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When to verify the identity of persons and entities—Money services businesses and foreign money services businesses : FINTRAC's compliance guidance

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

This guidance describes when money services businesses and foreign money services businesses 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 guidance.

Note: Throughout this guidance, 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 transactions, or when the following records must be kept:

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. This includes a situation where you are deemed to have received cash because you have authorized another person or entity to receive it on your behalf.

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. This includes a situation where you are deemed to have received virtual currency because you have authorized another person or entity to receive it on your behalf.

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

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.

Issuing or redeeming traveller’s cheques, money orders, or similar negotiable instruments of $3,000 or more

You must verify the identity of every person who requests that you issue or redeem $3,000 or more in traveller’s cheques, money orders, or similar negotiable instruments when the transaction takes place. 

Transmitting $1,000 or more in funds by means other than an electronic funds transfer

You must verify the identity of every person who requests that you transmit $1,000 or more in funds by means other than an electronic funds transfer (for example, by using an informal value transfer system such as Hawala remittance systems), when the transaction takes place.

Initiating an electronic funds transfer of $1,000 or more

You must verify the identity of every person who requests that you initiate an electronic funds transfer of $1,000 or more, when the transaction takes place.

Foreign currency exchange transactions of $3,000 or more

You must verify the identity of every person who conducts a foreign currency exchange of $3,000 or more when the transaction takes place. 

Transferring virtual currency in an amount equivalent to $1,000 or more

You must verify the identity of every person who requests that you transfer virtual currency in an amount equivalent to $1,000 or more when the transaction takes place.

Exchange virtual currency in an amount equivalent to $1,000 or more

You must verify the identity of every person who requests that you exchange virtual currency for funds, funds for virtual currency, or one virtual currency for another, in an amount equivalent to $1,000 or more when the transaction takes place.

Remitting funds in the amount of $1,000 or more to a beneficiary by means other than an electronic funds transfer

You must verify the identity of every person who is the beneficiary of a remittance received in an amount of $1,000 or more by means other than an electronic funds transfer (for example, by using an informal value transfer system such as Hawala remittance systems) when the transaction takes place.

Remitting funds to the beneficiary of an international electronic funds transfer of $1,000 or more

You must verify the identity of every person you remit funds to as the beneficiary of an international electronic funds transfer of $1,000 or more when transaction takes place.

Remitting virtual currency to a beneficiary in an amount equivalent to $1,000 or more

You must verify the identity of every person you remit virtual currency to as the beneficiary of a transfer that is equivalent to $1,000 or more when the transaction takes place.

 Information records

You must verify the identity of a person, corporation or other entity at the time that the information record is created when you as a money services business or foreign money services business provide crowdfunding platform services.

You must verify the identity of a corporation, or other entity at the time the information record is created when you as a money services business or foreign money services business provide cheque-cashing services.

You must verify the identity of a corporation or other entity 30 days after the day on which the information record is created for:

Cashing one or more cheques that total $3,000 or more

You must verify the identity of every person or entity that request you cash one or more cheques that total $3,000 or more at the time of the transaction.

Crowdfunding platform donations

You must verify the identity of a person, corporation or an entity that donates $1,000 or more in funds or in virtual currency using a crowdfunding platform that you provide and maintain. You must verify the identity of the person, corporation or entity at the time of the donation.

Provision of transport services

You must verify the identity of any person or entity that requests the transportation of:

You must verify the identity of the person or entity before the first transport of cash, virtual currency, or any similar negotiable instrument is carried out.

Legal references

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, corporation or other entity if you previously did so using the methods specified under 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:

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 a :

When you transfer or receive virtual currency as compensation for the validation of a transaction that is recorded in a distributed ledger or you exchange, transfer or receive a nominal amount of virtual currency for the sole purpose of validating another transaction or a transfer of information – you do not need to keep a large virtual currency transaction record and do not need to verify identity.

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:

Service agreements

You do not have to verify the identity of an authorized employee who conducts a transaction for their employer under a service agreement.

Information records

You do not have to verify the identity of a corporation or other entity when you create an information record if the entity is:

Provision of transport services

You do not have to verify identity when you transport cash, virtual currency (such as the storage of virtual currency), money orders, traveller’s cheques or other similar negotiable instruments between:

The same exception applies to the transport of coins of the currency of Canada for the purposes of delivery in accordance with the Royal Canadian Mint Act.

You do not need to verify the identity of a corporation or other entity that requests the transportation of $1,000 or more in cash or virtual currency, or $3,000 or more in money orders, traveller’s cheques or other similar negotiable instruments (except for cheques payable to a named person or entity) if the corporation or other entity is:

Crowd funding platform donations

You do not need to verify the identity of a corporation or other entity that donates $1,000 or more in funds or in virtual currency using a crowdfunding platform that you provide and maintain if the corporation or other entity is:

Cashing one or more cheques that total $3,000 or more

You do not need to verify the identity of a corporation or other entity that requests you cash one or more cheques that total $3,000 or more at the time of the transaction if the corporation or other entity is:

Legal references

For assistance

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

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