Guideline 9: Alternative to Large Cash Transaction Reports to FINTRAC

January 2011

This replaces the previous version of Guideline 9: Submitting Alternative to Large Cash Transaction Reports to FINTRAC issued in April 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. Can You Choose the Alternative to Large Cash Transaction Reports?
  3. Report to FINTRAC About the Business Client
  4. List to be Maintained
  5. Comments
  6. How to Contact FINTRAC
  • Financial Entity Alternative to Large Cash Transaction Reports - Types of Businesses for Clients that are Corporations
  • NAICS Sector Code 22 Utilities
  • NAICS Sector Codes 44-45 Retail Trade
  • NAICS Sector Code 481 Air Transportation
  • NAICS Subsector Code 482 Rail Transportation
  • NAICS Subsector Code 485 Transit and Ground Passenger Transportation
  • NAICS Industry Code 51322 Cable and Other Program Distribution
  • NAICS Industry Code 51331 Wired Telecommunications Carriers
  • Colleges and Universities (NAICS Industry Codes 61121 and 61131)
  • Content of the Financial Entity Business Client Report
  • Can Your Client be Considered for the Alternative to Large Cash Transaction Reports?
  • Examples of how to Apply the Conditions in Considering the Alternative to Large Cash Transaction Reports
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Guideline 9: Alternative to Large Cash Transaction Reports to FINTRAC (PDF version, 187 KB)

1. General

If you are a financial entity (such as a bank, credit union, caisse populaire, trust and loan company, a financial services cooperative (in the province of Quebec) or a credit union central (in all other provinces), or an agent of the Crown that accepts deposit liabilities), you have to report large cash transactions to the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC). The same is true for other reporting entities, such as securities dealers, money services businesses, etc. However, as a financial entity, you may be able to choose an alternative to sending large cash transaction reports about transactions for certain of your clients that are corporations. This is not available to any other reporting person or entity.

If you are a financial entity, this guideline has been prepared by FINTRAC to help you submit alternative to large cash transaction reports. It explains what criteria have to be met before you can choose the alternative to large cash transaction reports and what is involved in making this choice. It also explains what type of alternative to large cash transaction reports have to be sent to FINTRAC, and what information has to be included in these reports.

This guideline uses plain language to explain the most common reporting situations under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (the 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. For more information about money laundering, terrorist financing or other requirements under the Act and Regulations, 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 these guidelines, several references are provided to additional information that may be available on external Web sites. FINTRAC is not responsible for the accuracy or reliability of the information contained on those external Web sites.

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.

2. Can You Choose the Alternative to Large Cash Transaction Reports?

2.1 Which clients can you consider?

If you are a financial entity you can choose the alternative to large cash transaction reports regarding a clients business transactions that would otherwise require such a report if all of the following conditions are met:

  • your client is a corporation that carries on business within those types of businesses that can be considered for purposes of the alternative to large cash transaction reports, as described in Appendix 1. You cannot choose the alternative to large cash transaction reports for any client carrying on a pawnbroking business, or for any client whose principal business is the sale of vehicles, vessels, farm machinery, aircraft, mobile homes, jewellery, precious gems or metals, antiquities or art. There are some other exclusions, and these are noted in Appendix 1;
  • your client has had an account with you for at least 24 months or, immediately before opening an account with you, your client has had an account with another financial entity for at least 24 months. This means that a client who had an account for 12 months with you and 12 months with another financial entity would not meet this condition;
  • you have records to show that your client deposited $10,000 or more in cash into that account at least twice weekly, on average, for the preceding 12 months. This means your client has to have made at least 104 such deposits over the preceding 12 months;
  • your clients cash deposits are consistent with the usual practice of this business; and
  • you have taken reasonable measures to determine the source of the cash for those deposits.

Once you have determined that all of the conditions outlined above are met for any one of the corporations business accounts, you can choose the alternative to large cash transaction reports for that business. This would apply to all the accounts of that business.

If your client is a corporation with more than one business for income tax purposes, the alternative to large cash transaction reports has to be considered separately for each distinct business. As explained above, you cannot choose the alternative to large cash transaction reports if any of the corporation's businesses relate to pawnbroking, or if the corporation's principal business is the sale of vehicles, vessels, farm machinery, aircraft, mobile homes, jewellery, precious gems or metals, antiquities or art, or any other exemptions noted in Appendix 1.

If several corporations operate the same businesses, each corporation has to be considered separately. For example, if you have accounts with a corporation that operates a retail store and you also have accounts with other corporations who have bought franchises of that retail store, you would have to consider each corporation separately for purposes of the alternative to large cash transaction reports.

