Guideline 6F: Record Keeping and Client Identification for Casinos

July 2010

This replaces the previous version of Guideline 6F: Record Keeping and Client Identification for Casinos issued in March 2009. The changes made to this version are indicated by a side bar to the right of the modified text in the PDF version.

Table of Contents

1. General
2. Record Keeping and Client Identification Obligations
3. Records To Be Kept
   • 3.1 General exceptions to record keeping
   • 3.2 Large cash transaction records
   • 3.3 Large cash disbursement records
   • 3.4 Records to be kept when opening an account
   • 3.5 Extension of credit records
   • 3.6 Foreign currency exchange transaction tickets
   • 3.7 Records about certain funds remitted or transmitted
   • 3.8 Casino disbursement report records
   • 3.9 Suspicious transaction report records
   • 3.10 Identification information on all records
4. Client Identity
   • 4.1 When and how do you have to identify clients?
   • 4.2 General exceptions to client identification
   • 4.3 Client identity for large cash transactions
   • 4.4 Client identity for suspicious transactions
   • 4.5 Client identity for signature cards
   • 4.6 Client identity for disbursement records
   • 4.7 Other client identity for individuals
   • 4.8 How to identify an individual
   • 4.9 Client identity for corporations or other entities
   • 4.10 Keeping client identification information up to date
5. Third Party Determination and Related Records
   • 5.1 Third party determination
   • 5.2 Third party records
6. How Should Records Be Kept?
7. Penalties for Non-Compliance
8. Comments?
9. How to Contact FINTRAC

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Guideline 6F: Record Keeping and Client Identification for Casinos (PDF version, 95 KB)

1. General

The objective of the Proceeds of Crime (Money Laundering) and Terrorist Financing Act is to help detect and deter money laundering and the financing of terrorist activities. It is also to facilitate investigations and prosecutions of money laundering and terrorist activity financing offences. This includes implementation of reporting, record keeping, client identification and compliance regime requirements for casinos.

A casino means one that is authorized by a Canadian provincial, territorial or federal government to do business and that conducts its business in a permanent establishment. It only includes those where roulette or card games are played in the establishment, or where there is a slot machine. For these purposes, a slot machine does not include a video lottery terminal.

Registered charities may be authorized to carry on business temporarily as a casino for charitable purposes. If this type of business is carried out in the establishment of a casino for no more than two consecutive days at a time under the supervision of the casino, the activities are considered to be the supervising casino's. In this case, the supervising casino is responsible for the reporting, record keeping, client identification and compliance regime requirements related to the charity casino.

If you are a casino, this guideline has been prepared to help you meet your record keeping and client identification obligations.

This guideline uses plain language to explain the most common situations under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act as well as the related Regulations. It is provided as general information only. It is not legal advice, and is not intended to replace the Act and Regulations.

Record keeping and client identification obligations for other types of reporting persons or entities are explained by sector in other versions of this guideline (financial entities; life insurance companies, brokers and agents; securities dealers; money services businesses; agents of the Crown that sell or redeem money orders; accountants; dealers in precious metals and stones; British Columbia notaries; and real estate).

For more information about money laundering and terrorist financing, or other requirements under the Act and Regulations applicable to you, see the guidelines in this series:

• Guideline 1: Backgrounder explains money laundering, terrorist financing and their international nature. It also provides an outline of the legislative requirements as well as an overview of FINTRAC's mandate and responsibilities.
• Guideline 2: Suspicious Transactions explains how to report a suspicious transaction. It also provides guidance on how to identify a suspicious transaction, including general and industry-specific indicators that may help when conducting or evaluating transactions.
• Guideline 3: Submitting Suspicious Transaction Reports to FINTRAC explains when and how to submit suspicious transaction reports. There are two different versions of Guideline 3, by reporting method.
• Guideline 4: Implementation of a Compliance Regime explains the requirement for reporting entities to implement a regime to ensure compliance with their obligations under the Act and associated Regulations.
• Guideline 5: Submitting Terrorist Property Reports to FINTRAC explains to reporting entities when and how to submit a terrorist property report.
• Guideline 6: Record Keeping and Client Identification explains the requirement for reporting entities to identify their clients and keep records. There are several different versions of Guideline 6, with each one applicable to a particular sector.
• Guideline 7: Submitting Large Cash Transaction Reports to FINTRAC explains when and how to submit large cash transaction reports. There are two different versions of Guideline 7, by reporting method.
• Guideline 8: Submitting Electronic Funds Transfer Reports to FINTRAC explains when and how to submit electronic funds transfer reports. There are three different versions of Guideline 8, by type of electronic funds transfer and reporting method.
• Guideline 9: Submitting Alternative to Large Cash Transaction Reports to FINTRAC explains when and how financial entities can choose the alternative to large cash transaction reports. This is only applicable to financial entities.
• Guideline 10: Submitting Casino Disbursement Reports to FINTRAC explains when and how to submit casino disbursement reports. There are two different versions of Guideline 10, by reporting method.

If you need more help after you read this or other guidelines, call FINTRAC's national toll-free enquiries line at 1-866-346-8722.

Throughout this guideline, several references are provided to additional information that may be available on external Web sites. FINTRAC is not responsible for the accuracy, reliability or currency of the information contained on those external Web sites. The links provided are based on information available at the time of publishing of this guideline.

Throughout this guideline, any references to dollar amounts (such as $10,000) refer to the amount in Canadian dollars or its equivalent in foreign currency. Furthermore, all references to cash mean money in circulation in any country (bank notes or coins). In this context, cash does not include cheques, money orders or other similar negotiable instruments.Also, any references to the term "securities dealer" means an individual or entity authorized under provincial legislation to engage in the business of dealing in securities or any other financial instruments, or to provide portfolio management or investment advising services.

Your policies and procedures may cover situations other than the ones described in this guideline, for purposes other than your requirements under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act. For example, the retention period for your records may vary for purposes other than what is described in this guideline.

2. Record Keeping and Client Identification Obligations

As a casino, you have the following record keeping and client identification obligations:

• When you conduct a large cash transaction, your obligations are as follows:
  • Keep a large cash transaction record (see section 3);
  • Identify the individual (see section 4); and
  • Make a third party determination and keep related records (see section 5).
• When you pay out a casino disbursement whether in cash or not, you have to submit a casino disbursement report to FINTRAC. Your obligations are as follows:
  • Keep a copy of the report (see section 3);
  • Identify the individual (see section 4); and
  • Make a third party determination and keep related records (see section 5).
• When you open an account, your obligations are as follows:
  • Keep signature cards, account operating agreements, deposit slips, debit or credit memos and other records (see section 3);
  • Identify clients (see section 4); and
  • Make a third party determination and keep related records (see section 5).
• When you extend credit to a client of $3,000 or more, your obligations are as follows:
  • Keep an extension of credit record (see section 3); and
  • Identify the individual (see section 4).
• When you conduct a foreign currency transaction, your obligations are as follows:
  • Keep a foreign transaction ticket for any transaction (see section 3); and
  • Identify the individual if the transaction is for $3,000 or more (see section 4).
• When you conduct certain electronic funds transfers, your obligations are as follows:
  • For an amount of $1,000 or more, you have to keep a record and identify the client (see sections 3 and 4); and
  • Include originator information with the transfer (see section 3).
• When you have to submit a suspicious transaction report to FINTRAC, your obligations include the following:
  • If you have not already identified the individual who conducted the transaction, identify the individual (see section 4); and
  • Keep a copy of the report (see section 3).

There are some exceptions and these are explained throughout each section.

The use of personal information in Canadian commercial activities is protected by the Personal Information Protection and Electronic Documents Act (PIPEDA), or by substantially similar provincial legislation. You have to inform individuals concerning the collection of personal information about them. However, you do not have to inform individuals when you include personal information about them in any of the reports that you are required to make to FINTRAC. You can get more information about your responsibilities in this area from the following:

• Industry Canada (http://privacyforbusiness.ic.gc.ca); or
• The Office of the Privacy Commissioner of Canada (http://www.priv.gc.ca).
  • o The Office of the Privacy Commissioner of Canada has developed, on its Web site, a Question and Answer document entitled PIPEDA and the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (http://www.priv.gc.ca/resource/t_faqs_index_e.cfm) that will help you in understanding your responsibilities under both federal laws.

3. Records To Be Kept

As a casino, in addition to the records described in section 5, you have to keep the following records:

• Large cash transaction records;
• Casino disbursement report records;
• Records to be kept when opening an account;
• Extension of credit records;
• Foreign currency exchange transaction tickets;
• Records about certain funds transfers; and
• Suspicious transaction report records.

Details about each of these types of records are provided in subsections 3.2 through 3.9. Also, section 6 explains how your records should be kept.

See section 4 for information about identification requirements that may be associated to the events triggering record keeping requirements.

3.1 General exceptions to record keeping

If you keep information in a record that is already readily available in any other record that you have kept under these rules (as described throughout this guideline), you do not have to keep that information again.

You do not have to keep any of the records described in subsections 3.4 to 3.7 when you open an account or conduct a transaction for a public body or a very large corporation. The same is true regarding a subsidiary of either of those entities, if the financial statements of the subsidiary are consolidated with those of the public body or very large corporation.

In this context, a public body means any of the following or their agent:

• a Canadian provincial or federal department or Crown agency;
• an incorporated Canadian municipal body (including an incorporated city, town, village, metropolitan authority, district, county, etc.); or
• a hospital authority. A hospital authority means an organization that operates a public hospital and that is designated to be a hospital authority for GST/HST purposes. For more information on the designation of hospital authorities, refer to GST/HST Memoranda Series, Chapter 25.2, Designation of Hospital Authorities available from the Canada Revenue Agency Web site at http://www.cra-arc.gc.ca in the forms and publications listed by document type.

Also in this context, a very large corporation is one that has minimum net assets of $75 million on its last audited balance sheet. The corporation's shares have to be traded on a Canadian stock exchange or on a stock exchange outside Canada that is designated by the Minister of Finance. The corporation also has to operate in a country that is a member of the Financial Action Task Force (FATF). For more information about stock exchanges outside Canada that are designated by the Minister of Finance, refer to the July 2, 2008 news release available in the News area of the Department of Finance's Web site (http://www.fin.gc.ca).

To find out which countries are members of the FATF, refer to its Web site (http://www.fatf-gafi.org).

3.2 Large cash transaction records

This is a record for every amount of cash of $10,000 or more that you receive from a client in a single transaction. For example, if your client deposits $10,000 in cash to an account, you have to keep a large cash transaction record. In addition to this record, a large cash transaction will also require a report to FINTRAC, as explained in Guideline 7: Submitting Large Cash Transaction Reports to FINTRAC.

If you know that two or more cash transactions of less than $10,000 each were made within a 24-hour period (i.e., 24 consecutive hours), by or on behalf of the same client, these are considered to be a single large cash transaction if they add up to $10,000 or more. In this case, you would have to keep a large cash transaction record, and report the transaction to FINTRAC as explained above.

The transactions that you must keep a large cash transaction record for include the following:

• the sale of chips, tokens or plaques;
• front cash deposits;
• safekeeping deposits;
• the repayment of any form of credit, including repayment by markers or counter cheques;
• bets of currency; and
• sales of your casino's cheques.

Do not keep a large cash transaction record or make a large cash transaction report to FINTRAC if the cash is received from a financial entity or a public body. In this context, a financial entity means any of the following:

• a bank (i.e., one that is listed in Schedule I or II of the Bank Act) or an authorized foreign bank with respect to its operations in Canada;
• a credit union or a caisse populaire;
• effective July 31, 2010, a financial services cooperative (in the province of Quebec) or a credit union central (in all other provinces);
• a trust and loan company; or
• an agent of the Crown that accepts deposit liabilities.

For information about what is considered a public body in this context, see subsection 3.1.

Contents of a large cash transaction record
For any large cash transaction, the information you have to keep in a large cash transaction record includes the following:

• the amount and currency of the cash received;
• the name, date of birth and address of the individual from whom you received the cash and that individual's principal business or occupation;
• the date of the transaction;
• the purpose, details and type of transaction (for example, the cash was used to buy chips, etc.), including whether any other individuals or entities were involved in the transaction;
• how the cash was received (for example, in person, by mail, by armoured car, or any other way); and
• if an account was affected by the transaction, include the following:
  • the number and type of any such account;
  • the full name of the client that holds the account; and
  • the currency in which the account's transactions are conducted.

In the case of a deposit, the large cash transaction record also has to include the time of the deposit.

Be as descriptive as possible regarding the business or occupation. Record information that clearly describes it, rather than use a general term. For example, in the case of a consultant, the occupation recorded should reflect the area of consulting, such as "information technology consultant" or "consulting forester". As another example, in the case of a professional, the occupation should reflect the nature of the work, such as "petroleum engineer" or "family physician".

If you have to identify the individual conducting a large cash transaction, see subsection 3.10 for additional information that is required on the large cash transaction record.

If you are a supervising casino for a registered charity conducting business as a casino for two consecutive days or less on your premises, you are responsible for any large cash transaction records pertaining to the charity's casino activities.

3.3 Large disbursement records

For a casino disbursement of $10,000 or more, whether you pay it out in cash or not, a casino disbursement report is required - see subsection 3.8.

3.4 Records to be kept when opening an account

These records are those required when you open an account, such as signature cards, account operating agreements, deposit slips, debit and credit memos, copies of official corporate records (binding provisions) and other information as described below.

Signature cards
When you open an account, you have to keep a signature card for each account holder. A signature card means any record that is signed by an individual authorized to give instructions for the account.

If you have to identify an individual signing a signature card, see subsection 3.10 for additional information required on that record.

Accounts for corporations
If the account is opened for a corporation, you have to keep a copy of the part of the official corporate records showing the provisions that relate to the power to bind the corporation regarding the account. This could be a certificate of incumbency, the articles of incorporation or the bylaws of the corporation that set out the officers duly authorized to sign on behalf of the corporation, such as the president, treasurer, vice-president, comptroller, etc. If there were changes subsequent to the articles or bylaws that relate to the power to bind the corporation regarding the account and these changes were in effect at the time the account was opened, then the board resolution stating the change would be included in this type of record.

Accounts for individuals or entities other than corporations
If the account is opened for an individual or any entity that is not a corporation, you have to keep a record of the name, address and principal business or occupation of that individual or entity. For more information about recording business or occupation, see subsection 3.2, under the heading “Contents of a large cash transaction record”.

If the record is about an individual, it also has to include the individual's date of birth.

Account operating agreements
An account operating agreement is any document that is received or created in the normal course of business and outlines the agreement between you and your client about the account's operation.

Deposit slips
You have to keep a deposit slip for every deposit made to an account. A deposit slip means a record that sets out the date of a deposit, the amount of the deposit, and any part of it that was made in cash. A deposit slip also sets out the holder of the account in whose name the deposit is made and the number of the account.

Debit or credit memos
You have to keep any debit or credit memo that you create or receive regarding an account in the normal course of business.

3.5 Extension of credit records

You have to keep an extension of credit record for every extension of credit to a client of $3,000 or more. This record has to indicate the following information:

• the name of the client;
• the client's address and principal business or occupation;
• the terms and conditions of the extension of credit; and
• the date and amount of the extension of credit.

If the record is about an individual, it also has to include the individual's date of birth.

If you have to identify an individual for an extension of credit record, see subsection 3.10 for additional information required on that record.

3.6 Foreign currency exchange transaction tickets

You have to keep a transaction ticket for any foreign currency exchange transaction, regardless of the amount. A transaction ticket means a record that sets out the following information:

• the date, amount and currency of the purchase or sale; and
• the method, amount and currency of the payment made or received.

If the transaction is $3,000 or more, the foreign currency exchange transaction ticket has to set out the name, address and date of birth of the individual who carried out the transaction.

A transaction ticket can take the form of an entry in a transaction register, as long as it contains the information required, as explained in this subsection.

If you have to identify an individual conducting the foreign currency exchange transaction, see subsection 3.10 for additional information required on that record.

3.7 Records about certain funds remitted or transmitted

Information to include with outgoing funds transfers
If you send an electronic funds transfer (EFT) of any amount, at the request of a client, you have to include originator information with the transfer. Originator information means the name, address and, if any, the account number or reference number of the client who requested the transfer. You should not send any EFTs without including originator information.

An EFT means the transmission–through any electronic, magnetic or optical device, telephone instrument or computer–of instructions for the transfer of funds to or from Canada. In the case of messages sent through the SWIFT network, only SWIFT MT 103 messages are included. In addition, only in the context of originator information, an EFT includes any transmission of instructions for the transfer of funds within Canada that is a SWIFT MT 103 message.

An EFT does not include the following transactions:

• that use credit or debit cards, when the recipient has an agreement with the payment service provider for the payment of goods and services;
• where the recipient withdraws cash from their account;
• that use direct deposits or pre-authorized debits; or
• that use cheque imaging and presentment.

Information to be included with incoming funds transfers
If you receive an EFT, you have to take reasonable measures to ensure it includes originator information. In this context, reasonable measures could include contacting the institution that sent the payment instructions.

These requirements apply to the same EFTs, including the same exclusions, as those described above under the heading "Information to include with outgoing funds transfers".

Record about remitting or transmitting funds
If you remit or transmit funds, whether internationally or domestically, in an amount of $1,000 or more, you have to keep a record. This record has to include the following:

• if the client is an individual, the individual's name, address, date of birth and telephone number as well as the nature of their principal business or occupation;
• if the client is an entity, the name, address, date of birth and telephone number of the individual who initiated the transaction on behalf of the entity, as well as the nature of the individual's principal business or occupation;
• the relevant account number, if any, the reference number, if any, and the date of the transaction;
• the name or account number of the individual or entity to whom the amount is remitted or transmitted; and
• the amount and currency of the transaction.

For more information about recording business or occupation, see subsection 3.2, under the heading "Contents of a large cash transaction record".

If you have to identify the individual who requests the remittance or the transmission of funds, see subsection 3.10 for additional information that is required on the record about the remittance or transmission of funds.

If the funds remitted or transmitted involved an exchange to or from a foreign currency, see subsection 3.6 for additional information required in a transaction ticket.

3.8 Casino disbursement report records

When you have to report a casino disbursement to FINTRAC, you have to keep a copy of the casino disbursement report.

A casino disbursement is any payout, whether in cash or not, of $10,000 or more in the following transactions:

• redemption of slot tickets, chips, tokens or plaques;
• front cash withdrawals;
• safekeeping withdrawals;
• advances on any form of credit, including advances by markers or counter cheques;
• payments on bets, including slot jackpots;
• payments to clients of funds received for credit to that client or any other client;
• cashing of cheques or other negotiable instruments; and
• reimbursements to clients of travel and entertainment expenses.

A casino disbursement also includes two or more disbursements of less than $10,000 that you pay out to or on behalf of the same individual or entity within 24 consecutive hours of each other that total $10,000 or more.

If you are a supervising casino for a registered charity conducting business as a casino for two consecutive days or less on your premises, you are responsible for any casino disbursement reports as well as the related record keeping pertaining to the charity's casino activities.

For more information about when and how to submit casino disbursement reports, see Guideline 10: Submitting Casino Disbursement Reports to FINTRAC.

3.9 Suspicious transaction report records

When you have to report a suspicious transaction to FINTRAC, you have to keep a copy of the report. See Guideline 3: Submitting Suspicious Transaction Reports to FINTRAC for more information about obligations related to this report.

3.10 Identification information on all records

If you have to identify an individual, as explained in section 4, in association with any of the records mentioned in section 3, you have to keep the individual's name with that record. You also have to keep the following with that record.

Identification documents
If you have to identify the individual using an identification document, the record has to include the type of document you used to confirm the individual's identity, its reference number and its place of issue.

Identification of clients not physically present
If you do not use an identification document but use methods for a client who is not physically present (as described in subsection 4.8), you have to include whichever of the following, according to the methods used:

• If you use a cleared cheque to confirm the individual's identity, the record has to include the name of the financial entity and the account number of the deposit account on which the cheque was drawn;
• If you confirm that the individual holds a deposit account with a financial entity, the record has to include the date on which you made the confirmation as well as the name of the financial entity where the account is held and the number of the account;
• If you use an identification product, the record has to include the name of the identification product, the name of the entity offering it, the search reference number and the date you used the product to identify the individual;
• If you consult a credit file, the record has to include the name of the entity keeping the credit file and the date you consulted it; and
• If you use an attestation signed by a commissioner of oaths in Canada or a guarantor in Canada, you have to keep the attestation.

4. Client Identity

4.1 When and how do you have to identify clients?

As a casino, you have client identification obligations. You have to take the following measures to identify individuals or entities, subject to the general exceptions outlined below.

If you cannot identify an individual or an entity when you open an account according to the identification requirements, you cannot open the account. This means that no transaction other than an initial deposit can be carried out unless you are able to identify the individual or entity as explained in subsection 4.5 and 4.9.

Subsections 4.3 to 4.7 explain the need to identify individuals when an event triggers the requirement. Any individuals that you have not identified according to these rules must be identified if any of the situations described in those subsections occurs, unless an exception applies as explained below.

See section 3 for information about record keeping requirements that may be associated to the events triggering identification requirements.

4.2 General exceptions to client identification

In addition to the exceptions explained throughout the rest of section 4, the following general exceptions apply to client identification requirements.

Existing clients
Once you have confirmed the identity of an individual as explained in this guideline, you do not have to confirm their identity again if you recognize the individual (visually or by voice) at the time of a future event that would otherwise trigger the identification requirement. However, if you have any doubts about the identification information previously collected, you will have to identify that individual again.

Once you have confirmed the existence of a corporation and confirmed its name, address and the names of its directors (as explained in subsection 4.9), you are not required to confirm that same information in the future.

Once you have confirmed the existence of an entity other than a corporation (as explained in subsection 4.9), you are not required to confirm that same information in the future.

You do not have to identify individuals as described in subsections 4.5 to 4.7, nor do the requirements described in section 5 apply, for an individual who already has an account with you.

Certain types of accounts
You do not have to identify entities as described in subsections 4.5 nor do the requirements described in section 5 apply, in the following situations:

• at the opening of a business account for an entity for which you have already identified three individuals who are authorized to give instructions in respect of the account; or
• when you open an account for a public body or a very large corporation. The same is true regarding a subsidiary of either of those entities, if the financial statements of the subsidiary are consolidated with those of the public body or very large corporation.

For more information about what is considered a public body or a very large corporation in this context, see subsection 3.1.

4.3 Client identity for large cash transactions

You have to identify any individual with whom you conduct a large cash transaction, at the time of the transaction, if you have to keep a large cash transaction record for it, as described in subsection 3.2. If the transaction is a deposit to a business account, you do not have to identify the individual conducting it.

See section 4.8 to find out how to identify an individual for large cash transactions.

4.4 Client identity for suspicious transactions

When you have to send a suspicious transaction report to FINTRAC, you have to take reasonable measures, before the transaction is reported, to identify the individual who conducted it. This does not apply in the following circumstances:

• if you had already identified the individual as required and you have no doubts about that previous identification information;
• if you believe that doing so would inform the individual that you are submitting a suspicious transaction report; or
• the transaction being reported was an attempted transaction. Guideline 2: Suspicious Transactions provides more information about reporting attempted transactions.

In this context, reasonable measures to identify an individual include asking the individual for an identification document. They also include using either of the options available to identify individuals who are not physically present. However, reasonable measures exclude any method that you believe would inform the individual that you are submitting a suspicious transaction report.

4.5 Client identity for signature cards

You have to identify any individual who signs a signature card for an account that you open before any transaction (other than the initial deposit) is carried out. In the case of a business account, you do not have to identify any more than three individuals who are authorized to give instructions for the account.

See subsection 4.8 to find out how to identify an individual for signature cards.

The identification requirement related to a signature card does not apply if you already have an account with that individual.

If you open an account for an entity, there are identification requirements in addition to the one regarding signature cards. Refer to subsection 4.9 for more information about this.

In addition, this identification requirement does not apply if the account holder is a public body or a very large corporation. For more information about the meaning of a public body or very large corporation, see subsection 3.1.

4.6 Client identity for disbursement records

You have to identify any individual who conducts any of the transactions described in subsection 3.8 that require a copy of a casino disbursement report. You have to do this at the time of the transaction.

See subsection 4.8 to find out how to identify an individual for large disbursements.

4.7 Other client identity for individuals

You have to identify an individual in any of the following transactions:

• with whom you conduct a foreign currency exchange transaction of $3,000 or more for whom you have to keep a foreign currency exchange transaction record;
• to whom you extend credit of $3,000 or more for whom you have to keep an extension of credit record; and
• who requests that an amount of $1,000 or more be remitted or transmitted.

If you are required to identify an individual in any of these cases, you have to do so at the time of the transaction.

See subsection 4.8 to find out how to identify an individual for this purpose.

4.8 How to identify an individual

See subsection 3.10 for additional information that is required on certain records when you have to identify individuals.

To identify an individual, refer to the individual's birth certificate, driver's licence, passport, record of landing, permanent resident card or other similar document.

You can refer to an individual's provincial health card, but only if it is not prohibited by provincial or territorial legislation. For example, you cannot refer to an individual's provincial health card from Ontario, Manitoba or Prince Edward Island since health cards cannot be used for this purpose in these provinces. As another example, in Quebec, you cannot request to see a client's health card, but you may accept it if the client wants to use it for identification purposes. If you have questions about the use of health cards for identification, please contact the appropriate provincial issuer for more information.

For a document to be acceptable for identification purposes, it must have a unique identifier number. Also, the document must have been issued by a provincial, territorial or federal government. For example, a birth or baptismal certificate issued by a church would not be acceptable for this purpose. Also, an identification card issued by an employer for an employee (i.e. an employee identification card) is not acceptable.

The document also has to be a valid one and cannot have expired. For example, an expired driver's licence would not be acceptable.

A social insurance number (SIN) card can be used to verify the identity of a client, but the SIN (i.e. the number itself) is not to be provided to FINTRAC on any type of report. The Office of the Privacy Commissioner (http://www.priv.gc.ca) has produced a fact sheet concerning best practices for the use of SINs. Please consult it for more information on this topic.

Examples of other documents that can be used to verify the identity of a client include a certificate of Indian status or a provincial or territorial identification card issued by any of the following (or their successors):

• the Insurance Corporation of British Columbia;
• Alberta Registries;
• Saskatchewan Government Insurance;
• the Department of Service Nova Scotia and Municipal Relations;
• the Department of Transportation and Public Works of the Province of Prince Edward Island;
• Service New Brunswick;
• the Department of Government Services and Lands of the Province of Newfoundland and Labrador;
• the Department of Transportation of the Northwest Territories; or
• the Department of Community Government and Transportation of the Territory of Nunavut.

Valid foreign identification, if equivalent to an acceptable type of Canadian identification document, would also be acceptable for the purposes explained in this guideline. For example, a valid foreign passport is acceptable.

When you refer to a document to identify an individual, it has to be an original, not a copy of the document. In cases where it is not possible for you to view the original yourself, you may choose to use an agent or mandatary to verify the original identification document on your behalf. Even if you use an agent or mandatary, you are responsible for making sure the identification requirements are met.

Use of an agent or mandatary
If you use an agent or mandatary for client identification, you have to enter into a written agreement or arrangement with the agent or mandatary outlining what you expect them to do for you. In addition, you have to obtain from the agent or mandatary the customer information that was obtained according to the agreement or arrangement.

Your agent or mandatary can identify your client for you using an identification document. In cases where your client is not physically present at the opening of an account or conducting of a transaction, your agent or mandatary can also use the options explained below.

Individual not physically present
If you have to identify an individual who is not physically present you will have to use a combination of two of the following methods.In each of the two methods you use, the individual's information has to be consistent with what you have in your records. The information also has to be consistent from one method to the other. For example, if each of the methods you use has the name, address and date of birth information about the individual, all of it has to agree with what you have in your records.

The methods below may not apply for all clients. For example, the methods would not be available to identify a client outside Canada who is conducting a transaction with you, but has no Canadian credit history, no access to a Canadian guarantor and no deposit account with a financial entity. In this case, identification of the client using an identification document may necessitate the use of an agent or mandatary, as explained above.

4.9 Client identity for corporations or other entities

You have to confirm the existence of any corporation or other entity for which you open an account, before any transaction other than the initial deposit. In the case of a corporation, in addition to confirming its existence, you also have to determine the corporation's name, address and the names of its directors before any transaction other than the initial deposit.

Corporations
To confirm the existence of a corporation as well as the corporation's name and address, refer to the following documents:

• the corporation's certificate of corporate status;
• a record that has to be filed annually under provincial securities legislation; or
• any other record that confirms the corporation's existence. Examples of these include such other records as the corporation's published annual report signed by an independent audit firm, or a letter or a notice of assessment for the corporation from a municipal, provincial, territorial or federal government.

You also have to confirm the names of the corporation's directors. To do this, you may need to see the list of the corporation's directors submitted with the application for incorporation. In the case of a corporation that is a securities dealer, you do not need to ascertain the name of the corporation's directors.

The record you use to confirm a corporation's existence can be paper or an electronic version. Although such information may be available verbally (such as by phone), it is not acceptable for these purposes, as you have to refer to a record. If the record is in paper format, you have to keep the record or a copy of it.

If the record is an electronic version, you have to keep a record of the corporation's registration number, the type and source of the record. An electronic version of a record has to be from a public source. For example, you can get information about a corporation's name and address and the names of its directors from the Corporations Canada database which is accessible from Industry Canada's Web site (http://www.ic.gc.ca). As another example, you may also get this type of information if you subscribe to a corporation searching and registration service.

Entities other than corporations
To confirm the existence of an entity other than a corporation, refer to a partnership agreement, articles of association or any other similar record that confirms the entity's existence. The record you use to confirm the existence of an entity can be paper or an electronic version. Although such information may be available verbally (such as by phone), it is not acceptable for these purposes, as you have to refer to a record. If the record is in paper format, you have to keep the record or a copy of it.

If the record is an electronic version, you have to keep a record of the entity's registration number, the type and source of the record. An electronic version of a record has to be from a public source.

4.10 Keeping client identification information up to date

Your compliance regime has to include an assessment, in the course of your activities, of the risk of money laundering or terrorist financing. According to this assessment, in higher risk situations, you have to take reasonable measures to keep client identification information up to date.

In this context, reasonable measures include asking the client to confirm or update identification information. In the case of an individual client, reasonable measures also include confirming or updating the information through the options available to identify individuals who are not physically present. This can include obtaining information verbally to keep client identification information up to date.

In the case of clients that are entities, reasonable measures include consulting a paper or electronic record as explained in subsection 4.9, or obtaining information verbally to keep client identification information up to date.

The frequency with which client identification information is to be kept up to date will vary in accordance with the context in which transactions occur, and therefore could differ from one situation to the next. However, for high risk situations, frequency for keeping client identification information up to date should be at least every two years.

Guideline 4: Implementation of a Compliance Regime provides more information about risk assessment requirements.

5. Third Party Determination and Related Records

5.1 Third party determination

You have to make a third party determination when you have to keep any of the following records:

• Large cash transaction record
  Whenever you have to keep a large cash transaction record (as explained in subsection 3.2), you have to take reasonable measures to determine whether the individual who gives you the cash is acting on the instructions of a third party.

  In this context, a third party is an individual or entity other than the individual who conducts the transaction.

• Casino disbursement report
  When you have to report a casino disbursement (as explained in subsection 3.8), you will have to take reasonable measures to determine whether the individual who receives the disbursement is acting on behalf of a third party.

  In this context, a third party is an individual or entity who acts on the instructions of an individual other than the one who receives the disbursement.

• Signature card or an account operating agreement (when opening accounts)
  Whenever you open an account and are required to keep a signature card or an account operating agreement as explained in subsection 3.4, you have to take reasonable measures to determine whether the account is to be used by or on behalf of a third party.

  In this context, a third party is an individual or entity, other than the account holder or those authorized to give instructions about the account, who directs what happens with the account.

When you are determining whether a "third party" is involved, it is not about who "owns" the money, but rather about who gives instructions to deal with the money. To determine who the third party is, the point to remember is whether the individual in front of you is acting on someone else's instructions. If so, that someone else is the third party.

In making a third party determination when employees are acting on behalf of their employers, they are considered to be acting on behalf of a third party. The only exception to this is when an employee deposits cash to the employer's account. In that case, the employee is not considered to be acting on behalf of a third party. This is true only if the account in which the employee deposits cash is a business account.

Reasonable measures
What constitutes reasonable measures will vary in accordance with the context in which they occur, and therefore could differ from one situation to the next. However, reasonable measures would include retrieving the information already contained in your files or elsewhere within your business environment, or obtaining the information directly from the client.

You do not have to make any third party determination about an account if the account holder is a financial entity or a securities dealer engaged in dealing in securities in Canada.

5.2 Third party records

If you determine that there is in fact a third party, as explained above, you have to keep a record of the following information:

• the third party's name, address and principal business or occupation;
• if the third party is an individual, the third party's date of birth;
• the incorporation number and place of incorporation if the third party is a corporation; and
• in the case of a large cash transaction, the nature of the relationship between the third party and the individual who gives you the cash; or
• in the case of a casino disbursement, the nature of the relationship between the third party and the individual who receives the disbursement; or
• in the case of a signature card or an account operating agreement, the nature of the relationship between the third party and the account holder. For examples of third party relationships, see field 18 of Part G in the large cash transaction report.

For more information about recording business or occupation, see subsection 3.2, under the heading "Contents of a large cash transaction record".

If you are not able to determine that there is in fact a third party, but you have reasonable grounds to suspect that there are instructions of a third party involved, you have to keep a record to indicate the following:

• in the case of a large cash transaction, whether, according to the individual giving the cash, the transaction is being conducted on behalf of a third party; or
• in the case of a casino disbursement, whether, according to the individual, the disbursement is being received on behalf of a third party; or
• in the case of an account, whether, according to the individual authorized to act for the account, the account will be used by or on behalf of a third party.

This record must also indicate details of why you suspect the individual is acting on a third party's instructions.

You do not have to keep the third party record described above for an account if the following conditions are met:

• the account is opened by a legal counsel, an accountant or a real estate broker or sales representative; and
• you have reasonable grounds to believe that the account is to be used only for their clients.

If an account is for or on behalf of future and unknown clients, employees, etc., of the individual or entity opening the account, you should keep a record indicating that the account is to be used by or for third parties who are not known at the time of account opening.

6. How Should Records Be Kept?

You should maintain an effective record-keeping system to enable FINTRAC to have access to the records in a timely fashion. Your records have to be kept in such a way that they can be provided to FINTRAC within 30 days of a request to examine them.

For the requirements explained in this guideline, you can keep records in a machine-readable or electronic form, as long as a paper copy can be readily produced from it. For example, if you have a document imaging system, you do not have to produce the original document for these purposes, as long as you can print the imaged one.

The record keeping requirements explained in this guideline are about each record to be kept. Your record keeping system can store the information required for any one record separately, as long as you are able to readily retrieve and put the information together for the record whenever necessary.

Also, if you keep records electronically that require a signature on them, such as a signature card for example, an electronic signature of the individual who signed the record has to be retained. An electronic signature means an electronic image of the signature and does not include a personal identification number (PIN).

You are not required to keep a copy of the reports you make to FINTRAC (other than the suspicious transaction report, as explained in subsection 3.9 and the casino disbursement report, as explained in subsection 3.8), but you may choose to do so. It is recommended that you keep the information that FINTRAC sends you in the acknowledgement message about each report processed. This provides the date and time the report was received along with its identification number.

Timeframe for keeping records
In the case of signature cards, account operating agreements, and client credit files, these records have to be kept for five years from the day of closing of the account to which they relate. In the case of records to confirm the existence of an entity (including a corporation), they have to be kept for five years from the day the last business transaction was conducted.

In the case of a copy of a suspicious transaction report, the record has to be kept for a period of at least five years following the date the report was made.

In the case of all other records, including casino disbursement report records, the records must be kept for a period of at least five years following the date they were created.

Employees or contractors who keep records for you
Your employees who keep records (as described in section 3) for you are not required to keep those records after the end of their employment with you. The same is true for individuals in a contractual relationship with you, after the end of that contractual relationship. This means that you have to get and keep the records that were kept for you by any employee or contractor before the end of that individual's employment or contract with you.

7. Penalties for Non-Compliance

Failure to comply with your record keeping or client identification requirements can lead to criminal charges against you. Conviction of failure to retain records could lead to up to five years imprisonment, to a fine of $500,000, or both. Alternatively, failure to keep records or identify clients can lead to an administrative monetary penalty. For more information on penalties, you can also consult the Penalties for non-compliance section of FINTRAC's Web site.

8. Comments?

These guidelines will be reviewed on a periodic basis. If you have any comments or suggestions to help improve them, please send your comments to the mailing address provided below, or by email to guidelines-lignesdirectrices@fintrac-canafe.gc.ca.

9 How to Contact FINTRAC

For further information on FINTRAC and its activities, reporting and other obligations, please go to FINTRAC's website (http://www.fintrac-canafe.gc.ca) or contact FINTRAC:

Financial Transactions and Reports Analysis Centre of Canada
234 Laurier Avenue West, 24th floor
Ottawa, Ontario
Canada K1P 1H7

Toll-free: 1-866-346-8722