct a transaction for a public body or a very large corporation. The same is true regarding a subsidiary of either of those entities, if the financial statements of the subsidiary are consolidated with those of the public body or very large corporation.

In this context, a public body means any of the following or their agent:

  • a provincial or federal department or Crown agency;
  • an incorporated municipal body (including an incorporated city, town, village, metropolitan authority, district, county, etc.); or
  • a hospital authority. A hospital authority means an organization that operates a public hospital and that is designated to be a hospital authority for GST/HST purposes. For more information on the designation of hospital authorities, refer to GST/HST Memoranda Series, Chapter 25.2, Designation of Hospital Authorities available from the Canada Revenue Agency Web site at http://www.cra-arc.gc.ca in the forms and publications listed by document type.

Also in this context, a very large corporation is one that has minimum net assets of $75 million on its last audited balance sheet. The corporation's shares have to be traded on a Canadian stock exchange or certain stock exchanges outside Canada, and the corporation also has to operate in a country that is a member of the Financial Action Task Force (FATF).

For information about which stock exchanges outside Canada on which the stock of a very large corporation could be traded, refer to subsection 3201 of the Income Tax Regulations. You can access these Regulations at the Department of Justice Canada laws Web site (http://laws.justice.gc.ca).

To find out which countries are members of the FATF, refer to its Web site (http://www.fatf-gafi.org).

3.2 Large Cash Transaction Records

This is a record for every amount of cash of $10,000 or more that you receive from a client in a single transaction. For example, if your client brings you $10,000 in cash for a deposit on the purchase of a house, you have to keep a large cash transaction record. In addition to this record, a large cash transaction will also require a report to FINTRAC as explained in Guideline 7: Submitting Large Cash Transaction Reports to FINTRAC.

If you know that two or more cash transactions of less than $10,000 each were made within a 24-hour period (i.e., 24 consecutive hours), by or on behalf of the same client, these are considered to be a single large cash transaction if they add up to $10,000 or more. In this case, you would have to keep a large cash transaction record, and report the transaction to FINTRAC as explained above.

You do not have to keep a large cash transaction record or make a large cash transaction report to FINTRAC if the cash is received from a financial entity or a public body. In this context, a financial entity means any of the following:

  • a bank (i.e., one that is listed in Schedule I or II of the Bank Act) or an authorized foreign bank with respect to its operations in Canada;
  • a credit union or a caisse populaire;
  • a trust and loan company; or
  • an agent of the Crown that accepts deposit liabilities.

For information about what is considered a public body in this context, see subsection 3.1.

Contents of a large cash transaction record
For any large cash transaction, the information you have to keep in a large cash transaction record includes the following:

  • the amount and currency of the cash received;
  • the date of the transaction;
  • the purpose, details and type of transaction (for example, the cash was for a deposit on the purchase of a house, etc.), including whether any other individuals or entities were involved in the transaction;
  • how the cash was received (for example, in person, by mail, by armoured car, or any other way); and
  • if an account was affected by the transaction, include the following:
    • the number and type of any such account;
    • the full name of the client that holds the account, and
    • the currency in which the account's transactions are conducted.

Account information is required in this record if any account was affected. For example, this would include the account into which you deposited the cash, such as the broker, lawyer or notary's in-trust account.

In addition, the large cash transaction record must include the name of the individual from whom you received the cash and that individual's address and principal business or occupation. Effective June 23, 2008, a large cash transaction record also has to include the individual's date of birth, whether or not you had to identify that individual.

Be as descriptive as possible regarding the business or occupation. Record information that clearly describes it, rather than use a general term. For example, in the case of a consultant, the occupation recorded should reflect the area of consulting, such as "information technology consultant" or "consulting forester". As another example, in the case of a professional, the occupation should reflect the nature of the work, such as "petroleum engineer" or "family physician". For more examples, consult the resource on occupational information in Canada, called the National Occupational Classification (NOC). This information is available from the A-Z Index on the Human Resources and Social Development Canada Web site (http://www.hrsdc.gc.ca).

If you have to identify the individual conducting the large cash transaction, see subsection 3.6 for additional information that is required on the large cash transaction record.

3.3 Receipt of Funds Records

Effective June 23, 2008, a receipt of funds record is required when you receive any amount, whether or not it is in cash. If you have to keep a large cash transaction record, you do not have to keep a receipt of funds record for the same transaction.

You do not have to keep a receipt of funds record if the funds are received from a financial entity or a public body. For information about what is considered a financial entity in this context, see subsection 3.2. For information about what is considered a public body in this context, see subsection 3.1.:

Contents of a receipt of funds record
For any receipt of funds, the information you have to keep in a receipt of funds record includes the following:

  • the amount and currency of the funds received;
  • the date of the transaction;
  • the purpose, details and type of transaction (for example, the funds were for a deposit on the purchase of a house, etc.), including whether any other individuals or entities were involved in the transaction;
  • if the funds received were cash, how the cash was received (for example, in person, by mail, by armoured car, or any other way); and
  • if an account was affected by the transaction, include the following:
    • the number and type of any such account;
    • the full name of the client that holds the account, and
    • the currency in which the transaction was conducted.

Account information is required in this record if any account was affected. For example, this would include the account into which you deposited the funds, such as the broker's in-trust account. If the funds were received by cheque, this would also include the account on which that cheque was drawn.

If the receipt of funds record is about an individual, it also has to include the name and address of the individual from whom you received the funds, that individual's date of birth as well as that individual's address and principal business or occupation. For more information about recording business or occupation, see subsection 3.2, under the heading "Contents of a large cash transaction record".

If the receipt of funds record is about an entity, you will have to include the entity's name, address and nature of their principal business.

If the receipt of funds record is about a corporation, you also need to keep a copy of the part of the official corporate records showing the provisions relating to the power to bind the corporation regarding the transaction. This could be a certificate of incumbency, the articles of incorporation or the bylaws of the corporation that set out the officers duly authorized to sign on behalf of the corporation, such as the president, treasurer, vice-president, comptroller, etc. If there were changes subsequent to the articles or bylaws that relate to the power to bind the corporation regarding the purchase and these changes were applicable at the time that the record had to be kept, then the board resolution stating the change would be included in this type of record.

If you have to identify the individual conducting the transaction, see subsection 3.6 for additional information that is required on the receipt of funds record.

3.4 Client Information Records

Effective June 23, 2008, for every purchase or sale of real estate, you will also have to keep a client information record. This record sets out the client’s name and address, and the nature of the client’s principal business or occupation. If the client is an individual, the client information record also has to include the individual’s date of birth.

If the client information record is about a corporation, you also need to keep a copy of the part of the official corporate records showing the provisions relating to the power to bind the corporation regarding the transaction. This could be a certificate of incumbency , the articles of incorporation or the bylaws of the corporation that set out the officers duly authorized to sign on behalf of the corporation, such as the president, treasurer, vice-president, comptroller, etc. If there were changes subsequent to the articles or bylaws that relate to the power to bind the corporation regarding the transaction, and these changes were applicable at the time that the record had to be kept , then the board resolution stating the change would be included in this type of record.

However, the requirement to keep a record relating to the power to bind does not apply if you also have to keep a large cash transaction record about the purchase or sale of real estate.

3.5 Suspicious Transaction Report Records

Effective June 23, 2008, when you have to report a suspicious transaction to FINTRAC, you have to keep a copy of the report. See Guideline 3: Submitting Suspicious Transaction Reports to FINTRAC for more information about obligations related to this report.

3.6 Identification Information on all Records

Effective June 23, 2008, if you have to identify an individual, as explained in section 4, in association with any of the records mentioned in section 3, you have to keep the individual's name with that record. You also have to keep the following with that record.

Identification documents
If you have to identify the individual using an identification document, the record has to include the type of document you used to confirm the individual's identity, its reference number and its place of issue.

Identification of clients not physically present
Effective June 23, 2008, if you do not use an identification document but use methods for a client who is not physically present (as described in subsection 4.6), you have to include whichever of the following, according to the methods used:

  • If you use a cleared cheque to confirm the individual's identity, the record has to include the name of the financial entity and the account number of the deposit account on which the cheque was drawn;
  • If you confirm that the individual holds a deposit account with a financial entity, the record has to include the date on which you made the confirmation as well as the name of the financial entity where the account is held and the number of the account;
  • If you use an identification product, the record has to include the name of the identification product, the name of the entity offering it, the search reference number and the date you used the product to identify the individual;
  • If you consult a credit file, the record has to include the name of the entity keeping the credit file and the date you consulted it; and
  • If you use an attestation signed by a commissioner of oaths in Canada or a guarantor in Canada, you have to keep the attestation.

4. Client Identity


4.1 When and How Do You Have To Identify Clients?

As a real estate broker or sales representative, you have client identification obligations when you act as an agent regarding the purchase or sale of real estate. You have to take the following measures to identify individuals or entities, subject to the general exceptions in subsection 4.2.

Subsections 4.3 to 4.5 explain the need to identify individuals when an event triggers the requirement. Any individuals that you have not identified according to these rules must be identified if any of the situations described in those subsections occurs, unless an exception applies as explained below.

Effective June 23, 2008, if the parties in a real estate transaction are each represented by a different real estate broker or sales representative, you have to identify the individual or confirm the existence of the entity that you represent in the transaction. Also effective June 23, 2008, if some parties in a real estate transaction are not represented by a real estate broker or sales representative while other parties are, each real estate broker or sales representative that represents a party to the transaction has to identify or confirm the existence of the parties that are not represented.

See section 3 for information about record keeping requirements that may be associated to the events triggering identification requirements.

4.2 General Exceptions to Client Identification

In addition to the exceptions explained throughout the rest of section 4, the following general exceptions apply to client identification requirements.

Existing clients
Once you have confirmed the identity of an individual as explained in this guideline, you do not have to confirm their identity again if you recognize the individual at the time of a future event that would otherwise trigger the identification requirement. However, effective June 23, 2008, if you have any doubts about the identification information previously collected, you will have to identify that individual again.

Once you have confirmed the existence of a corporation and confirmed its name, address and the names of its directors (as explained in subsections 4.7), you are not required to confirm that same information in the future.

Once you have confirmed the existence of an entity other than a corporation (as explained in subsection 4.7), you are not required to confirm that same information in the future.

Certain types of transactions
You do not have to identify clients as described in subsection 4.5 if you conduct a transaction for a public body or a very large corporation. The same is true regarding a subsidiary of either of those entities, if the financial statements of the subsidiary are consolidated with those of the public body or very large corporation.

For information about what is considered a public body or a very large corporation in this context, see subsection 3.1.

4.3 Client Identity for Large Cash Transactions

You have to identify any individual with whom you conduct a large cash transaction, at the time of the transaction, if you have to keep a large cash transaction record for it, as described in subsection 3.2.

See subsection 4.6 to find out how to identify an individual for a large cash transaction.

4.4 Client Identity for Suspicious Transactions

Effective June 23, 2008, when you have to send a suspicious transaction report to FINTRAC, you have to take reasonable measures, before the transaction is reported, to identify the individual who conducted it. This will not apply in the following circumstances:

  • if you had already identified the individual as required and you have no doubts about that previous identification information;
  • if you believe that doing so would inform the individual that you are submitting a suspicious transaction report; or
  • the transaction being reported was an attempted transaction. Revisions to Guideline 2: Suspicious Transactions will provide more information about reporting attempted transactions effective June 23, 2008.

In this context, reasonable measures to identify an individual include asking the individual for an identification document. They also include using either of the options available to identify individuals who are not physically present. However, reasonable measures exclude any method that you believe would inform the individual that you are submitting a suspicious transaction report.

4.5 Client Identity for Other Records

Effective June 23, 2008, you have the following identification requirements when you have to keep a receipt of funds record, as explained in subsection 3.3, or a client information record, as explained in subsection 3.4.

Individuals
You have to identify individuals for whom you keep a receipt of funds record or a client information record. You have to do this at the time of the transaction related to the record.

See subsection 4.6 to find out how to identify an individual for a receipt of funds record or a client information record.

Entities
You have to confirm the existence of any entity for which you have to keep a receipt of funds record or a client information record. You have to do this within 30 days of the transaction related to the record.

In the case of a corporation, in addition to confirming its existence, you also have to determine the corporation's name, address and the names of its directors within 30 days of the transaction related to the record.

To find out how to confirm the existence of a corporation, read the information in subsection 4.7, under the heading "Corporations". To find out how to confirm the existence of an entity other than a corporation, read the information in subsection 4.7 under the heading "Entities other than corporations".

4.6 How to Identify an Individual

See subsection 3.6 for additional information that is required on certain records when you have to identify individuals.

To identify an individual, refer to the individual's birth certificate, driver's licence, passport, record of landing, permanent resident card or other similar document.

You can refer to an individual's provincial health card, but only if it is not prohibited by provincial or territorial legislation. For example, you cannot refer to an individual's provincial health card from Ontario, Manitoba or Prince Edward Island since health cards cannot be used for this purpose in these provinces. As another example, in Quebec, you cannot request to see a client's health card, but you may accept it if the client wants to use it for identification purposes. If you have questions about the use of health cards for identification, please contact the appropriate provincial issuer for more information.

For a document to be acceptable for identification purposes, it must have a unique identifier number. Also, the document must have been issued by a provincial, territorial or federal government. For example, a birth or baptismal certificate issued by a church would not be acceptable for this purpose. Also, an identification card issued by an employer for an employee (i.e. an employee identification card) is not acceptable.

The document also has to be a valid one and cannot have expired. For example, an expired document, such as a driver's licence, would not be acceptable.

A social insurance number (SIN) card can be used to verify the identity of a client, but the SIN (i.e. the number itself) is not to be provided to FINTRAC on any type of report. The Office of the Privacy Commissioner (http://www.privcom.gc.ca) has produced a fact sheet concerning best practices for the use of SINs. Please consult it for more information on this topic.

Examples of other documents that can be used to verify the identity of a client include an old age security card or a certificate of Indian status. Another example is a provincial or territorial identification card issued by any of the following (or their successors):

  • the Insurance Corporation of British Columbia;
  • Alberta Registries;
  • Saskatchewan Government Insurance;
  • the Department of Service Nova Scotia and Municipal Relations;
  • the Department of Transportation and Public Works of the Province of Prince Edward Island;
  • Service New Brunswick;
  • the Department of Government Services and Lands of the Province of Newfoundland and Labrador;
  • the Department of Transportation of the Northwest Territories; or
  • the Department of Community Government and Transportation of the Territory of Nunavut.

Valid foreign identification, if equivalent to an acceptable type of Canadian identification document, would also be acceptable for the purposes explained in this guideline. For example, a valid foreign passport is acceptable.

When you refer to a document to identify an individual, it has to be an original, not a copy of the document. In cases where it is not possible for you to view the original yourself, you may choose to use an agent or mandatary to verify the original identification document on your behalf. Even if you use an agent or mandatary, you are responsible for making sure the identification requirements are met.

Use of an agent or mandatary
If you use an agent or mandatary for client identification, you have to enter into a written agreement or arrangement with the agent or mandatary outlining what you expect them to do for you. In addition, you have to obtain from the agent or mandatary the customer information that was obtained according to the agreement or arrangement.

Your agent or mandatary can identify your client for you using an identification document. In cases where your client is not physically present at the conducting of a transaction, your agent or mandatary can also use the options explained below.

Individual not physically present
To identify an individual who is not physically present, you have to use a combination of two of the following methods. In each of the two methods you use, the individual's information has to be consistent with what you have in your records. The information also has to be consistent from one method to the other. For example, if each of the methods you use has the name, address and date of birth information about the individual, all of it has to agree with what you have in your records.

The methods below may not apply for all clients. For example, the methods would not be available to identify a client outside Canada who is conducting a real estate transaction with you, but has no Canadian credit history, no access to a Canadian guarantor and no deposit account with a financial entity. In this case, identification of the client using an identification document may necessitate the use of an agent or mandatary, as explained above.

Identification product or credit file method
You can use either of the following methods but you cannot combine them:

  • Refer to an independent and reliable identification product. It must be based on personal information as well as Canadian credit history about the individual of at least six months duration. This type of product can use a series of specific questions, based on an individual's credit file, to enable verification of client identity.
  • With the individual's permission, refer to a credit file. The credit file must have been in existence for at least six months.

Products for either of these methods are available commercially, such as those used for credit ratings.

Attestation method
Obtain an attestation that an original identification document for the individual has been seen by a commissioner of oaths or a guarantor. This attestation must be on a legible photocopy of the document and include the following information:

  • the name, profession and address of the commissioner of oaths or the guarantor;
  • the signature of the commissioner of oaths or the guarantor; and
  • the type and number of the identifying document provided by the individual being identified.

In this context, a guarantor has to be an individual engaged in one of the following professions in Canada:

  • a dentist, a medical doctor or a chiropractor;
  • a judge, a magistrate or a lawyer;
  • a notary (in Quebec) or a notary public;
  • an optometrist or a pharmacist;
  • an accredited public accountant (APA), a chartered accountant (CA), a certified general accountant (CGA), a certified management accountant (CMA), a public accountant (PA) or a registered public accountant (RPA);
  • a professional engineer (P. Eng., in a province other than Quebec) or engineer (Eng. in Quebec); or
  • a veterinarian.

Cleared cheque or deposit account method
You can use either of the following methods, but you cannot combine them.

  • Confirm that a cheque drawn on a deposit account that the individual has with a financial entity has cleared. This means a cheque that was written by the individual, cashed by the payee and cleared through the individual's account. It does not include pre-authorized payments as these are not cheques written by the individual.
  • Confirm that the individual has a deposit account with a financial entity.

For either method, the account has to be with a financial entity. This means a bank listed in Schedule I or II of the Bank Act, an authorized foreign bank with respect to its operations in Canada, a credit union, a caisse populaire, a trust and loan company or an agent of the Crown that accepts deposit liabilities. In the case of a foreign bank, the deposit account has to be in Canada.

The account cannot be one that is exempt from identification requirements for the financial entity, such as a registered retirement savings plan or a reverse mortgage. For more information about accounts that cannot be used for the cleared cheque or deposit account methods, see Guideline 6G: Record Keeping and Client Identification for Financial Entities.

4.7 Client Identity for Corporations and Other Entities

You have to confirm the existence of any corporation or other entity for which you have to keep a client information record or a receipt of funds record , within 30 days of the transaction associated to the record. In the case of a corporation, in addition to confirming its existence, you also have to determine the corporation’s name, address and the names of its directors, within 30 days of the transaction.

Corporations
To confirm the existence of a corporation as well as the corporation's name and address, refer to the following documents:

  • the corporation's certificate of corporate status;
  • a record that has to be filed annually under provincial securities legislation; or
  • any other record that confirms the corporation's existence. Examples of these include such other records as the corporation's published annual report signed by an independent audit firm, or a letter or a notice of assessment for the corporation from a municipal, provincial, territorial or federal government.

You also have to confirm the names of the corporation's directors. To do this, you may need to see the list of the corporation's directors submitted with the application for incorporation. If the client is a corporation that is a securities dealer, you do not need to ascertain the name of the corporation's directors.

The record you use to confirm a corporation's existence can be a paper or an electronic version. Although such information may be available verbally (such as by phone), it is not acceptable for these purposes, as you have to refer to a record. If the record is in paper format, you have to keep the record or a copy of it.

If the record is an electronic version, you have to keep a record of the corporation's registration number, the type and source of the record. An electronic version of a record has to be from a public source. For example, you can get information about a corporation's name and address and the names of its directors from Industry Canada's Strategis federal corporations database on the Corporations Canada page of the Strategis Web site (http://strategis.ic.gc.ca). As another example, you may also get this type of information if you subscribe to a corporation searching and registration service.

Entities other than corporations
In the case of an entity other than a corporation, refer to a partnership agreement, articles of association or any other similar record that confirms the entity's existence. The record you use to confirm the existence of an entity can be paper or an electronic version. Although such information may be available verbally (such as by phone), it is not acceptable for these purposes, as you have to refer to a record. If the record is in paper format, you have to keep the record or a copy of it.

If the record is an electronic version, you have to keep a record of the entity's registration number, the type and source of the record. An electronic version of a record has to be from a public source.

4.8 Keeping Client Identification Information Up To Date

Effective June 23, 2008, your compliance program will have to include an assessment, in the course of your activities, of the risk of money laundering or terrorist financing. According to this assessment, in higher risk situations, you will have to take reasonable measures to keep client identification information up to date.

In this context, reasonable measures include asking the client to confirm or update identification information. In the case of an individual client, reasonable measures also include confirming or updating the information through the options available to identify individuals who are not physically present. This can include obtaining information verbally to keep client identification information up to date.

In the case of clients that are entities, reasonable measures include consulting a paper or electronic record as explained in subsection 4.7, or obtaining information verbally to keep client identification information up to date.

The frequency with which client identification information is to be kept up to date will vary in accordance with the context in which transactions occur, and therefore could differ from one situation to the next. However, for high risk situations, frequency for keeping client identification information up to date should be at least every two years.

Revisions to Guideline 4: Implementation of a Compliance Regime will provide more information about risk assessment requirements.

5.Third Party Determination and Related Records


5.1 Third Party Determination

You have to make a third party determination when you have to keep any of the following records:

  • Large cash transaction record
    Whenever you have to keep a large cash transaction record as explained in subsection 3.2, you have to take reasonable measures to determine whether the individual who gives you the cash is acting on the instructions of a third party.
     
  • Client information record
    Whenever you are required to keep a client information record as explained in subsection 3.4, you have to take reasonable measures to determine whether the client is acting on the instructions of a third party.

In this context, a third party is an individual or entity other than the individual who conducts the transaction. When you are determining whether a “third party” is involved, it is not about who “owns” the money, but rather about who gives instructions to deal with the money. To determine who the third party is, the point to remember is whether the individual in front of you is acting on someone else’s instructions. If so, that someone else is the third party.

In making a third party determination when employees are acting on behalf of their employers, they are considered to be acting on behalf of a third party.

Reasonable measures
What constitutes reasonable measures will vary in accordance with the context in which they occur, and therefore could differ from one situation to the next. However, reasonable measures would include retrieving the information already contained in your files or elsewhere within your business environment, or obtaining the information directly from the client.

5.2 Third Party Records

If you determine that there is in fact a third party who gave instructions to the individual conducting the transaction, you have to keep a record of the following information:

  • the third party's name, address and principal business or occupation;
  • if the third party is an individual, effective June 23, 2008, the third party's date of birth;
  • the incorporation number and place of incorporation if the third party is a corporation; and
  • in the case of a large cash transaction, the nature of the relationship between the third party and the individual who gives you the cash; or
  • in the case of a client information record, the nature of the relationship between the third party and the client. For examples of third party relationships, see field 18 of Part G in the large cash transaction report.

For more information about recording business or occupation, see subsection 3.2, under the heading "Contents of a large cash transaction record".

If you are not able to determine that there is in fact a third party, but you have reasonable grounds to suspect that there are instructions of a third party involved, you have to keep a record to indicate the following:

  • in the case of a large cash transaction, whether, according to the individual giving the cash, the transaction is being conducted on behalf of a third party; or
  • in the case of a client information record, whether, according to the client, the transaction is being conducted on behalf of a third party.

This record must also indicate details of why you suspect the individual is acting on a third party's instructions.

6. How Should Records Be Kept?


You should maintain an effective record keeping system to enable FINTRAC to have access to the records in a timely fashion. Your records have to be kept in such a way that they can be provided to FINTRAC within 30 days of a request to examine them.

For the requirements explained in this guideline, you can keep records in a machine-readable or electronic form, as long as a paper copy can be readily produced from it. For example, if you have a document imaging system, you do not have to produce the original document for these purposes, as long as you can print the imaged one.

The record keeping requirements explained in this guideline are about each record to be kept. Your record keeping system can store the information required for any one record separately, as long as you are able to readily retrieve and put the information together for the record whenever necessary.

You are not required to keep a copy of the reports you make to FINTRAC (other than the suspicious transaction report as explained in subsection 3.5), but you may choose to do so. It is recommended that you keep the information that FINTRAC sends you in the acknowledgement message about each report processed. This provides the date and time the report was received along with its identification number.

Timeframe for keeping records
In the case of client information records and records to confirm the existence of an entity (including a corporation), these records have to be kept for five years from the day the last business transaction was conducted.

In the case of a copy of a suspicious transaction report, the record has to be kept for a period of at least five years following the date the report was made.

All other records must be kept for a period of at least five years following the date they were created.

Employees or contractors who keep records for you
Your employees who keep records (as described in section 3) for you are not required to keep those records after the end of their employment with you. The same is true for individuals in a contractual relationship with you, after the end of that contractual relationship. This means that you have to get and keep the records that were kept for you by any employee or contractor before the end of that individual's employment or contract with you.

7. Penalties for Non-Compliance


Failure to comply with your record keeping or client identification requirements can lead to criminal charges against you. Conviction of failure to retain records could lead to up to five years imprisonment, to a fine of $500,000, or both. Alternatively, effective December 30, 2008, failure to keep records or identify clients can lead to an administrative monetary penalty.

8. Comments?


These guidelines will be reviewed on a periodic basis. If you have any comments or suggestions to help improve them, please send your comments to the mailing address provided below, or by email to guidelines-lignes directrices@fintrac-canafe.gc.ca.

9. How to Contact FINTRAC


For further information on FINTRAC and its activities, reporting and other obligations, please go to FINTRAC's website (http://www.fintrac-canafe.gc.ca) or contact FINTRAC:

Financial Transactions and Reports Analysis Centre of Canada
234 Laurier Avenue West, 24th floor
Ottawa, Ontario
Canada K1P 1H7

Toll-free: 1-866-346-8722