Frequently asked questions
This section provides information on money laundering and on the scale of the problem worldwide and in Canada.
1. What is money laundering?
Money laundering is the process whereby 'dirty money', produced through criminal activity, is transformed into 'clean money' whose criminal origin is difficult to trace. Criminals do this by disguising the sources, changing the form, or moving the funds to a place where they are less likely to attract attention.
The money earned from criminal activity (proceeds of crime) can originate from all kinds of designated offences. These include, but are not limited to illegal drug trafficking, bribery, fraud, forgery, murder, robbery, counterfeit money, stock manipulation, tax evasion, and copyright infringement.
If you are a reporting entity and money laundering is suspected through the processing of a financial transaction, FINTRAC needs to know.
2. What is terrorist financing?
Terrorist financing may involve funds raised from legitimate sources, such as personal donations and profits from businesses and charitable organizations, as well as from criminal sources, such as the drug trade, the smuggling of weapons and other goods, fraud, kidnapping and extortion.
3. What are threats to the security of Canada?
Threats to the security of Canada are defined in the Canadian Security Intelligence Service Act as:
- espionage or sabotage that is against Canada or is detrimental to the interests of Canada or activities directed toward or in support of such espionage or sabotage;
- foreign influenced activities within or relating to Canada that are detrimental to the interests of Canada and are clandestine or deceptive, or involve a threat to any person;
- activities within or relating to Canada directed toward or in support of the threat or use of acts of serious violence against persons or property for the purpose of achieving a political, religious or ideological objective within Canada or a foreign state; and,
- activities directed toward undermining by covert unlawful acts, or directed toward or intended ultimately to lead to the destruction or overthrow by violence of the constitutionally established system of government in Canada.
This section provides information on FINTRAC and its mandate. The section also provides warnings about fraudulent organizations using names similar to FINTRAC.
1. What is FINTRAC?
The Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) is an agency of the Government of Canada responsible for facilitating the detection, prevention and deterrence of money laundering, terrorist activity financing and other threats to the security of Canada.
FINTRAC receives reports from financial institutions and intermediaries, analyzes and assesses the reported information, and disclose suspicions of money laundering or of terrorist financing activities to police authorities and others as permitted by the Act. FINTRAC will also disclose to CSIS information that is relevant to threat to the security of Canada.
The analysis of information that FINTRAC receives from reporting entities facilitates the investigation and prosecution of money laundering offences and terrorist financing offences. FINTRAC's analysis is a vital tool to law enforcement, and strikes a balance between privacy and enforcement needs.
2. Are there any fees charged by FINTRAC?
FINTRAC DOES NOT charge fees of any kind. There are no service fees or charges to file a report with FINTRAC.
There have been reports of groups soliciting fees under names that resemble FINTRAC.
3. Does FINTRAC freeze funds?
FINTRAC DOES NOT freeze or seize funds.
There have been reports of groups soliciting fees under names that resemble FINTRAC.
4. Does FINTRAC issue clearance certificates to prove that funds are not related to criminal or terrorist activity?
FINTRAC does not issue clearance certificates for any reason. The Canadian government does not issue clearance certificates for the purpose of clearing funds under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act. There is no government agency in Canada that issues such certificates for the purpose of clearing financial transactions for anti-money laundering and anti-terrorist financing.
There have been reports of groups soliciting fees under names that resemble FINTRAC.
5. Can FINTRAC provide confirmation that a reporting entity is in compliance with Canada’s anti-money laundering and anti-terrorist financing legislation?
No. FINTRAC does not provide certification, endorsement, accreditation or any other type of confirmation regarding a reporting entity's obligations under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act.
Privacy and Protection of Information
This section provides information on how FINTRAC protects the personal information of private citizens.
1. What does FINTRAC do with the reports it receives?
The reports collected by FINTRAC are analyzed for unusual patterns of transactions that resemble money laundering or terrorist financing activity. FINTRAC matches these preliminary analyses with information from law enforcement and other databases.
When FINTRAC concludes that it has "reasonable grounds to suspect" that information in its possession "would be relevant to investigating or prosecuting a money laundering offence or a terrorist activity financing offence" it provides designated information as defined in the Proceeds of Crime (Money Laundering) and Terrorist Financing Act and related Regulations, to the appropriate law enforcement agency.
When there are reasonable grounds to suspect that the information is relevant to threats to the security of Canada, FINTRAC discloses the information to CSIS.
2. How does FINTRAC protect the personal information of private citizens?
FINTRAC is subject to the Privacy Act which strictly regulates how federal institutions can use and disclose personal information collected about individuals. In addition, the Proceeds of Crime (Money Laundering) and Terrorist Financing Act stipulates that FINTRAC is to ensure that the personal information under its control is protected from unauthorized disclosure. The Act also sets out that information can only be disclosed to law enforcement where there are reasonable grounds to suspect that the information would be relevant to investigating or prosecuting a money laundering offence or a terrorist activity financing offence, or to CSIS when there are reasonable grounds to suspect that it is relevant to threats to the security of Canada. Even in those circumstances, only "designated information" can be disclosed.
Finally, the Act stipulates that FINTRAC employees and contractors are subject to criminal penalties of up to 5 years in jail or a fine of $500,000 or both, for unauthorized disclosure or use of information.
3. Can I give you information on someone that I think is involved in something illegal?
If you believe that the information you have is serious and requires an immediate response, then you may wish to provide this information to your local police or to CSIS.
FINTRAC can only receive information from the public about suspicions of money laundering or suspicions of terrorist activity financing. For more information about this, see the page called "Providing voluntary information about suspicions of money laundering or of the financing of terrorist activities".
Reporting to FINTRAC and Other Obligations
This section provides information on submitting reports to FINTRAC, client identification, risk assessment, politically exposed foreign persons and the intended use of accounts.
1. How do reporting entities make reports to FINTRAC?
Reports must be sent to FINTRAC electronically if the reporting entity has the technical capabilities to do so. The only exception is the terrorist property report, which can only be submitted on paper.
Where the technical capabilities do not exist for all the other reports, paper reporting is permitted.
FINTRAC's guidelines about each report provide details as to how they can be sent.
2. Do I have to report a suspicious financial transaction that was not completed?
You must report an attempted transaction if you have reasonable grounds to suspect that the attempted transaction is related to a money laundering or terrorist financing offence. An attempted transaction is one that a client intended to conduct and took some form of action. It would include negotiations or discussions to conduct a transaction and involve concrete measures taken by either you or the client. If you don't suspect that the attempted transaction is related to money laundering or terrorist financing, there is no reporting requirement.
3. Do I need to look for different money laundering indicators now that tax evasion and copyright offences are designated offences under the Criminal Code?
No. When you have reasonable grounds to suspect that a transaction could be related to money laundering or terrorist activity financing, you have to send a Suspicious Transactions Report to FINTRAC, regardless of where the money comes from. If you don't suspect any money laundering or terrorist activity financing, you have no obligation to report to FINTRAC. You should continue to use the indicators of money laundering that you were using before tax evasion and copyright offences became designated offences.
4. What is the difference between the identification product method and the credit file method for identifying customers in non-face-to-face situations?
The credit file method requires that you refer to an individual's actual credit file to confirm their personal identification information, after obtaining permission to do so. The identification product method differs in that it consists of a series of specific questions to be asked to the client based on information drawn from that individual’s Canadian credit history. The client’s answers to the questions can then be used to confirm their identity. Identification products may be obtained from consumer credit rating companies, as well as any other organization that offers an independent and reliable product based on credit history information.
5. What method may I use to ascertain the identity of a client located in a foreign country?
The most effective method to ascertain the identity of a client located in a foreign country is to use an agent that will verify your client's identity on your behalf. To use this method, you need a written agreement with the agent for client identification. You also need to get the identification information from the agent once the client has been identified. You can appoint anyone as an agent for client identification, provided you have a written agreement.
You can use the non-face-to-face identification methods to identify a person who is not physically present, but those methods might not apply for a client outside Canada.
6. How often are reporting entities required to update client identification information for high-risk clients?
A review of the assessment of the money laundering and terrorist financing risks for your business is required every two years, for the purpose of testing its effectiveness. Therefore, FINTRAC recommends that high-risk client identification information be reviewed and updated at least every two years to help make the risk assessment relevant, as risk levels may change over time. This does not mean that you have to identify these clients again. You can ask them if their information is up-to-date when they come in or when you send them written correspondence.
7. Do I have to determine whether a corporate client is a politically exposed person (PEP) or the head of an international organization (HIO)?
No, you only have to make that determination for individuals. However, your risk assessment may result in you deciding to implement other processes for corporate clients that you assess as higher risk.
8. For how long is an individual considered to be a politically exposed foreign person (PEFP), politically exposed domestic person (PEP), or the head of an international organization (HIO)? Are they still a PEP or HIO once they have left office?
A person determined to be a foreign PEP is forever a foreign PEP. A person ceases to be a domestic PEP 5 years after they have left the office. Once a person is no longer the head of an international organization, that person is no longer a HIO. The same timing applies to family members and close associates of PEPs and HIOs.
9. Can a Canadian citizen be a PEFP?
Yes. A Canadian citizen who holds or has held a prescribed position on behalf of a foreign country would be considered a PEFP. For example, a Canadian citizen that works for a foreign embassy outside of Canada as an attaché of an ambassador would be considered a PEFP.
10. When recording a client’s intended use of an account, how specific should I be?
The intended use of account is applicable to financial entities and securities dealers only.
Your records indicating the intended use of any given account (except for credit card accounts) should give a clear indication of what the client will be using the account for, so that you will be better able to detect deviations from typical account activity. Simply stating "chequing" or "savings" is insufficient. Acceptable examples might include savings for future payment of children's education; investments for retirement; to receive directly deposited employment or pension income; or to pay day-to-day expenses and bills. The intended use of account can be noted in an account operating agreement or other similar document; it does not have to be a separate record.
11. What is the time limit for sending reports to FINTRAC?
The reporting time limit depends on the type of report, as follows:
- Electronic funds transfer reports (EFTO/EFTI and EFTS) must be sent to FINTRAC no later than five working days after the day of the transfer.
- Suspicious transaction reports (STR) must be sent to FINTRAC no later than 30 calendar days from when you have determined that there are reasonable grounds to suspect that the transaction or attempted transaction is related to the commission of a money laundering or terrorist financing offence.
- Large cash transaction reports (LCTR) must be sent to FINTRAC no later than 15 calendar days after the day of the transaction.
- Casino Disbursement Reports (CDR) must be sent to FINTRAC no later than 15 calendar days after the day of the transaction.
12. Where can I get a copy of the reporting forms?
A file can be accessed and printed from the Publications section (see the left menu), under the heading "Reporting forms".
13. What is a terrorist property report?
Reporting entities must submit a terrorist property report if they have any of the following property in their possession or control:
- that they know is owned or controlled by or on behalf of a terrorist or a terrorist group; or
- that they believe is owned or controlled by or on behalf of a listed person.
This includes information about any of the property as well as any transaction or proposed transaction relating to that property.
In this context, property means any type of real or personal property.
14. How do I send a terrorist property report to FINTRAC?
There are two ways to send a terrorist property report to FINTRAC to get an acknowledgement of receipt.
- By fax: 1-866-226-2346
- By registered mail (postage is at your own expense):
Financial Transactions and Reports Analysis Centre of Canada
234 Laurier Avenue West, 24th Floor
Canada K1P 1H7
You can also send your report by regular mail to the FINTRAC address above, however, you will not receive any acknowledgement from FINTRAC when your paper report has been received.
15. Other than FINTRAC, is there anyone else to whom I must report terrorist property?
In addition to making a terrorist property report to FINTRAC about this type of property, there is also a requirement under the Criminal Code for anyone in Canada as well as Canadians outside of Canada to disclose, to the RCMP and CSIS, the existence of property in their possession or control that they know is owned or controlled by or on behalf of a terrorist or a terrorist group. This includes information about any transaction or proposed transaction relating to that property. Information is to be provided to them without delay as follows:
- RCMP, Anti-Terrorist Financing Team, unclassified fax: (613) 949-3113.
- CSIS Financing Unit, unclassified fax: (613) 231-0266.
- You may also have a requirement to provide information or to report to your regulator.
16. What is the "purpose and intended nature" of the business relationship?
The "purpose and intended nature" of a business relationship is why and/or how an individual or entity expects to use your business’ products and services. In some cases, this information may be determined by the types of transactions the individual or entity conducts. You must keep a record of the "purpose and intended nature" of the business relationship, unless you are able to retrieve this information from other records you currently hold. The reason for obtaining this information, and keeping a record, is to allow you to anticipate the transactions and activities of the individual or entity and to assist you in determining if an activity is not in line with your expectations. In such a case, the business relationship may need to be more frequently monitored and some transactions may need to be reported. The “purpose and intended nature” of the business relationship needs to be reviewed on a periodic basis and kept up to date. This is done to ensure that you continue to understand the individual’s or entity’s activities over time so that any changes identified can be used to assess or detect high-risk transactions and activities.
This section provides information on F2R.
1. What is F2R?
F2R is a reporting mechanism designed and built by FINTRAC to assist reporting entities in submitting reports on-line. You need to enroll with FINTRAC to be able to submit reports electronically.
2. What does "enrol with FINTRAC" mean?
This is the process for your business to get access to FINTRAC's electronic reporting tool (F2R). You also need to enroll with FINTRAC to submit reports by batch.
3. What information do I need to enrol?
You need to provide the following information to FINTRAC:
- Your company's lega or business name (the one you use for filing)
- Your company's main address (i.e. where you do business);
- Type, if any, of your numbering system for locations, if applicable (i.e. transit number);
- The type of reports that you will be filing (i.e. suspicious transaction reports, large cash transaction reports, electric funds transfer reports etc.);
- The name of the person designated as your reporting entity's F2R Administrator (for further information about the various roles, see the F2R Electronic Reporting User Guide); and
- Whether your organization will require an F2R Administrator Assistant.
4. I am a new reporting entity and have not previously submitted reports to FINTRAC. How do I proceed?
You have to submit reports to FINTRAC electronically if you have the technical capability to do so. See the minimum technical capabilities listed in the Reporting section of our Web site.
If you have the technical capabilities, there are two reporting mechanisms at your disposal: F2R and Batch. For additional information about electronic reporting, see the Reporting section of our Web site.
If you do not have the capability to report electronically, you must report by paper. See the reporting forms in our Publications page.
5. Do I have to pay to use F2R?
No, F2R is offered at no cost, to facilitate reporting.
6. I have forgotten my password. What do I do?
You do not have to contact FINTRAC to receive a new password. Simply select the "Forgot your password?" link on the Log On screen and enter your user ID. A temporary password will be sent to the email address associated to your user information. Once you get your temporary password, use it to log on. The system will then ask you to change that temporary password for future use.
If you've forgotten your user ID, contact FINTRAC at 1-866-346-8722.
7. I’ve tried my password a number of times and it does not seem to be working. What do I do?
You are locked out of the secure system. Wait at least 15 minutes before trying again. If your password still does not work, use the "Forgot your password?" link to get a temporary password sent to you by email. If the issue still persists, contact FINTRAC's technical support at 1-866-346-8722.
8. I want to add a user for F2R. Do I need to contact FINTRAC?
You do not need to contact FINTRAC to add a user to F2R. Your F2R Administrator, or F2R Administrator Assistant, simply needs to access the Administration section in F2R and add the user and assign them a specific role. The only time you need to contact FINTRAC about F2R users is to change the F2R Administrator or the F2R Administrator Assistant.
9. Are reporting entities required to have a Verification and Submission Officer (VSO)?
You can have one or more VSOs for F2R if you like. However, it is not required.
British Columbia Notaries
This section provides information that is relevant to this sector.
1. Are wired funds received from a lender or a buyer’s notary or lawyer considered "cash"?
Funds that are wired are not considered to be cash. 'Cash' is defined in subsection 1(2) of the Proceeds of Crime (Money Laundering) and Terrorist Financing Regulations and refers to physical currency such as coins and bank notes.
2. Do I have obligations if I am assisting a foreign buyer that is out of the country to purchase real estate in Canada?
If you are assisting a buyer to purchase real estate and receive an amount of $3,000 or more, you must keep a receipt of funds record and ascertain the identity of the buyer. You may also have other obligations, such as submitting a suspicious transaction report, if you have reasonable grounds to suspect that the transaction is related to a money laundering or a terrorist financing offence.
3. Should a receipt of funds record be kept when funds paid by a client are received through a financial institution?
Yes. Funds paid by a client through a bank or other financial intermediary are considered to have been received from that client. In other words, funds received from your client by means of a cheque, bank draft, wire transfer, or any other means is considered to be a receipt of funds. If the funds are in an amount of $3,000 or more, British Columbia notaries must keep a receipt of funds record and ascertain the identity of the individual conducting the transaction. If the client is a corporation or other entity, British Columbia notaries must keep additional records.
4. Is the information provided by British Columbia notaries kept confidential by FINTRAC when they report? Will my client be told that I reported them?
All reports submitted to FINTRAC are kept confidential and protected from disclosure. These reports are integrated into larger databases and connected with other information. FINTRAC can only disclose to police specific information and only where there are reasonable grounds to suspect that the information is relevant to investigating or prosecuting a money laundering offence or a terrorist financing offence. The name of the person making a report to FINTRAC is not part of that specific information. A typical money laundering and terrorist financing case includes numerous financial transactions and is based on numerous reports which offer additional anonymity to the transaction you reported.
In cases where police can ask a court to order FINTRAC to produce additional information that might reveal the name of the person who has made a report, FINTRAC can make objections to the court to avoid having to disclose that name. In the same way, where the name of a person who has made a report might become public in a prosecution for money laundering or terrorist financing, the prosecutor could request that the court order that the name remain secret. In such cases, it would be up to the court to decide.
5. If I deal with other lawyers or notaries to conduct identification for a client that is located out of my area, am I required to have the lawyer or notary sign an agreement with my office for the purposes of ascertaining identity?
You may use an agent when you are required to ascertain the identity of a client located outside of your area or even outside of the country. This may occur in the case where you receive funds in the course of a real estate purchase. The agent can be a lawyer, a notary or another third party. If you retain an agent, you must have a written agreement with them. In other words, your office must sign an agreement with the agent. You need to ensure that your agent will ascertain identity in accordance with the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA) by referring to a valid identification document issued by a government. Lastly, you must ensure that your agent will provide you with the client identification information for your records.
6. What activities are covered under FINTRAC’s legislation?
If you are a British Columbia notary public or a British Columbia notary corporation, you have the following specific regulatory requirements under the PCMLTFA when you engage in any of the following activities on behalf of any individual or entity:
- receiving or paying funds (other than those received or paid for professional fees, disbursements, expenses or bail);
- purchasing or selling securities, real property or business assets or entities; or
- transferring funds or securities by any means.
If you are an employee of a reporting person or entity, these requirements are the responsibility of your employer except with respect to reporting suspicious transactions and terrorist property, which is applicable to both.
Dealers in Precious Metals and Stones
This section provides information that is relevant to this sector.
1. As a dealer in precious metals and stones (DPMS), do I have obligations if I engage only once or twice a year in a transaction above $10,000?
If you are a DPMS that engages in the purchase or sale of precious metals, precious stones or jewellery in an amount of $10,000 or more in a single transaction - even only once as of December 30, 2008 - you have obligations under the Act. This means a purchase regardless of how you paid, or a sale regardless of how you were paid. In other words, it includes such purchases or sales, whether or not cash was involved. However, if you manufacture jewellery, cut or polish stones or conduct mining activities, exemptions may apply to you.
2. When does the application of the PCMLTFA regime start?
A DPMS has obligations as soon as there is a purchase or sale of precious metals, precious stones or jewellery in an amount of $10,000 or more in a single transaction.
At that time, the dealer must implement a compliance regime (comprised of five elements) and ensure that certain records are kept and the identity of individuals and entities are ascertained in prescribed circumstances.
3. My business is comprised of both manufacturing and wholesaling activities. Is my business therefore exempted from requirements under the Act as a jewellery manufacturer?
If 90% or more of all your purchases and sales are related to manufacturing activities, you are considered to be a manufacturer and do not have obligations. If your manufacturing activities represent less than 90% of all your purchases or sales, you are not considered a manufacturer and thus have legislative obligations under the Act.
4. Do jewellery manufacturers that transact directly with consumers have obligations under the Act?
Yes. Manufacturers that transact directly with consumers are no longer considered to be manufacturers and must comply with the requirements under the Act if they engage in the purchases or sales of jewellery in an amount of $10,000 or more in a single transaction. These manufacturers have requirements under the Act as soon as they sale or purchase precious metals, precious stones or jewellery of $10,000 or more in a single transaction.
5. I understand that manufacturers that sell directly to consumers are no longer considered manufacturers. Would sales to my employees be considered sales to consumers and create obligations on my part?
If you are a jewellery manufacturer and you sell goods to your employees, you remain exempted from the requirements under the Act. Employees are not considered to be consumers. This exemption is limited to employees only and is not extended to family and friends of employees.
6. I have a client that purchased a $6,000 gold watch in cash followed by another cash purchase (of precious metals, precious stones or jewellery) of $5,000 four hours later, totaling $11,000 in cash. Is this transaction reportable as a large cash transaction?
Yes. Two or more cash transactions made within 24 consecutive hours by the same person (or on behalf of the same person) and that total $10,000 or more are considered to be a single transaction of $10,000 or more. These two transactions have to be reported to FINTRAC as a large cash transaction.
7. Do I need to file a large cash transaction report when the amount received in cash exceeds $10,000 but only does so because of taxes (GST, HST, PST) applied on the purchased item?
Anytime you receive a sum of $10,000 or more in cash, you must report the transaction to FINTRAC regardless of whether it includes taxes or other fees.
8. My sales to clients are low-value transactions (below $10,000) but my purchases for inventory purposes are usually above $10,000 or more. Do I have obligations under the Act?
Yes. You have obligations if you purchase precious metals, precious stones or jewellery in an amount of $10,000 or more in a single transaction, including purchases for inventory purposes.
9. I have known my clients for many years. Must I really ascertain their identity if I receive a large sum of cash ($10,000 or more) from them for a purchase?
Yes. You must ascertain the identity of every individual from whom you receive an amount of $10,000 or more in cash. Once you have ascertained their identity in accordance with the regulations, you do not have to do so again if you recognize them—as long as you have already identified the individual once in the past.
10. What activities are covered under FINTRAC’s legislation?
A dealer in precious metals and stones means an individual or an entity that buys or sells precious metals, precious stones or jewellery, in the course of its business activities. You are subject to the requirements listed below if you ever engage in the purchase or sale of precious metals, precious stones or jewellery in an amount of $10,000 or more in a single transaction. In other words, you are not subject to these requirements if you engage only in purchases or sales of less than $10,000 per transaction.
Real Estate Brokers and Sales Representatives
This section provides information that is relevant to this sector.
1. Can a real estate broker or a sales representative be an agent or mandatary for the purpose of client identification? Can anyone be an agent or a mandatary (as long as an agreement is in place with the sales representative or real estate broker)?
A real estate broker, a sales representative or any person can be an "agent" or a "mandatary" to identify a client in a domestic or international real estate transaction, as long as there is a written agreement in place to that effect with the sales representative or real estate broker, outlining what the real estate broker or sales representative expects the agent or mandatary to do for him. The written agreement with the "agent" or "mandatary" needs to be in place prior to identifying the client. The sales representative or real estate broker must also obtain from that agent or mandatary the customer identification information for his records: type of identification, identifier number of the identification document, and issuing jurisdiction.
2. When a real estate broker or a sales representative acts as an agent or mandatary for client identification purposes, are they to send copies of the identification document to the sales representative or real estate broker with whom they have entered into an agreement?
The real estate broker or sales representative who is acting as an agent or mandatary is not required to keep a copy of the identification document on file. The responsibility of keeping all records rests on the real estate professional (sales representative or real estate broker) who represents the client and not his agent or mandatary. The real estate professional must obtain from his or her agent or mandatary the confirmation that the client was identified and the following information:
- the type of identification document used to confirm the individual's identity (must be a valid government-issued identification document);
- the reference number of the identification document used; and
- the place of issue of the identification document used.
3. How long are real estate brokers or sales representatives required to retain their records?
Real estate brokers or sales representatives are required to retain all records for a period of five years. However, the beginning of that five year period calculation may vary depending on the record being kept.
4. What happens to the retention of records when real estate brokers or sales representatives, usually an independent contractor, changes brokerages?
This obligation does not apply to an individual who is an employee of a reporting entity, in which case the reporting entity has the obligations or to a real estate agent acting on behalf of a broker, in which case the broker has sole responsibility for everything except suspicious transaction reporting, which is the responsibility of both.
It is the responsibility of the broker to obtain and keep the records that were retained for the broker by any employee or contractor who acted on their behalf. In other words, a sales agent who acted on behalf of a broker as an independent contractor has to leave all records kept in accordance with the PCMLTFA with the broker he is leaving. The agent is not be required to keep those records after the end of his relationship with the broker.
5. When a real estate broker or sales representative sells a home, and both parties are represented by a real estate broker or sales representatives, but the deposit goes directly to the seller (i.e. the buyer’s agent does not see the cheque or the funds), who is required to keep the receipt of funds record?
The buyer’s agent is required to keep the receipt of funds record.
6. For Canadian identification requirement when a mandatary is NOT used, does client sending photocopy of driver’s licence meet the qualification of providing government-issued identification?
First if the client is not present, the real estate brokers or sales representatives must use either a mandatary to identify the client on their behalf, or the combination of non-face-to-face identification methods.
Secondly when using a mandatary to identify the client, they cannot use a photocopy of a driver's licence - the mandatary must see a valid original driver's licence, and record that information.
Therefore, a client sending photocopy of his driver's licence does not meet the qualification of providing government-issued identification. The real estate brokers or sales representatives or their mandatary must see the original document.
7. When a real estate broker or sales representative sells a home or represents the buyer, who should the real estate broker or sales representative identify?
For every transaction, you must identify the person conducting the transaction. And if that person is acting on behalf of an entity or a corporation, you must also confirm the existence of the entity or the corporation. In the case of a corporation, you must obtain documentation that the person has the power to bind the corporation and you must also list the directors of the corporation and their addresses. However, you do not need to identify the directors.
Real Estate Developers
This section provides information that is relevant to this sector.
1. Real estate developers are covered for the sale of new residential units and buildings. What is a "new" unit or building?
A new building is one that has been constructed within the past two years and has not been occupied for its intended purpose before it is sold. For example, a home or other building that is occupied by a real estate developer as a sales office and is then sold to a homeowner would still qualify as a new home. A final determination on whether a building that is occupied before it is sold constitutes a new building under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act should be made on a case by case basis based on how the building was used.
2. Would a substantially renovated home meet the above definition?
Yes, a building that has 90% or more of its interior renovated and is subsequently sold by the real estate developer would be subject to the developer requirements. (The 90% threshold is consistent with Canada Revenue Agency's guidance on what constitutes a new home for tax purposes in the case of a substantial renovation).
3. Entities meet the regulatory definition of "real estate developer" once they have sold, in a calendar year after 2007, five or more new houses or condominium units, one or more new commercial or industrial building or, one or more new multi-unit residential building (MURB) each of which contains five or more residential units or two or more new MURB which together have five or more units. Once an entity meets the definition, does it have obligations from that point forward?
Once an entity meets the definition of a real estate developer and is thus subject to the regulations, it will be covered in subsequent years, regardless of whether the entity falls below the triggering threshold. In order to cease to be a reporting entity, the entity would have to demonstrate that their business model has substantively changed, to the point that they are unlikely to again meet the triggering threshold.
For greater certainty, entities have obligations only after having sold five new houses or condominium units or one new MURB containing five or more units or at least two new MURBs containing together five or more units. This means that entities have record-keeping, client identification and reporting obligations in respect of the sixth house or condo, second MURB (where one building contains five or more units) or second MURB (where at least two buildings contain together five or more units) they sell, and must develop a compliance regime as soon as the fifth home or first building is sold.
4. Are institutional buildings included in the definition of "commercial or industrial building"?
An institutional building, such as a hospital or a school, would meet the definition of a covered building. That said, these types of buildings would only trigger requirements if they are sold by a real estate developer to another party. Buildings constructed to specification as per a public tender would not be covered.
5. Are pre-fabricated homes covered under the new regulations? If so, who is responsible for compliance with these regulations when a pre-fabricated home is sold?
Yes. If the housing manufacturer sells a home directly to consumers, the manufacturer would be responsible for complying with the requirements. If the manufactured house is sold to the consumer by a retailer (the retailer is the party that enters into an agreement of purchase and sale with a consumer and then places an order with a manufacturer), the retailer is subject to the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA) requirements rather than the manufacturer.
6. If the ultimate owner of a newly-built property is changed pursuant to an assignment, what are the real estate developer’s client identification obligations?
The developer's obligation extends to knowing their own client. They must keep a client information record in respect of each party that enters into an agreement of purchase and sale with them on a new property. Should the owner of the property change prior to closing but subsequent to the developer’s involvement in the transaction, they are not required to be aware of or retain that information. There is a responsibility, however, for the developer to inquire when completing the client information record whether their client is acting on behalf of a third party.
7. If deposit cheques are made out to the real estate developer’s lawyer (as is usually the case), does the developer have any receipt of funds and client identification obligations?
In that case, a real estate developer has no receipt of funds obligations.
8. What would be the requirements for a real estate developer to be covered under FINTRAC’s legislation?
Effective February 20, 2009, if you are a real estate developer, the 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.
Administrative Monetary Penalties
This section provides information on administrative monetary penalties.
1. What are administrative monetary penalties?
Administrative monetary penalties (AMPs) are civil penalties that may be issued in response to non-compliance with the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA) and related regulations.
2. When did FINTRAC begin to issue AMPs?
FINTRAC has had the authority to issue AMPs since December 30, 2008.
3. Can AMPs be issued for all non-compliance violations?
Yes. Any instance of non-compliance that is subject to an AMP is considered a violation. Violations are specifically designated in regulations. There are over 180 separate violations.
4. How much can an AMP be?
The range of an AMP is from $1 to $100,000 for individuals and $1 to $500,000 for entities, such as corporations. These limits apply to each instance of a violation and therefore multiple violations or instances of violations can result in a total AMP that exceeds these limits.
5. Can an AMP be appealed?
Yes. You may request that an AMP be reviewed by making written representations to the Director of FINTRAC. You may further appeal the Director’s decision to the Federal Court of Canada in the case where the decision concerns a serious or very serious violation.
6. Does having an AMP program change FINTRAC’s approach to ensuring compliance?
The introduction of an AMP program is an important development to FINTRAC’s compliance approach. It provides flexibility for more proportionate and measured responses to non-compliance with the PCMLTFA.
7. Do other government agencies have the authority to issue AMPs?
Yes. AMPs are considered a useful instrument in ensuring regulatory compliance. FINTRAC's AMP program is consistent with similar programs in other government agencies.
8. Will FINTRAC inform other regulators that a person or entity has committed violation(s) and was issued an AMP under the PCMLTFA?
Yes. In the case where a person or entity is also regulated by another body, FINTRAC will share information regarding the person’s or entity’s compliance with Part 1 of the PCMLTFA, if a memorandum of understanding is in effect between FINTRAC and the regulator.
9. Will all reporting entities that have been issued an AMP be automatically subject to FINTRAC’s public naming provision?
FINTRAC has the discretion to publicly name any reporting entity that has been imposed an AMP and proceedings have ended. FINTRAC will exercise this discretion when one of the following criteria has been met:
- A very serious violation has been committed; or
- The base penalty amount is $250,000 or more (before adjustments for the compliance history and non-punitive criteria); or
- Repeat significant non-compliance has been committed.
10. Why are there civil and criminal penalties for non-compliance? What is the difference?
The nature of the two forms of penalties is different. A criminal penalty is meant to be punitive and can therefore include imprisonment as well as a fine, or both. An AMP on the other hand is meant to be proportionate to the related administrative violation(s) and an incentive to take corrective actions without being punitive.
11. Can AMPs be issued against a specific person within a reporting entity or are AMPs only applied against the entity itself?
FINTRAC can only issue an AMP against the person or entity who is the subject of the obligations under Part 1 of the Act. In the case of a corporation or partnership it is the entity that is subject to the obligations under Part 1 of the Act. In the case of a sole proprietorship, it is the owner of the business who is subject to those obligations.
12. I have questions on an AMP, who can I contact?
You can contact FINTRAC at 1-866-346-8722 and leave a message with our call centre. A FINTRAC representative will then contact you as soon as possible.
Reviews and Appeals
This section provides information on reviews and appeals of decisions made by FINTRAC concerning administrative monetary penalties or the registration of money services businesses.
1. How is a request for review submitted to FINTRAC?
You must file your request for review in writing with the Reviews and Appeals Unit at:
Reviews and Appeals Unit
Financial Transactions and Reports Analysis Centre of Canada
234 Laurier Avenue West
Ottawa, Ontario K1P 1H7
Regular email and fax are not secure methods to transmit information and as such you should refrain from sending sensitive personal information through those means.
2. Can I provide explanations verbally instead of in writing?
FINTRAC can only process reviews that are made in writing. FINTRAC will not receive any oral submissions.
3. What information should my request for review include?
Your letter should provide enough information to identify the decision for which you are requesting a review and clearly state the reasons why you are requesting a review. You should also provide all relevant information you wish the review and appeal officer to consider as part of the review.
4. Can a lawyer prepare and submit a request for review on my behalf?
A lawyer or your legal representative may request a review on your behalf. FINTRAC will process the request submitted by your lawyer or legal representative if you submit a letter of authorization confirming the authority to act on your behalf in the review process.
General - Batch Pilot
1. Who can participate in the batch pilot?Participants have already been chosen to cover a number of sectors and all batch report types.
General - Batch
1. What is batch reporting?Batch reporting is the submission of multiple reports in one file. To use this you have to create the batch file and format the information according to FINTRAC's specifications. For more information, refer to the Batch reporting page.
2. What steps do I need to take to start reporting by batch?
In order to report by batch, you must:
- Enrol for electronic reporting (F2R); see F2R section for details;
- Complete the FINTRAC PKI subscriber agreement;
- Send the completed agreement to FINTRAC;
- Await application approval;
- Create and download a PKI certificate and download the reporting software.
3. How do I apply for a Public Key Infrastructure (PKI) certificate with FINTRAC?
There are four steps in applying to FINTRAC for a PKI certificate:
- Step 1 – Complete the FINTRAC PKI subscriber agreement;
- Step 2 – Send the completed agreement to FINTRAC;
- Step 3 – Await application approval;
- Step 4 – Create and download a PKI certificate and download the reporting software.
4. What do I have to do to be able to start submitting by batch?
There are five steps to complete before you can start submitting reports to FINTRAC by batch:
- Step 1: Enrol with FINTRAC for electronic reporting;
- Step 2: Complete the Public Key Infrastructure (PKI) registration process;
- Step 3: Install and configure the batch reporting software;
- Step 4: Create batch files and format according to FINTRAC's specifications;
- Step 5: Successfully complete the acceptance procedures (certification) for each report type to be submitted by batch.
For more information on batch reporting consult the following technical documentation:
- Standard Batch Reporting Instructions and Specifications (for suspicious transaction reports, large cash transaction reports and non-SWIFT electronic funds transfer reports)
- SWIFT Batch Reporting Instructions and Specifications (for SWIFT electronic funds transfer reports)
- XML Batch Reporting Instructions and Specifications (for casino disbursement reports)
5. Are reports returned for further action (RRFAs) included in the acceptance testing (certification) process?No, RRFAs are not included in the certification process.
6. How will we know when we have successfully completed the batch acceptance test?You will be notified within 24 hours of having successfully completed the batch acceptance test. This means that you successfully submitted four out of your last five test files in a training channel for a particular report type, according to the process outlined in the batch reporting instructions and specifications. It also means that you can start to submit real batch files for that report type in the production channel.
General - Data Quality Issues
1. Will a reporting entity only get a report returned for further action (RRFA) when Compliance has looked at the error?Yes. An example of an RRFA is in the batch specification documents.
2. Will RRFAs be sent by email or through the batch transmitting software?An email will be sent to advise the reporting entity's F2R Administrator of the RRFA. Unless you have chosen to process corrections through F2R, the RRFA for a report submitted by batch will be sent through the batch transmitting software.
3. Are RRFAs provided for every kind of report?No. RRFAs are not provided for suspicious transaction reports (STRs). In the case of major STR quality issues, a FINTRAC Compliance Officer will contact the reporting entity.
If there is an error that needs to be corrected for an STR submitted by batch, a reporting entity can either submit a correction batch or, if they have chosen to process changes to batch reports through F2R, request the STR back through F2R to make corrections.
4. If we receive RRFAs for reports submitted by batch, would it be errors in the same batch file, or across a number of files?An RRFA message about reports sent by batch can contain information about one or more reports. If there is more than one report, these could have been submitted in more than one batch.
5. When we submit a 'correction' batch for suspicious transaction reports, large cash transaction reports or electronic funds transfer reports, can some of the records included be new reports?No. A "correction" batch can only contain corrections and deletions for reports that were part of a previously accepted batch. To submit new suspicious transaction reports, large cash transaction reports or electronic funds transfer reports by batch, you must include them in an 'add' batch.
Please note that this does not apply to XML batch reporting.
6. If an accepted batch contains rejected reports or errors, would the reporting entity receive both an acknowledgement and an RRFA?Yes. If an accepted batch has rejected reports or reports with errors, you will receive an acknowledgement file explaining the errors. You may also receive an RRFA about those errors. In either case, you need to correct the errors and submit the corrected reports to FINTRAC.
7. Is the RRFA ID number in the RRFA message format unique?Yes. It is unique for each RRFA. Please note that XML batch reporting does not use tags.
8. I submitted a batch which was accepted by FINTRAC. However, one of the large cash transaction reports contained within it was rejected. I corrected the rejected report and submitted it alone in a new add batch. It was rejected again. Why?If you need to make changes to a large cash transaction report, a suspicious transaction report or an electronic funds transfer report contained in an accepted batch, you are required to submit a correction batch. If you submit a correction to a rejected report from an accepted batch in a new batch, the report will be rejected as our system will detect that it is a previously submitted report.
Please note that this does not apply to XML batch reporting.
9. I received an email stating that I need to correct reports I submitted to FINTRAC. How do I go about correcting the reports?Log on to F2R and select “RRFA” in the Reporting section of the left menu. The reports that were returned for further action will be displayed. Select an entry to access the “RRFA summary” that will list all of the details for each report in the RRFA. A brief description explaining the error(s) is provided. The corrections will need to be made before that report can be resubmitted to FINTRAC.
When you are submitting the corrected report, you will also need to provide a short description of the corrections made.
If the returned reports were submitted by batch, the instructions above apply if you have chosen to process changes to batch reports in F2R. If not, the corrected reports would have to be submitted by batch.
10. I received reports returned for further action (RRFA). How long do I have to correct the reports?Make corrections to each report included in the RRFA and resubmit them to FINTRAC as soon as possible. If you do not correct the reports within 20 days, the system will automatically recall them and they will disappear from your queue in F2R, remaining unchanged.
11. I have already submitted a report to FINTRAC but need to make corrections. What do I do?To make the corrections or add information to a report, you will need to recall it. The Acknowledgements option allows you to search for reports that have been submitted to and received by FINTRAC. You must then select the check box for any report that you wish to recall for revisions. In a few minutes, the report in question will be available in the Requested for change report list. Select the “Requested for Change” heading under Reporting, in the left side menu of the F2R system. You will also be able to delete reports that were submitted in error through this process. For more information, please read the F2R User guide.
12. FINTRAC returned one of my reports for correction. Who can I call to get an explanation of the issue?Before calling FINTRAC for an explanation, be sure to read the explanation text in the RRFA message. A description of the issue is provided.
General - Format
1. In the general acknowledgement and RRFA layouts, are the transaction sequence and the disposition sequence the same as in the suspicious transaction reports and large cash transaction reports? There is a discrepancy in the size of the fields.Yes, these are part sequence numbers from the large cash transaction report or suspicious transaction report. Those fields are only two characters and you will only receive two characters for each of these fields in the acknowledgement or RRFA file. The rest of the field will be space-filled.
General - Reporting Entity Identifier Number
1. What is the reporting entity’s identifier number?The “reporting entity's identifier number” is a numeric field required in the batch header and in each report included in a batch. This number is provided to the reporting entity by FINTRAC at enrolment.
General - Code Pages
1. Which code pages are accepted by FINTRAC?As described in section 4.1 of the SWIFT Batch Reporting Instructions and Specifications as well as in section 4.1 of Module 1 of the Standard Batch Reporting Instructions and Specifications, the ASCII code page 850 is the only code page accepted by FINTRAC for suspicious transaction, large cash transaction or electronic funds transfer reports.
As described in subsection 4.1.2 of Module 1 of the XML Batch Reporting Instructions and Specifications, the UTF-8 charset using code page 10646 is the default character encoding mechanism for casino disbursement reports.
2. How can we validate that the code page sent to FINTRAC is valid?Codes pages are validated at the batch file level and not at the report or character level. Therefore, it may be difficult to detect code page errors.
To help you determine if the code page used in your batch file is valid for suspicious transaction, large cash transaction or electronic funds transfer reports, it is recommended that you obtain a file editor that can open a file in a binary format. Such file editors may be found through an Internet search.
Once you have downloaded the file editor, you have to open the file using the file editor and interpret the results.
For casino disbursement reports, use the schema file provided to you by FINTRAC to validate your XML batch files prior to submitting them.
STR, LCTR and EFTO/EFTI Reports
1. What if we send a report for a new location that has not yet been entered in F2R?The report will be rejected (error code 411). The update of location information is a manual process for reporting entities.
2. What if we send a report for a location that has been closed?FINTRAC will accept a report for an inactive location, as it is assumed that the location was active when the transaction occurred.
3. If we report under the 24-hour rule, does the report have to contain more than one transaction?
- Large cash transaction reports
Groups of cash transactions of less than $10,000 each that you have to report because of the 24-hour rule should be in the same large cash transaction report, unless they were conducted at different locations.
- Electronic funds transfer reports
Groups of electronic funds transfers of less than $10,000 each that you have to report because de the 24-hour rule have to be reported in separate reports.
- Large cash transaction reports
4. Our information for non-SWIFT electronic funds transfer reports (EFTO/EFTI) provides time and date of transmission, not transaction. Is that acceptable?Yes, for EFTO/EFTI, you must provide the date and time of the electronic funds transfer.
5. What is the reporting entity report reference number?The “reporting entity report reference number” is a 20-digit alpha-numeric field required in reports submitted by batch. Each report submitted by your organization has to have a unique number. Reports will be rejected if this reference number is not included.
6. What is the reporting entity's location number?The “reporting entity's location number” is a 15-digit alpha-numeric field that is mandatory in reports submitted to FINTRAC. It is the unique identifier number assigned to each of your locations in F2R. You can view all of your locations in the F2R “Location” screens.
7. What is the time limit for making changes to reports that were already submitted to FINTRAC?If you have to report a transaction to FINTRAC, you are required to submit a complete and accurate report within the applicable reporting time limits.
If you submitted a report to FINTRAC that was not complete and accurate at the time of submission, you can submit a correction for that report. For you to be compliant with the requirements, the correction should also be submitted within the reporting time limit. If you need to correct a report after that time limit has passed, you can still submit the correction, but do so as soon as possible.
The same applies to corrections required because of errors pointed out to you in the acknowledgement file or in the reports returned for further action (RRFA). If you need to submit corrections, you should do so within the reporting time limit for the report. If that deadline has passed, submit the correction as soon as possible.
SWIFT EFT Reports
1. Can SWIFT messages be reported through F2R?No. SWIFT EFT reports can only be submitted by batch.
2. Can SWIFT EFT reports be corrected through F2R?No. The only way to correct a SWIFT EFT report is through batch.
3. What information has to be included in Part B of a SWIFT electronic funds transfer (EFT) report?The following information about the client ordering the payment of the EFT (tag :50: of the SWIFT message) is required based on Schedules 2 and 3 of the Proceeds of Crime (Money Laundering) and Terrorist Financing Regulations:
- Client’s full name;
- Client’s full address;
- Client’s account number, if applicable.
This information is mandatory in an outgoing SWIFT EFT report, and requires reasonable efforts in an incoming SWIFT report. Although SWIFT allows its members to choose between three options to fill out tag :50:, (options A, F and K), only options F and K provide the information required in the report to FINTRAC.
Option F at tag :50: can also contain information that is not set out in Schedules 2 and 3. If you send or receive an MT 103 message with option F, you should remove any information that is other than client’s full name, address and account number before submitting your report to FINTRAC.
For additional information, see the Guidance on Tag: 50: (Ordering Customer) sub-section of Electronic Funds Transfer What must be Reported?
- Date Modified: