When to identify individuals and confirm the existence of entities – Casinos

June 2017

This guidance on client identification is applicable to casinos that are subject to the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA) and associated Regulations.

Details on how to identify individuals and confirm the existence of entities is available in FINTRAC’s guidance Methods to identify individuals and confirm the existence of entities.

Throughout this guidance, references to dollar amounts (such as $10,000) are in Canadian dollars. Furthermore, all references to cash mean money in circulation in any country (bank notes or coins) and do not include cheques, money orders or other similar negotiable instruments.

The Proceeds of Crime (Money Laundering) and Terrorist Financing Regulations (PCMLTFR) specify when you must identify an individual or confirm the existence of an entity, and how you must do this. The point at which you identify a client will vary depending on the activity or transaction that is carried out. Knowing your clients includes identifying them in accordance with the Regulations, but you also have further obligations in this regard, such as requirements related to the ongoing monitoring of business relationships and third party determination. Please refer to FINTRAC’s guidance on these subjects for more information.

**Note: Exceptions to your client identification requirements are listed in the last section of this guidance.

Identifying clients

As a casino, you must identify individuals and confirm the existence of entities for certain activities and transactions, as listed below. Entities can be corporations, trusts, partnerships, funds, and unincorporated associations or organizations.

When you have to confirm the existence of an entity that is a corporation, you also have to verify its name and address, and the names of the corporation’s directors.

The formation of business relationships and the ensuing obligations are tied to your requirements to identify clients. You are in a business relationship with every individual or entity that holds an account with you. For non-account-based relationships, you are considered to be in a business relationship with every individual you have had to identify at least twice, and with every entity whose existence you have had to confirm at least twice. If you have not identified an individual or confirmed the existence of an entity because an exception applied, you are still considered to be in a business relationship and must conduct ongoing monitoring and keep certain records.

You are also required to take reasonable measures to determine if a client is acting on the instruction of a third party when opening an account or conducting a large cash transaction. In this case, reasonable measures may include asking the individual, or relying on information you may already have about the individual. If you determine that the individual in front of you is acting on someone else's instructions, that “someone else” is the third party.

As a casino, you are responsible for identifying clients for:

  1. Account openings and signature card creations
  2. Extension of credit of $3,000 or more
  3. Foreign currency exchange of $3,000 or more
  4. Remittance or transmission of $1,000 or more
  5. Casino disbursements
  6. Large cash transactions
  7. Suspicious transactions

1. Account openings and signature card creations

You must identify all individuals that you create a signature card for in relation to an account that you open. A signature card is a document signed by an individual authorized to give instructions on an account, or electronic data that constitutes a signature. It can include the hand written signature of an individual or an electronic signature that is created or adopted by an individual. The electronic signature can be numeric, character-based, or biometric as long as it is unique to the individual and a record can be kept. This must be done before any funds are disbursed.

When you open an account for an entity, you must:

This must be done before the first transaction is carried out on the account, other than the initial deposit.

When you open a business account, you do not have to identify every individual for whom you create a signature card if you have created a signature card for more than three individuals and have identified at least three of these individuals. These individuals must be identified before any funds are disbursed from the account.

When opening a new account, if you cannot identify an individual or confirm the existence of an entity, you cannot open the account.

2. Extension of credit of $3,000 or more

If you extend credit to a client for $3,000 or more, you must identify the individual who conducts the transaction with you, at the time the transaction takes place.

3. Foreign currency exchange of $3,000 or more

For a foreign currency exchange of $3,000 or more you must identify the individual conducting the transaction at the time the transaction takes place.

4. Remittance or transmission of $1,000 or more

When you remit or transmit $1,000 or more, you have to identify the individual who makes the request at the time the transaction takes place.

For example, when you send an electronic funds transfer (EFT) of $1,000 or more, you must identify the individual who makes the request at the time the transaction takes place. An EFT means the transmission of instructions, through any electronic, magnetic or optical device, telephone instrument or computer, for the transfer of funds to or from Canada.

If you transmit funds as an EFT of any amount at the request of a client, including an EFT sent within Canada that is a SWIFT MT 103 message, you must include the originator information.

If you receive an EFT of any amount, including an EFT sent within Canada that is a SWIFT MT 103 message, you must take reasonable measures to ensure it includes the originator information. In this context, reasonable measures may include contacting the institution that sent the payment instructions.

5. Casino disbursements

You must identify every individual who receives a casino disbursement at the time the transaction takes place. A casino disbursement is any payout, whether in cash or not, of $10,000 or more for the following transactions:

A casino disbursement also includes two or more disbursements of less than $10,000 each that total $10,000 or more within a 24-hour period, when you know that the disbursements are received by, or on behalf of, the same individual or entity.

6. Large cash transactions

You must identify every individual who conducts a large cash transaction at the time the transaction takes place. A large cash transaction occurs when you receive $10,000 or more in cash in a single transaction. A large cash transaction also occurs when there are multiple cash transactions of less than $10,000 each that total $10,000 or more within a 24-hour period, when you know they are conducted by, or on behalf of, the same individual or entity.

7. Suspicious transactions

You must take reasonable measures to identify an individual who conducts or attempts to conduct a suspicious transaction before sending a Suspicious Transaction Report. Reasonable measures in this case may include asking the individual to provide photo identification.

All suspicious transactions and attempted suspicious transactions, including transactions that are normally exempt from client identification requirements, require you to take reasonable measures to identify your clients.

Keeping client identification information up to date

You must update client information at a frequency that will vary based on your risk assessment. As part of your ongoing monitoring requirements, you must keep all client identification information up to date. High-risk clients’ identification information must be updated more frequently, and you must take any other appropriate enhanced measures.

To keep client identification information up to date, you must take measures such as asking the client to provide information to confirm or update their identification information. In the case of an individual, this may also include confirming or updating the information by using the options that are available to identify individuals who are not physically present.

In the case of clients that are entities, measures to keep client identification information up to date may include consulting a paper or electronic record or obtaining information verbally.

Exceptions

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

If an individual has an account with you, you do not have to re-identify the individual again if subsequent accounts are opened.

You do not need to verify the names of the directors when you confirm the existence of a corporation that is a securities dealer.

You do not have to identify an individual or confirm the existence of an entity when you undertake the following activities for a public body or very large corporation:

The same is true regarding a subsidiary of either of those types of entities, if the financial statements of the subsidiary are consolidated with those of the public body or very large corporation.

You do not have to identify an individual who conducts a large cash transaction if the cash is received from a financial entity or public body.

You do not have to take reasonable measures to identify the individual who conducts or attempts to conduct a suspicious transaction only if:

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