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When to verify the identity of persons and entities — Factors : FINTRAC's compliance guidance

From: Financial Transactions and Reports Analysis Centre of Canada (FINTRAC)

This guidance describes when factors must verify the identity of persons and entities as required by the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (the Act) and associated Regulations.

For details on how to verify the identity of persons and entities, consult: Methods to verify the identity of persons and entities.

Note: Throughout this guidance, all references to dollar amounts (such as $10,000) are in Canadian dollars.

In this guidance

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1. When to verify the identity of persons and entities

You must verify the identity of any person or entity for the following transaction, or when the following records are to be kept:

Suspicious transactions

You must take reasonable measures to verify the identity of every person or entity that conducts or attempts to conduct a suspicious transaction, regardless of the transaction amount, and including transactions that would normally be exempt from client identification requirements, before sending a Suspicious Transaction Report.

Large cash transactions

You must verify the identity of every person or entity from which you receive $10,000 or more in cash when the transaction takes place.

Note: This obligation is subject to the 24-hour rule.

Large virtual currency transactions

You must verify the identity of every person or entity from which you receive virtual currency in an amount equivalent to $10,000 or more when the transaction takes place.

Note: This obligation is subject to the 24-hour rule.

Information records

You must verify the identity of every person or entity at the time that an information record is created in respect of a factoring agreement.

Receipt of funds records

You must verify the identity of every person or entity from whom you receive funds in the amount of $3,000 or more at the time that the record is created. 

Other factoring agreement records

You must verify the identity of every person or entity at the time the factoring agreement record is created.

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2. The difference between verifying identity and keeping client identification information up to date

As part of your ongoing monitoring requirements for business relationships, you must keep client identification information up to date, at a frequency that will vary based on your risk assessment, and as outlined in your policies and procedures.

This does not require you to re-identify clients in accordance with the methods to verify identity. As explained in the ongoing monitoring guidance, the requirement is only for you to keep client identification information up to date. This is understood to be information that you have about your client such as their name and address. In the case of a person, this would also include, but is not limited to, the nature of their principal business or their occupation; and in the case of an entity, the nature of its principal business.

Legal references

3. Exceptions to client identification requirements

You do not have to re-identify a person or an entity if you previously did so using the methods specified in the Regulations in place at the time, and kept the associated records, so long as you have no doubts about the information used.

Large cash transactions

You do not have to verify the identity of a person or entity that conducts a large cash transaction if you receive cash from a client that is:

Large virtual currency transactions

You do not have to verify the identity of a person or entity that conducts a large virtual currency transaction if you receive the virtual currency from a client that is:

Suspicious transactions

You do not have to take reasonable measures to verify the identity of the person or entity that conducts or attempts to conduct a suspicious transaction if:

Information records, receipt of funds records and other factoring agreement records

You do not have to verify the identity of a corporation or an entity other than a corporation when you enter into a factoring agreement with an entity that is:

Legal references

For assistance

If you have questions on your requirements, please contact FINTRAC by email at guidelines-lignesdirectrices@fintrac-canafe.gc.ca

Date Modified: