Frequently Asked Questions

General

This section provides information on money laundering and on the scale of the problem worldwide and in Canada.

1. What is money laundering?

   The laundering of the proceeds of crime (or 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.
    

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.
   
    

FINTRAC

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.
   
   Fraud Alert!
   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.
   
   Fraud Alert!
   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.
   
   Fraud Alert!
   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. 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.
    

4. Can any of the non-face-to-face identification methods be used to ascertain the identity of a person that is met face-to-face?

   No. You cannot use one of the non-face-to-face identification methods to identify a person that is physically present. When a client is in your presence, you must refer to a valid government-issued identification document such as a passport, a driver’s licence, etc.
    

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. Am I required to conduct a risk assessment for every client?

   Yes, once you have an ongoing relationship with a client (where your dealings with a client are not limited to a single transaction), a client risk assessment is required. This could take the form of a detailed assessment of that individual client, or the assignment of that client to a risk category based on a review of their business relationship with you, the products or services that the client will be using.
   
   In addition to client risk, your overall risk assessment must also take into account the risks posed by your products and services; the delivery channels you use to serve your clients; the geographic locations where you are doing business; and any other factor relevant to the risk assessment of your business.
    

8. Do I have to determine whether a corporate client is a politically exposed foreign person (PEFP)?

   No, you only have to make that determination for individuals. However, your risk assessment may result in your deciding to implement other processes for corporate clients that you assess as higher risk.
    

9. For how long is an individual considered to be a PEFP? Are they still a PEFP once they have left office?

   Once an individual becomes a politically exposed foreign person (PEFP), either by holding office themselves or because they are a close family member of an office-holder, they will always remain a PEFP. Their status as a PEFP does not end once they leave office. A close family member also continues to be a PEFP when their relative leaves the position that made them a PEFP, even after that relative’s death.
    

10. 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.
    
    Conversely, a foreign national holding a similar political, judicial or military position on behalf of Canada, would not be considered a PEFP.
     

11. 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.
     

12. 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.
    
     

13. 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”.
     

14. 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 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.
     

15. 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
    Section A
    234 Laurier Avenue West, 24th Floor
    Ottawa, Ontario
    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.
     

16. 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, Financial Intelligence Task Force fax: (613) 231-0266 or the RCMP information line at 1-888-349-9963.
    • CSIS, Security Screening Branch, Project Leader Government Operations, fax (613) 842-1902.
    • You may also have a requirement to provide information or to report to your regulator.
    
     

Compliance Questionnaire

This section provides information on Compliance questionnaire.

1. What is a compliance questionnaire (CQ)?

   FINTRAC has developed an online compliance questionnaire to assist reporting entities, who have obligations under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act, in providing information about themselves and their compliance regime. The CQ is made up of a series of questions and should take approximately 20 minutes to complete.
   
    

2. Is the CQ legitimate and will my information be protected?

   Yes the CQ is legitimate. FINTRAC has developed an online compliance questionnaire to assist reporting entities in providing information about themselves and their compliance regime.
   
   The information you provide to FINTRAC in the questionnaire will be protected in the same way as all information that we collect. Personal information under our control is protected from unauthorized disclosure, information is dealt with on a strict 'need to know' basis and information can only be disclosed 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.
   
    

3. What are my obligations for completing the CQ?

   If you receive a letter from FINTRAC requesting that you fill out the CQ, as a reporting entity, you are required to fill it out, within the given timeframe.
   
    

4. What if I am no longer in the business and have been requested to complete a CQ?

   If you have received a letter requiring you to complete a CQ but you are no longer in the business or you have received a letter for a business that previously operated at your address, please contact FINTRAC at 1-866-346-8722.
   
    

5. How do I have to submit the CQ?

   You must submit the CQ electronically if you have the technical capabilities to do so. This means that you have a personal computer with internet access.
   
    

F2R

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, in our Publications page); 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.

   Electronic Reporting

   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.

   Paper Reporting

   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.
    

Money Services Businesses

This section provides information that is relevant to this sector.

1. Do I have to register?

   The obligation to register with FINTRAC as a money services business (MSB) applies to any business that conducts operations in the following areas:

   • foreign exchange dealing;
   • remitting or transmitting funds by any means or through any person, entity or electronic funds transfer network; or
   • issuing or redeeming money orders, traveler’s cheques or other similar negotiable instruments except for cheques payable to a named person or entity.

   You are not required to register in the following situations:

   • if you conduct money services business activities solely as an agent for another business that is a money services business; or
   • if you carry out money services business activities as part of other activities for which you are already subject to the Proceeds of Crime (Money Laundering) and Terrorist Financing Act and Regulations.

   See FINTRAC Interpretation Notice No.1 – Criteria for “Engaged in a Money Services Business” for more details.

   
    

2. What will happen if I continue operations without registering?

   Failure to register your money services business as required could lead to criminal charges and, if convicted, up to five years imprisonment, to a fine of $500,000, or both.
    

3. When do I have to register?

   If you are a money services business, you have to be registered with FINTRAC before you can operate in Canada
    

4. How do I register?

   You have to register electronically on FINTRAC’s secure registration Web site if you have the technical capabilities to do so (basically, Internet access and a computer). If you do not have the technical capabilities to do so electronically, a paper registration application form is available on FINTRAC’s main Web site. FINTRAC offers a Guide for Money Service Businesses Registration to assist you and this is also available on FINTRAC’s main Web site.

   If you have the technical capabilities, before you can access the secure registration Web site, you need to complete a step called organizational set-up so that FINTRAC can gather information about your money services business (MSB). This does not register your MSB but enables FINTRAC to issue you a user ID and password so that you can do so. If you have not already done this, send an email to msb-esm@fintrac-canafe.gc.ca and provide the following information:

   • Your full name
   • Your money services business legal name
   • Complete street address (including postal code)
   • Email address
   • Business phone number
   • Best time for FINTRAC to contact you (for example, 10:30AM EST)
   • The name of the person designated to be your organization’s MSB Administrator

   A FINTRAC representative will contact you to get you started with the registration process.

   If you cannot send an email,contact FINTRAC at 1-866-346-8722.

   
    

5. I have forgotten my password. How can I receive a new one?

   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 ask you to change that temporary password for future use.

   If you’ve forgotten your user ID, contact FINTRAC at 1-866-346-8722.

   
    

6. Is there a fee to register?

   No, registration with FINTRAC is free.
    

7. Can a third party register my MSB on my behalf?

   Yes, a third party can register your MSB. However, the individual completing the registration has to be aware of certain details about your MSB and be authorized to provide such details. The information provided has to be accurate. Remember that you are responsible for the information provided by the third party. If you would still like to have a third party register on your behalf, you will need to complete the “Authorizing or Cancelling a Representative” form. You will need to provide us with your contact information and a FINTRAC representative will provide you with the form.
    

8. Is there any reason why I cannot register my MSB?

   Yes, there are many reasons why a MSB could not be eligible for registration. Among those, an individual or entity convicted of a money laundering or terrorist financing offence cannot register.

   Detailed information about individual and entities that are not eligible for registration are provided in the Guide for Money Service Businesses Registration.

   
    

9. Are there any exceptions to registering? Are charities exempt from registering?

   No, all MSBs operating in Canada must register with FINTRAC.

   See FINTRAC Interpretation Notice No.1 – Criteria for “Engaged in a Money Services Business” for more information about who is considered a money services business.

   
    

10. Does registering my MSB with FINTRAC mean that I am certified to operate?

    Registration with FINTRAC is not a license, endorsement or evaluation of your business.

    Any additional requirements of municipal, provincial, territorial or federal laws continue to apply.

    
     

11. What is the difference between the business licence number and incorporation number in the MSB registration form?

    If your business is a corporation and incorporated provincially or federally, you will have an incorporation number. If your business is a corporation, provide your incorporation number and place of issue in fields A17 to 19. If your business is not a corporation, fields A17 to 19 do not apply to you.

    Some cities/towns or provinces require that the business also have a business licence number. If you need a business licence, provide information about your business licence number, including its place of issuein fields A.12 to A.14 of the registration form. If you do not have a business licence number, leave these fields blank.

    
     

12. Where do I find the MSB registration number required in field B.5 of the registration form?

    If you use another money services business (MSB) to conduct transactions, you can ask that other MSB for their registration number so that you can enter it on your own registration form at field B5. You can also find their MSB registration number by going to the Money Services Business Registration page, through the “MSB Registration Search” link found on the left menu, or the “View public registration information about MSBs” on the right. Search the name of the MSB and you will see their registration number in their profile.

    This field is only for another money services business that you use to conduct transactions. Do not include your own MSB in this field.

    
     

13. What is considered “carrying on activities in a dwelling house” for field B.8 of the registration form?

    “Carrying on activities in a dwelling house” means that the primary location of an MSB is the residence or dwelling of the owner. Answer “yes” to this question only if you operate your business out of your home.
     

14. Field B.10 asks the approximate annual volume of my transactions. Should I enter the gross value of transactions or the portion of the transaction that results in income for the business?

    Enter the gross volume of your annual transactions in these fields. These amounts can be based on your last fiscal year or the previous calendar year. If you are a new money service business, enter your estimated annual volume.
     

15. What is the difference between an agent and a branch?

    An agent (or mandatary) is legally a separate business from your MSB that you authorize to sell your products or services.

    A branch is part of your own business at a distinct physical location.

    
     

16. I received a clarification request (CR) notice. What does that entail? How long do I have to respond to the CR notice?

    A clarification request means that FINTRAC needs you to confirm or give more information about your registration form. You must respond to a CR within 30 days or your registration could be denied or revoked.

    How do I respond to a clarification request?

    Once you log on to the secure MSB registration Web site, you will see which fields need clarification. To start the clarification, select the “Clarify” button located at the bottom of the main page. After updating the fields, you will have to resubmit your application to FINTRAC.

    
     

17. How long will it take FINTRAC to process my application?

    FINTRAC will process your application within 14 days. However, if you receive a clarification request the process could take much longer. To speed up the processing of your application, you should respond to all clarification requests as soon as possible.
     

18. How often do I need to renew my registration?

    Your registration will be valid for two years and you have to renew it before it expires. FINTRAC will send you a renewal reminder in advance. The first renewal depends on your business type and any subsequent renewals will be every two years. Failure to renew your MSB registration with FINTRAC could lead to criminal charges and, if convicted, up to five years imprisonment, to a fine of $500,000, or both.
     

19. How can I make a change to my application after I am registered?

    After you submitted your registration application to FINTRAC, if you need to submit changes or newly obtained information, login to the MSB Registration system and select “Submit change” from the home page. You will then be able to complete all fields related to a change. The exceptions are the following fields where you must contact FINTRAC by telephone to make changes: A1, A2, A16, B9 and B10.
     

20. The bank requires a registration number in order to open a bank account with them. What can I provide them that show I’m registered with FINTRAC?

    Your MSB Registration number can be provided in order to open a bank account. That number can be found on the MSB Registration website or in the letter that you received stating that you are registered with FINTRAC.
     

21. I received a letter in the mail stating that my MSB has been denied or revoked its registration with FINTRAC. Who can I contact for more information?

    Call 1-866-346-8722 (option 4) or e-mail msb-esm@fintrac-canafe.gc.ca and provide us with your contact information.
     

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. 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.
    

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 receipt of funds record legislative requirement applies only when the real estate broker or sales representative receives funds. Therefore, if the real estate broker or sale representative does not receive any funds (cash or cheque), he does not have to keep a receipt of funds record.
   
   In the scenario provided, the real estate broker or sales representative does not handle the cheque/funds, and the funds go directly to the seller, then there is no requirement for the real estate broker or sales representative to keep a 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 or fines 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 will FINTRAC begin to issue administrative monetary penalties?

   Since December 30, 2008, FINTRAC has the authority to issue administrative monetary penalties.
    

3. Can administrative monetary penalties be issued for all non-compliance violations?

   Any instance of non-compliance that is subject to an administrative monetary penalty is considered a “violation”. Violations are specifically designated in regulations. There are over 180 separate violations.
    

4. How much are the penalties or fines?

   Administrative monetary penalties are limited to $100,000 for individuals and $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 of individual fines that exceed these limits.
    

5. Can administrative monetary penalties be appealed?

   It is possible to have a penalty reviewed by making a written application to FINTRAC. In certain circumstances, the reporting entity has the right to appeal to the Federal Court.
    

6. Does having an administrative monetary penalties program change FINTRAC’s approach to ensuring compliance?

   FINTRAC’s approach remains the same. FINTRAC remains committed to working cooperatively with reporting entities in ensuring compliance with the PCMLTFA and related regulations. Penalties are not new to FINTRAC. Criminal sanctions have been in place for several years. The introduction of administrative monetary penalties, however, is an important development in that it provides flexibility for more proportionate and measured responses to non-compliance.
    

7. Do other government agencies have the authority to issue administrative monetary penalties?

   Yes. Administrative monetary penalties are considered a useful instrument in ensuring regulatory compliance. FINTRAC’s administrative monetary penalities program is consistent with similar programs in other government agencies, including the Office of the Superintendent of Financial Institutions (OSFI), the Financial Consumer Agency of Canada (FCAC), the Canada Border Services Agency (CBSA), the Canadian Food Inspection Agency (CFIA), and the Competition Bureau.
    

8. Would violations identified by a regulator examinations be subject to AMPs?

   There are no legal restrictions on imposing an AMP based on information provided to FINTRAC by a regulator. However, FINTRAC’s policy is that AMPs will be issued based on FINTRAC findings. Therefore, FINTRAC may conduct a follow-up examination against a regulator’s findings to further assess the appropriate course of action.
    

9. Will all REs who have been issued an AMP be automatically subject to FINTRAC’s public naming provision?

   FINTRAC has the authority to publicly name any RE that has been issued an AMP. FINTRAC will exercise this authority when one of the two following thresholds has been reached:
   1. The AMP includes a violation classified as Serious or Very Serious; or
   2. The AMP is comprised of Minor violations totalling an amount in excess of $10,000.
    

10. Why are there two forms of 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 financial penalty. An AMP on the other hand is meant be proportionate to the related administrative violation(s) and incent corrective action 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 AMPs 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/operator of the business who is subject to those obligations.
     

12. I have received a letter informing me that I must pay an administrative monetary penalty. Who can I contact to get an explanation?

    You can contact FINTRAC at 1-866-346-8722 and leave a message with our call centre. A FINTRAC representative will then come in contact with you as soon as possible.
     

Review 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 Review and Appeals Unit at:
   
   Review and Appeals Unit
   Financial Transactions and Reports Analysis Centre of Canada
   Ottawa, Ontario
   Canada K1P 1H7
   
   You may also send your request for review by email at:
   rev-app@fintrac-canafe.gc.ca.
    

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 appeals 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.