For additional information to help you determine whether you can choose the alternative to large cash transaction reports for a client, see the following appendices:

  • Appendix 3 presents the conditions in a question-based flow.
  • Appendix 4 outlines examples of situations for clients for whom you could or could not consider the alternative to large cash transaction reports.

2.2 How to choose the alternative to large cash transaction reports

If all the conditions listed in subsection 2.1 are met and you choose the alternative to large cash transaction reports for a client, you have to do the following:

  • send a report to FINTRAC about the business client for whom you are making this choice (see section 3);
  • report certain changes about the business client to FINTRAC (see section 3);
  • verify annually that conditions are met for each client and report this to FINTRAC (see section 3); and
  • maintain a list with the name and address of each client for whom you have chosen not to report large cash transactions (see section 4).

Once you become aware that any of the conditions are no longer being met for a client for whom you had chosen the alternative to large cash transaction reports, as of the time you become aware, you must resume reporting large cash transactions conducted for that client.

3. Report to FINTRAC About the Business Client

If all the conditions listed in subsection 2.1 are met and you choose the alternative to large cash transaction reports for a client, you have to send a report to FINTRAC with information about the business client for whom you are choosing this. This is to provide information about the client, including name and address, nature of the clients business, incorporation number and incorporation jurisdiction, as well as the total monetary value and number of cash deposits for the clients business over the preceding 12 months.

Until this report, called the Financial Entity Business Client Report, is sent to FINTRAC, you have to report any large cash transactions for the client as explained in Guideline 7: Submitting Large Cash Transaction Reports to FINTRAC.

If you use the batch file transfer mechanism for sending reports to FINTRAC, read subsection 3.1 to find out how to make this report. If you do not use the batch file transfer mechanism read subsection 3.2.

3.1 If you use batch transmission software

If you use the batch file transfer reporting mechanism, use your batch transmission software to submit your Financial Entity Business Client Report to FINTRAC. You will have to notify FINTRAC that you will use your batch transmission software to send this type of report. If you do not already transmit reports this way, see subsection 3.2.

For your first Financial Entity Business Client Report, follow these steps:

Step 1 - From the reporting section of FINTRAC's Web site, download and save a copy of the Financial Entity Business Client Report spreadsheet for batch transmission.

Step 2 - Complete the Financial Entity Business Client Report spreadsheet. Indicate that you are completing an original report by entering O in the report type field above Part A. For more information on how to fill out the fields, refer to Appendix 2. Do not complete Part D, as this is only applicable to the annual verification explained in subsection 3.4.

Step 3 - Once you have completed the spreadsheet, save it in its default format (i.e., xls, qpw or wk4) for future reference and updating.

Step 4 - Before you submit the file to FINTRAC, save it again in a comma separated value format. Only this copy is to be sent to FINTRAC.

To save your file in a comma separated value format, open the completed Financial Entity Business Client Report spreadsheet. Go to the File menu and select Save As. In the File name: section, follow the format PKIUSERID_YYYYMMDD_##.csv, and substitute each element as follows:

  • PKIUSERID is your 10-digit PKI User ID number issued by FINTRAC.
  • YYYYMMDD is the date the file is sent to FINTRAC (i.e., the current date).
  • ## is a two-digit number to differentiate between reports. Use 01 unless you send more than one Financial Entity Business Client Report within the same day. If you do send more than one report in the same day, then increment ## accordingly (i.e., 01, 02, etc.).
  • csv is the file extension of the spreadsheet to be submitted (i.e., for a comma separated value or comma delimited format, the extension is csv).

When selecting which file type to save as, choose one of the following:

  • In Microsoft Excel, select CSV (comma delimited) (*.csv).
  • In Quattro Pro, select CSV (Comma delimited).
  • In Lotus 1-2-3, select Comma Separated Value (CSV).

Step 5 - Once the file has been saved in a comma separated value format, submit it to FINTRAC with your batch transmission software provided to you by FINTRAC. Remember that you have to first notify FINTRAC that you will be sending this type of report by batch.

Use the batch report channel called Alt to LCTR (alternative to large cash transaction reports) to drop the spreadsheet for transmission. Please refer to the Batch Transmitting Guide for more information about the transmission of files. This is available in the reporting section of FINTRAC's Web site at http://www.fintrac-canafe.gc.ca.

You will be notified if the transmission of the file was successful. However, you will not receive a secondary acknowledgement about processing results.

3.2 If you do not use batch transmission software

If you do not use the batch file transfer reporting mechanism, you can submit your Financial Entity Business Client Report to FINTRAC by fax. Once you have completed the spreadsheet, you should save it for future reference, updates, additions or verifications.

For your first Financial Entity Business Client Report, follow these steps:

Step 1 - From the reporting section of FINTRAC's Web site download and save a copy of the Financial Entity Business Client Report spreadsheet for non-batch transmission.

Step 2 - Complete the Financial Entity Business Client Report spreadsheet. For more information on how to fill out the fields, refer to Appendix 2. Do not complete Part D, as this is only applicable to the annual verification explained in subsection 3.4.

Step 3 - Once you have completed the spreadsheet, save it for future reference, updates, additions or verifications. As this file is for your own records, the file naming convention is up to you.

Step 4 - Print the file and send it to FINTRAC by fax at 1-866-226-2346.

3.3 Report new business clients

If you have sent a Financial Entity Business Client Report before and you need to add new business clients, start with the spreadsheet you saved previously. In the previously submitted report, indicate that this is an update by entering U in the report type field above Part A. To the left-hand side of field B1, enter A in the Update Indicator column for each new client. All other existing clients that were reported in the previous version of the saved spreadsheet must also be shown with no information entered in the Update Indicator column.

3.4 Report certain changes about the business client

Once the information about business clients described above has been sent to FINTRAC, if there are any changes to the clients name or address, the nature of the clients business or the business incorporation number, you have to report the change to FINTRAC. This has to be done within 15 calendar days after the change is made.

In this context, a change in the nature of the clients business includes anything that would cause you to revise the description of the nature of the business or the North American Industry Classification System (NAICS) code indicated for the client in your financial entity business client report. For more information about NAICS, refer to Appendix 1.

If there is a change to the nature of the business, you need to ensure the business is still within those types of businesses described as eligible in Appendix 1.

To report these types of changes to FINTRAC, make the change required to your saved spreadsheet described in Step 3 of subsection 3.1 or 3.2. Indicate that this is an update to a previously submitted report by entering U in the report type field above Part A. Also, enter C in the Update Indicator column to the left of field B1 for each business whose information is being changed. All other existing clients that were reported in the previous version of the saved spreadsheet must also be shown with no information entered in the Update Indicator column. Do not complete Part D, as this is only applicable to the annual verification explained in subsection 3.4.

Re-save the spreadsheet and submit it in its entirety to FINTRAC, according to the batch transmission or fax instructions that apply to you. Repeat this process any time you have to report a change.

For more information about this report, see Appendix 2.

If you discover that a client no longer meets the criteria described in subsection 2.1, you must remove them from your alternative to large cash reports list. You do not have to report to FINTRAC that you have removed a client from your list. However, you must resume reporting any large cash transactions conducted for that client after you discovered that the criteria are no longer met. Delete the information about any removed clients from the spreadsheet before you send your next update or your next annual verification to FINTRAC.

3.5 Annual verification

Once you have chosen the alternative to large cash transaction reports, you have to verify at least once every 12 months that all the conditions listed in subsection 2.1 are still met for each client. Once this is done, you have to complete Part D of your Financial Entity Business Client Report and send it to FINTRAC to provide the name of your senior officer who has confirmed that the conditions are still being met for a particular client.

To do this, you will need to start with your latest saved copy of your spreadsheet (as described in Step 3 of subsection 3.1 or 3.2 or in subsection 3.3). Indicate that this is an annual verification by entering a V in the report type field above Part A. Also, enter V in the Update indicator column to the left of field B1 for each business whose information is being verified and complete Part D for each one.

Please do not include any new business clients and do not make any changes to information in Parts A, B or C on the report at the time of your annual verification. If you need to add new business clients or make changes, do so by submitting the related information as an update as described in subsection 3.3.

Re-save the spreadsheet and submit it in its entirety to FINTRAC, according to the batch transmission or fax instructions that apply to you. Repeat this process any time you have to report annual verification for a business client.

While conducting your annual verification for a particular client, if you discover that the client no longer meets the criteria described in subsection 2.1, delete the information about that client from the spreadsheet before you send your annual verification to FINTRAC. As explained above, once you become aware that the criteria are no longer met for a client, you must resume reporting any large cash transactions conducted for that client as of that time.

4. List to be Maintained

In addition to the information you send to FINTRAC in the reports described in section 3, you must maintain a list with the name and address of each client for whom you have chosen this alternative to large cash transaction report.

You can keep this list in paper form, or in a machine-readable or electronic form, as long as a paper copy can be readily produced. You can use your copy of the spreadsheet for this purpose.

The reports that you send to FINTRAC are not to seek approval for the clients on your alternative to large cash transaction list. You are responsible for making sure that each client meets the criteria described in subsection 2.1. If you discover that any clients on your list no longer meet these criteria, you must remove them from your list immediately and report large cash transactions for those clients.

5. 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.

6. How to Contact FINTRAC

For further information on FINTRAC and its activities, and report submission, please go to FINTRAC's Web site (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