Notice on forthcoming regulatory amendments and flexibility

On June 1, 2021, a number of regulatory amendments will come into force which will create or change obligations for reporting entities (REs) that are subject to the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (the Act). These amendments can be found here:

These amendments include:

FINTRAC expects REs to comply with the amendments, but understands that many may face challenges in meeting these new and changing obligations because of pandemic-related stresses on their businesses. Given the scope and magnitude of the changes, and the impact on both FINTRAC and REs, we will exercise flexibility when assessing and enforcing the Regulations with respect to the measures described below.

These measures were developed in collaboration with the Department of Finance Canada and are being exercised on an exceptional and transitionary basis in order to respond to concerns from REs and to give them, as well as FINTRAC, the time needed to implement the necessary changes. FINTRAC will continue to assess and enforce the Act and associated Regulations in accordance with the current and new obligations with consideration for the flexible measures outlined in this notice until updates to the current reporting forms are implemented by FINTRAC.

As part of FINTRAC's ongoing support to REs, relevant guidance related to the provisions found in the amended Regulations will be published on the website in advance of June 1, 2021.

What are the flexible measures?

As of June 1, 2021, FINTRAC will exercise flexibility in assessing and enforcing compliance with certain record keeping and reporting obligations related to the amended Regulations, as described by the measures below. FINTRAC will expect REs to continue submitting reports in the same manner as they do currently, until the updates to the current reporting forms are implemented.

**NOTE: The below measures will not apply to the new virtual currency obligations; FINTRAC expects REs to implement all virtual currency related obligations, as applicable, starting on June 1, 2021.

**NOTE: "Non-mandatory information" in measures #4 and #5 in this Notice applies to information that meets all of the following criteria:

  1. Information related to fields that are not marked with an asterisk ("*") in the amended Schedules,
  2. Information that cannot be entered into the current reporting forms, and
  3. Information that does not have a corresponding record keeping obligation in the amended Regulations.

The flexible measures are as follows:

  1. Use of current reporting forms and systems for Large Cash Transaction Reports (LCTRs), Electronic Funds Transfer Reports (EFTRs), Casino Disbursement Reports (CDRs) and Suspicious Transaction Reports (STRs):
    • REs are expected to continue submitting reports using the current reporting forms and systems while FINTRAC updates its reporting forms. This additional time is to allow REs to update their processes and systems in accordance with the amended Regulations. FINTRAC will continue to engage REs on the development of the reporting forms.
    • REs will not be expected to aggregate and submit SWIFT and non-SWIFT transactions in one reporting form until the updated EFT reporting forms are implemented.
  2. Aggregating multiple transactions based on the beneficiary for LCTRs and EFTRs (under the 24-hour rule):
    • The current LCTR and EFTR forms do not allow REs to aggregate information based on the beneficiary, which are required under the amended Regulations. FINTRAC will expect REs to continue complying with the reporting and record keeping obligations that are currently in force, in accordance with their current policies and procedures, until updated reporting forms are implemented.
  3. Aggregating transactions of $10,000 or more with transactions of less than $10,000 for LCTRs, EFTRs and CDRs (under the 24-hour rule):
    • FINTRAC's current LCTR, EFTR and CDR forms do not allow REs to submit a report that combine aggregated transactions of less than $10,000 made within 24 consecutive hours that total $10,000 or more with a transaction of $10,000 or more. Until the updated reporting forms are implemented, REs are expected to continue aggregating according to the guidance published on the website.
    • More specifically, FINTRAC expects REs to continue submitting a report for each  transaction of $10,000 or more (no 24-hour rule), and to submit a report of two or more transactions of less than $10,000 made within 24 consecutive hours that total $10,000 or more (applying the 24-hour rule).
    • REs may continue to aggregate transactions on either a rolling or static basis until the updated reporting forms are implemented by FINTRAC.
  4. Application of reasonable measures to obtain reporting information for non-mandatory information for LCTRs, EFTRs, and CDRs:
    • FINTRAC will be flexible when assessing whether an RE took reasonable measures to obtain non-mandatory information. FINTRAC will continue to expect REs to have processes in place to obtain non-mandatory information, which should be explained within their policies and procedures.
    • For further clarity, FINTRAC expects REs to take steps to collect information related to fields that are not marked with an asterisk ("*") in the amended Schedules. These steps may include asking clients for this information, or retrieving information that is already available to them, including information held in non-digital formats.
    • FINTRAC encourages REs to continue providing this information in STRs when it is relevant to the determination of reasonable grounds to suspect money laundering and/or terrorist activity financing, as it relates to the facts, context, and indicators of the suspicion in Part G of the report.
    • FINTRAC also encourages REs to continue providing this information in Part B of the Terrorist Property Report (TPR).
  5. Reporting and record keeping of non-mandatory information for existing reports:
    • FINTRAC will be flexible when assessing whether non-mandatory information related to certain fields in the amended Schedules were reported and kept in a record. Examples include, but are not limited to, the following fields:
      1. Type of device used by person who makes request online
      2. Number that identifies device
      3. User name
      4. Internet Protocol address used by device
      5. Date and time of online session in which request is made
    • FINTRAC encourages REs to continue providing this information in STRs when it is relevant to the determination of reasonable grounds to suspect money laundering and/or terrorist activity financing, as it relates to the facts, context, and indicators of the suspicion in Part G of the report.
    • FINTRAC also encourages REs to continue providing this information in Part B of the TPR.

FINTRAC will consider these measures when assessing REs' compliance with the amended Regulations after June 1, 2021 and until the updated reporting forms are implemented.

How will REs be assessed from June 1, 2021 while the measures are in place?

FINTRAC will assess REs with a focus on current obligations, which will still be in force after June 1, 2021, and on the new provisions from the amended Regulations to which the above measures will not be applied. While FINTRAC expects REs to continue using the current reporting forms after June 1, 2021, and until updated reporting forms are implemented, it is understood that this may create inconsistencies for certain new obligations. FINTRAC will continue to be reasonable when assessing REs, with consideration for the above measures, while REs update their internal processes and systems. To support REs, FINTRAC will maintain relevant guidance on its website.

During this transitionary period, FINTRAC may identify areas or issues that fall under the flexible measures which require further attention as part of an examination. Where this is the case, FINTRAC will continue to be reasonable, fair and balanced in its assessments and may include those areas as "observations" in its findings letter sent following an examination.

Additionally, FINTRAC expects RE's effectiveness testing to be conducted with a focus on obligations in force at the time this Notice is published, and that will still be in force after June 1, 2021, as well as the new provisions to which the above measures will not apply.

When will the flexible measures end?

The above listed measures are applicable until updates to the current reporting forms are implemented by FINTRAC. The following forms will be updated:

FINTRAC will inform REs on the forms' rollout strategy and testing period, which will be published on the website. We will also inform REs when the reporting forms are implemented by FINTRAC and the flexible measures no longer apply.

Date Modified: