Politically exposed persons and heads of international organizations guidance for life insurance companies, brokers and agents


May 2021

This guidance comes into effect on June 1, 2021.

Life insurance companies, brokers and agents have politically exposed persons (PEPs) and heads of international organizations (HIOs) requirements under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA) and associated Regulations.

References to PEPs in this guidance include both foreign and domestic PEPs, unless otherwise specified.   

This guidance only describes the PEP and HIO obligations of life insurance companies, brokers and agents under the PCMLTFA and associated Regulations. If you are a life insurance company, broker or agent that offers loans or prepaid payment products to the public, or maintains related loan or prepaid payment product accounts (PPPA), you are considered to be a financial entity for those activities. You can find financial entities' PEP and HIO obligations in the Politically exposed persons and heads of international organizations guidance for account-based reporting entity sectors.

This guidance answers the following questions:

  1. When must I make a PEP, HIO, family member or close associate determination?
  2. What are the exceptions to making a PEP, HIO, family member or close associate determination?
  3. What measures do I need to take after making a PEP, HIO, family member or close associate determination?
  4. What PEP, HIO, family member or close associate records do I need to keep?

For more information about your obligations in relation to determining who are PEPs, HIOs, and persons related or closely associated to them, and clarity on related terminology and considerations, such as who is considered a member of senior management, see FINTRAC's Politically exposed persons and heads of international organizations guidance.

**Note: Throughout this guidance, all references to dollar amounts (such as $100,000) are in Canadian dollars.

1. When must I make a PEP, HIO, family member or close associate determination?

You must take reasonable measures to make a PEP, HIO, family member or close associate determination with respect to the following transactions:

Receipt of a lump-sum payment in the amount of $100,000 or more in funds or an amount of VC equivalent to $100,000 or more

You must take reasonable measures to determine whether a person who makes a lump-sum payment in the amount of $100,000 or more in funds or an amount of VC equivalent to $100,000 or more in respect of an immediate or deferred annuity or of a life insurance policy is a PEP, HIO, or family member or close associate of one of these persons.Footnote 1

Remit an amount of $100,000 or more in funds or an amount of VC equivalent to $100,000 or more to a beneficiary

You must take reasonable measures to determine whether a beneficiary to whom you will remit an amount of $100,000 or more in funds or an amount of VC equivalent to $100,000 or more over the duration of an immediate or deferred annuity or a life insurance policy is a PEP, HIO, or family member or close associate of one of these persons.Footnote 2

2. What are the exceptions to making a PEP, HIO, family member or close associate determination?

You do not have to make a PEP, HIO, family member or close associate determination in the following situations:

  1. You do not need to make a PEP determination, if you already determined that a person is a foreign PEP or a family member of a foreign PEP.Footnote 3
  2. You do not need to determine if a person that is a member of a group plan account is a PEP, HIO, or a family member or close associate of a PEP or HIO, if:Footnote 4
    • the person's member contributions are made by the sponsor of the plan or by payroll deduction; and 
    • the identity of the entity that is the plan sponsor has been verified in accordance with subsection 109(1) or 112(1) of the Proceeds of Crime (Money Laundering) and Terrorist Financing Regulations.
  3. You do not need to make a PEP or HIO determination when you are dealing in reinsurance.Footnote 5

3. What measures do I need to take after making a PEP, HIO, family member or close associate determination?

Foreign PEPs

Receipt of a lump-sum payment in an amount of $100,000 or more in funds or an amount of VC equivalent to $100,000 or more

When you receive a lump-sum payment in an amount of $100,000 or more in funds or in an amount of VC equivalent to $100,000 or more in respect of an immediate or deferred annuity or a life insurance policy for a person that you determine to be a foreign PEP, or family member or close associate of a foreign PEP, you must:Footnote 6

Remit an amount of $100,000 or more in funds or an amount of VC equivalent to $100,000 or more to a beneficiary

When you remit an amount of $100,000 or more in funds or an amount of VC equivalent to $100,000 or more to a beneficiary over the duration of an immediate or deferred annuity or a life insurance policy, and you determine that the beneficiary is a foreign PEP, or family member or close associate of a foreign PEP, you must:Footnote 7

Domestic PEPs

Receipt of a lump-sum payment in an amount of $100,000 or more in funds or an amount of VC equivalent to $100,000 or more

When you receive a lump-sum payment in an amount of $100,000 or more in funds or an amount of VC equivalent to $100,000 or more in respect of an immediate or deferred annuity or a life insurance policy and you determine that a person is a domestic PEP, HIO, or family member or close associate of a domestic PEP or HIO, and based on your risk assessment, you consider there to be a high risk of a money laundering (ML) or terrorist activity financing (TF) offence being committed, you must:Footnote 8

Remit an amount of $100,000 or more in funds or an amount of VC equivalent to $100,000 or more to a beneficiary

When you are to remit an amount of $100,000 or more in funds or an amount of VC equivalent to $100,000 or more to a beneficiary over the duration of an immediate or deferred annuity or a life insurance policy, and you determine that the beneficiary is a domestic PEP, HIO, or family member or close associate of a domestic PEP or HIO, and based on your risk assessment, you consider there to be a high risk of an ML or TF offence being committed, you must:Footnote 9

Prescribed timing for taking measures

Receipt of a lump-sum payment of an amount of $100,000 or more in funds or an amount of VC equivalent to $100,000 or more

You have 30 days after the day on which a lump-sum payment in an amount of $100,000 or more in funds or an amount of VC equivalent to a $100,000 or more is conducted to:Footnote 10

Remit an amount of $100,000 or more in funds or an amount of VC equivalent to $100,000 or more to a beneficiary

Before you first remit any amount of the $100,000 or more in funds or any part of the amount of VC equivalent to $100,000 or more to the beneficiary of an immediate or deferred annuity or a life insurance policy, you must:Footnote 11

4. What PEP, HIO, family member or close associate records do I need to keep?

When you review one of the above-mentioned transactions (see When must I make a PEP or HIO determination) for which you have determined that a person is a PEP, HIO, or family member or close associate of a PEP or HIO, you must keep a record of:Footnote 12

You may also want to include in the record the nature of the relationship between a family member or close associate and the PEP or HIO, as applicable.

Retention: You must keep these records for at least 5 years from the day on which the last business transaction was conducted.Footnote 13

Date Modified: