Beneficial ownership: Understanding your requirements
This presentation is designed to provide information on beneficial ownership, what it means and why it's critical in Canada's fight against money laundering and terrorist financing.
Video
Length of video: 12:25 minutes
Catalogue number: FD4-50/2026E-MP4
ISBN: 978-0-660-97696-9
Transcript of the video "Beneficial ownership: Understanding your requirements"
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| 1 | [Start of video] By identifying individuals who ultimately own or control entities, we enhance transparency and reduce the misuse of the financial system for illicit purposes. By the end of this video, you will gain insights into how beneficial ownership requirements strengthen Canada's anti-money laundering and counter-terrorism financing efforts and how you, as a reporting entity, can meet your obligations effectively. Please note the information in this video is relevant to all reporting entity sectors, except for title insurers. The information presented in this video reflects the requirements under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act and associated Regulations in force at the time of its publication. As legislative and regulatory amendments are subject to change, individuals and entities must refer to the Act and associated Regulations for the full description of their obligations. |
Text on screen: Beneficial ownership Understanding your requirements |
| 2 | First, we will cover beneficial ownership requirements under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act, also known as the Act, and how they align with global standards. Second, we will be explaining when you are required to submit a Beneficial Ownership Discrepancy Report. Specifically, when to consult Corporations Canada's database and what is a material discrepancy that must be reported to Corporations Canada. |
Text on screen: Agenda 1- Introduction to beneficial ownership requirements 2- When to submit a Beneficial Ownership Discrepancy Report |
| 3 | Beneficial ownership requirements under the Act and associated Regulations are a cornerstone of Canada's Anti-Money Laundering and Anti-Terrorist Financing Regime. By aligning its beneficial ownership efforts with Recommendations 24 and 25 of the Financial Action Task Force (FATF), Canada continues to demonstrate its commitment to global Anti-Money Laundering and Counter-Terrorism Financing standards. An effective compliance program includes evaluating relationship-based risk indicators, such as beneficial ownership information, to identify and mitigate risks associated with money laundering and terrorist financing. It also involves assessing beneficial ownership-related risks as part of the overall risk assessment process. Beneficial ownership requirements also support know your client obligations. By identifying the individuals who ultimately own or control entities, these measures remove anonymity in financial transactions, ensuring greater transparency and preventing the misuse of our financial system for illicit activities. When reporting entities collect and verify beneficial ownership information, they also play a critical role in mitigating money laundering and terrorist financing risks, while helping to protect the integrity of Canada's financial system. |
Text on screen: Why is beneficial ownership important Beneficial ownership
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| 4 | Beneficial ownership requirements apply to all reporting entities, except for title insurers. To meet beneficial ownership requirements, reporting entities must obtain beneficial ownership information when verifying the identity of an entity under the Regulations. This includes corporations, trusts, and partnerships. Once the beneficial ownership information is collected, reporting entities must take reasonable measures to confirm its accuracy: when they first obtain it, and during ongoing monitoring of business relationships. Reporting entities must also consult Corporation Canada's database and report material discrepancies to Corporation Canada when they assess a corporation as high risk and during ongoing monitoring of high risk business relationships. Reporting entities must also meet record-keeping requirements in relation to beneficial ownership information. They must keep records of the beneficial ownership information they have obtained, and the measures they have taken to confirm the accuracy of the information. These records must be kept for at least 5 years from the day the last business transaction is conducted. |
Text on screen: Beneficial ownership requirements overview Animation: Text and icons appear explaining beneficial ownership requirements. Obtain information Must obtain beneficial ownership information:
Confirm accuracy Must take reasonable measures to confirm the accuracy of beneficial ownership information:
Consult Corporation Canada's database Must consult Corporation Canada's database and report material discrepancies to Corporation Canada:
Keep records Must keep a record of:
Retention period: at least 5 years |
| 5 | The beneficial ownership information reporting entities must obtain will vary depending on the type of entity. When reporting entities verify the identity of a corporation, they must obtain: the names of all directors, and names and addresses of all individuals who directly or indirectly own or control 25% or more of shares of the corporation. For trusts, reporting entities must obtain the names and addresses of all trustees, known beneficiaries and settlors of the trust. For a widely held trust or a publicly traded trust, you must obtain the names of all trustees of the trust, and the names and addressed of all persons who directly or indirectly own or control 25% or more of the units of the trust. For entities that are not corporations nor trusts, such as partnerships, reporting entities must obtain the names and addresses of all individuals who directly or indirectly own or control 25% or more of the entity. It is important to note that in all cases, reporting entities must obtain information establishing the ownership, control and structure of the entity. |
Text on screen: Beneficial ownership information Entity Beneficial ownership information Corporation: Names of all directors, and names and addresses of all individuals who directly or indirectly own or control 25% or more of shares of the corporation. Trust: Names and addresses of all trustees, known beneficiaries and settlors of the trust. Widely held trust or a publicly traded trust: Names of all trustees of the trust, and the names and addresses of all persons who directly or indirectly own or control 25% or more of the units of the trust. Other entity: Names and addresses of all individuals who directly or indirectly own or control 25% or more of the entity. In all cases, reporting entities must obtain information establishing the ownership, control and structure of the entity. |
| 6 | Beneficial owners are individuals who either directly or indirectly own or control 25% or more of an entity. When it comes to trusts, this includes trustees, known beneficiaries, and settlors. For a widely held trust or publicly traded trust, they are the trustees and all persons who own or control, directly or indirectly, 25% or more of the units of the trust. It's important to remember that beneficial owners must always be individuals—they cannot be other corporations, trusts, or entities. |
Text on screen: Who are beneficial owners 1- Individuals who directly or indirectly own or control 25% or more of an entity 2- For trusts, beneficial owners include trustees, known beneficiaries, and settlors 3- For widely held trust or publicly traded trust, they are the trustees and all persons who own or control, directly or indirectly, 25% or more of the units of the trust |
| 7 | Reporting entities must take reasonable measures when confirming accuracy of the beneficial ownership information obtained. Reasonable measures include:
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Text on screen: Reasonable measures to confirm accuracy Reporting entities must take reasonable measures to confirm the accuracy of the information obtained. Reasonable measures include:
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| 8 | Collaboration between federal, provincial and territorial governments within Canada has led to harmonized amendments within most Canadian jurisdictions to require corporations to maintain accurate and up-to-date records of information on all beneficial owners, and to make them accessible upon request to law enforcement, tax authorities, and other relevant bodies. Reporting entities are required to consult Corporations Canada's database when taking reasonable measures to confirm the beneficial ownership information they obtained on corporations incorporated under the Canada Business Corporations Act that have been assessed as high risk for money laundering or terrorist activity financing offences. Corporations Canada's database provides information on individuals with significant control over these corporations. This database is to be used by reporting entities to verify the beneficial ownership information they have obtained on high-risk assessed corporations under the Canada Business Corporations Act. |
Text on screen: Corporations Canada's database Reporting entities are required to consult Corporations Canada's database when they obtain beneficial ownership information for corporations incorporated under the Canada Business Corporations Act that have been assessed as high risk for money laundering or terrorist activity financing offences. |
| 9 | If a reporting entity identifies a material discrepancy between the beneficial ownership information they have obtained and the individuals with significant control listed in Corporations Canada's database, they are required to report the discrepancy and keep records. Reporting entities will be required to report the discrepancy to Corporations Canada within 30 days after the day on which the discrepancy has been identified, unless the discrepancy is resolved within 30 days. Corporations Canada will send a notice of acknowledgement of the Beneficial Ownership Discrepancy Report by email to the contact person who has filed the report. Beneficial ownership discrepancy reporting helps keep federal beneficial ownership information accurate and up to date. |
Text on screen: Beneficial Ownership Discrepancy Report and record keeping If there is a material discrepancy between the beneficial ownership information obtained and the individuals with significant control listed in Corporations Canada's database, reporting entities must:
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| 10 | A material discrepancy refers to a significant inconsistency between two sets of information: the beneficial ownership details collected by a reporting entity and the list of individuals with significant control found in Corporations Canada's database for corporations incorporated under the Canada Business Corporations Act. A material discrepancy has an impact on the accuracy of the identification of individuals who own or control a corporation or could conceal their identity. If such a discrepancy is identified, you must submit a Beneficial Ownership Discrepancy Report to Corporations Canada within 30 days and retain the notice of acknowledgement for five years. A material discrepancy that is resolved within 30 days after the day on which it is identified is not required to be reported. For further clarity, a material discrepancy can be reported upon its identification without waiting for the 30 days to elapse. In addition, it is not a requirement to re-consult Corporations Canada's database within that timeframe to determine if the material discrepancy has been resolved. Please visit the FINTRAC website for more information on when to submit a Beneficial Ownership Discrepancy Report. |
Text on screen: What is a material discrepancy A material discrepancy is a meaningful inconsistency between the beneficial ownership information of a corporation incorporated under the Canada Business Corporations Act and the individuals with significant control listed in Corporations Canada's database that could impact the proper identification, or conceal, the individuals that own or control a corporation. |
| 11 | Inconsistencies are not considered material discrepancies when it is a spelling mistake or minor variation in a name or address; the use of a service address in one source and a residential address in another; information that is not available to the public due to an exception or exemption, the presence of an exception or exemption is clearly indicated within Corporation Canada's database; or when information on individuals with significant control available in Corporations Canada's database is about persons who are not captured under beneficial ownership information requirements or vice versa. |
Text on screen: What is not included as a material discrepancy Animations: Text and icons appear when items that are not included as a material discrepancy are mentioned. A spelling mistake or minor variation in a name or address. The use of a service address in one information source and a residential address in another. The fact that information is not available to the public due to an exception or exemption. Information on individuals with significant control available in Corporations Canada's database is about persons who are not captured under beneficial ownership information requirements, or vice versa. |
| 12 | If reporting entities are unable to obtain the beneficial ownership information or to confirm its accuracy, when it is first obtained, or during ongoing monitoring, then reporting entities must: take reasonable measures to verify the identity of the entity's chief executive officer or of the person who performs that function, and apply special measures for high-risk clients, including enhanced ongoing monitoring. |
Text on screen: What if beneficial ownership information cannot be obtained or its accuracy be confirmed Reporting entities must:
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| 13 | You may obtain information confirming that there is no individual who directly or indirectly owns or controls 25% or more of a corporation, a widely held or publicly traded trust, or an entity other than a corporation or trust. This is not the same thing as being unable to obtain the beneficial ownership information. If you determine that there is no individual who directly or indirectly owns or controls 25% or more of a corporation, a widely held or publicly traded trust, or an entity other than a corporation or trust, you must keep a record of the measures you took and the information you obtained in order to reach that conclusion. However, you are still required to obtain and take reasonable measures to confirm information about the ownership, control and structure of the entity. |
Text on screen: What if there are no beneficial owners If you determine that there is no individual who directly or indirectly owns or controls 25% or more of a corporation, a widely held or publicly traded trust, or an entity other than a corporation or trust, you must keep a record of the measures you took and the information you obtained in order to reach that conclusion. You are still required to obtain and take reasonable measures to confirm information about the ownership, control and structure of the entity. |
| 14 | You do not have to obtain beneficial ownership information and take reasonable measures to confirm its accuracy, including consulting Corporations Canada's database, in the following situations:
Lastly, in all cases, the beneficial ownership requirements do not apply if you are not required to verify the identity of an entity under the Regulations because of a related exception. This is because your obligation to verify identity for a particular transaction, activity, or client does not apply in that circumstance. |
Text on screen: Circumstances when you do not need to obtain beneficial ownership information and confirm its accuracy
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| 15 | Visit the FINTRAC website for guidance for more information on beneficial ownership requirements. If you have any questions or need further clarification, please do not hesitate to reach out to us at guidelines-lignesdirectrices@fintrac-canafe.gc.ca. Thank you again for your time and the important work you do. [End of video] |
Text on screen: Thank you! Visit our website to stay up to date on guidance: https://fintrac-canafe.canada.ca Please send your questions to: guidelines-lignesdirectrices@fintrac-canafe.gc.ca |
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