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

June 2017

Politically exposed persons and heads of international organizations – Life insurance companies, brokers and agents

June 2017

A politically exposed person (PEP) or the head of an international organization (HIO) is a person entrusted with a prominent position that typically comes with the opportunity to influence decisions and the ability to control resources. The influence and control a PEP or HIO has puts them in a position to impact policy decisions, institutions and rules of procedure in the allocation of resources and finances, which can make them vulnerable to corruption.

Corruption is an international issue that impacts all countries, so the Financial Action Task Force (FATF) has recommended that all countries consider domestic as well as foreign politically exposed persons and heads of international organizations as part of the approach to combatting money laundering and the financing of terrorist activities. The FATF references the United Nations Convention against Corruption (UNCAC) which defines PEPs as "individuals who are, or have been, entrusted with prominent public functions and their family members and close associates".

Transparency International is an organization that operates internationally with a mandate to stop corruption and promote transparency. It can be a source of information to learn more about corruption and the potential vulnerability of persons who hold prominent positions.

Corruption can be defined simply as the misuse of public power for private benefit. Internationally, as well as within Canada's own anti-money laundering and anti-terrorist financing legislation, it is important to understand that the possibility for corruption exists, and that politically exposed persons or heads of international organizations can be vulnerable to carrying out, or being used for, money laundering or terrorist activity financing offences.

Part of knowing your clients is determining whether a person is a foreign PEP, a domestic PEP, a HIO, or a family member or close associate of one of these people.

The reporting entities with these obligations include financial entities, securities dealers, money services businesses and life insurance companies. This guidance is for life insurance companies, broker and agents who have to make a PEP or HIO determination in relation to lump-sum payments.

You must take reasonable measures to determine whether a person who makes a lump-sum payment of $100,000 or more towards an immediate or deferred annuity or life insurance policy, on their own behalf or at the instruction of someone else, is a foreign PEP, a domestic PEP, a HIO, or a family member or close associate of any of these.

While foreign PEPs, their family members and their close associates must automatically be treated as high-risk clients, you have an obligation to assess a domestic PEP, a HIO, or the family member or close associate of a domestic PEP or HIO to determine if the person poses a high risk for committing a money laundering or a terrorist activity financing offence. If you assess the risk to be high, then the person must be treated as a high-risk client.

All high-risk clients are subject to your policies and procedures for high-risk clients, outlined as a requirement of the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA). For high-risk PEPs, HIOs, their family members and close associates, you have specific obligations to keep records, establish source of funds, and obtain senior management review of the transaction.

If you have already determined that a person is a foreign PEP or the family member of a foreign PEP, in accordance with the Proceeds of Crime (Money Laundering) and Terrorist Financing Regulations (PCMLTFR), you are not required to make this determination again. This guidance and the additional obligations related to PEPs and HIOs will be in force as of June 17, 2017.

What reasonable measures should I use to make the determination?

You must take reasonable measures to determine if a person is a foreign PEP, a domestic PEP, a HIO, or the family member or close associate of one of these, if the person makes a lump-sum payment of $100,000 or more towards an immediate or deferred annuity or life insurance policy, on their own behalf or at the instruction of someone else. You must also take reasonable measures to establish the source of funds for the lump-sum transaction for these persons.

Reasonable measures include, but are not limited to, one or more of the following actions:

asking the client;
conducting an open source search; or
consulting a source of commercially available information.

You may consider using more than one reasonable measure to make a determination.

A reasonable measure is a proactive effort because you are required to take a measure to make the determination. As such, you must have a process in place to make this determination. For example, your process might be that you ask every person, at the time of the transaction, and then act on the response you receive.

Who is a foreign PEP?

A foreign PEP is a person who holds or has held one of the following offices or positions in or on behalf of a foreign state:

head of state or head of government;
member of the executive council of government or member of a legislature;
deputy minister or equivalent rank;
ambassador, or attaché or counsellor of an ambassador;
military officer with a rank of general or above;
president of a state-owned company or a state-owned bank;
head of a government agency;
judge of a supreme court, constitutional court or other court of last resort; or
leader or president of a political party represented in a legislature.

These persons are foreign PEPs regardless of citizenship, residence status or birth place.

A person determined to be a foreign PEP, is forever a foreign PEP.

Who is a domestic PEP?

A domestic PEP is a person who holds — or has held within the last 5 years — a specific office or position in or on behalf of the Canadian federal government, a Canadian provincial government, or a Canadian municipal government:

Governor General, lieutenant governor or head of government;
member of the Senate or House of Commons or member of a legislature;
deputy minister or equivalent rank;
ambassador, or attaché or counsellor of an ambassador;
military officer with a rank of general or above;
president of a corporation that is wholly owned directly by Her Majesty in right of Canada or a province;
head of a government agency;
judge of an appellate court in a province, the Federal Court of Appeal or the Supreme Court of Canada;
leader or president of a political party represented in a legislature; or
mayor*.

* In line with legislation across Canada, municipal governments include cities, towns, villages and rural (county) or metropolitan municipalities. As such, a mayor is the head of a city, town, village, or rural or metropolitan municipality, regardless of the size of the population.

A person ceases to be a domestic PEP 5 years after they have left office.

Who is the head of an international organization?

The head of an international organization is a person who is either:

the head of an international organization established by the governments of states; or
the head of an institution established by an international organization.

When we refer to the head of an international organization or the head of an institution established by an international organization we are referring to the primary person who leads that organization, for example a president or CEO.

There is no requirement for an institution established by an international organization to operate internationally. It is possible that an institution that has been established by an international organization only operates domestically, or in one jurisdiction.

You need to use reasonable measures to determine if the person is the head of an international organization or the head of an institution set up by an international organization.

Once a person is no longer the head of an international organization, or the head of an institution established by an international organization, that person is no longer a HIO.

What is an international organization?

An international organization is an organization set up by the governments of more than one country. The key to determining whether you are dealing with a HIO is to determine how the organization was established. If the organization was established by means of a formally signed agreement between the governments of more than one country, then the head of that organization is a HIO. The existence of these organizations is recognized by law in their member countries but the organizations are not seen to be resident organizations of any one member country.

Certain organizations clearly meet this definition, but others may take more research before coming to a determination. Examples of international organizations, and institutions established by international organizations, can be found in Annex A of this guidance.

Why is it important to consider the family member or close associate of a PEP or HIO?

It is critical to consider family members or close associates of PEPs and HIOs as part of your PCMLTFA obligations. It is an established trend that criminals carrying out, or directing, criminal activity will distance themselves from the proceeds of that crime as much as possible until they have laundered the money. FINTRAC has observed that many criminals rely on family members or other personal relationships to conduct transactions on their behalf in order to create this distance until they can establish a safe way to spend these assets.

You may, therefore, not see financial transactions or joint policies between the PEP or HIO and their family members or close associates. This is because the purpose of laundering funds is to protect the identity of the criminals and they may avoid a direct link with the individuals involved in conducting any transaction on their behalf. This is why FINTRAC's guidance references other types of associations to consider, beyond a transaction or joint policy, when making a close associate or family member determination.

Who is considered to be the family member of a PEP or a HIO?

If a person is a foreign PEP, domestic PEP or HIO, then certain family members must also be regarded as PEPs or HIOs. These family members are:

their spouse or common-law partner;
their child;
their mother or father;
the mother or father of their spouse or common-law partner; and
a child of their mother or father (sibling).

Is the niece of a PEP considered a family member?

No. A person is a PEP or HIO because of the position that they hold or have held. The family members of the PEP or HIO that are specifically listed in this guideline are also regarded as PEPs or HIOs. If John is a PEP, then John's brother, Sam, is considered a PEP. But Sam's daughter (John's niece) is not determined to be a PEP under the PCMLTFA.

Is the step-child of a PEP or the step-child of a PEP's mother or father considered a family member?

A step-family relationship does not fall under the definition of a family member unless they were legally adopted. For example, if Helen is a domestic PEP, and she has legally adopted Sarah, her step-daughter through marriage, then Sarah is the child of a domestic PEP.

Similarly, if a marriage includes step-siblings the siblings are not considered family members if they were not legally adopted by the step-parent. For example, Angela marries a foreign PEP, and each has a daughter from a previous marriage. Neither Angela, nor the foreign PEP, adopts the other's daughter, so the two daughters are not considered as siblings to each other. Only Angela (legal spouse) and the foreign PEP's biological daughter need to be considered as family members of a foreign PEP.

Who is considered to be a close associate of a PEP or a HIO?

You must take reasonable measures to determine whether a person who makes the lump-sum payment of $100,000 or more is a close associate of a foreign PEP, a domestic PEP or a HIO.

A close associate can be an individual who is closely connected to a PEP or HIO for personal or business reasons. The term "close associate" is not intended to capture every person who has been associated with a PEP or HIO.

A person determined to be a close associate of a foreign PEP must be treated as a high-risk client.

However if you determine that a person is a close associate of a domestic PEP or HIO, you must conduct a risk assessment of that close associate. If you determine that a close associate is a high risk for a money laundering or terrorist activity financing offence, then you must treat that person as a high-risk client.

Some examples of a close association for personal or business reasons include a person who is:

joint on a policy where one of the holders may be a PEP or HIO;
an owner who makes a deposit of $100,000 or more and the payee is a PEP or HIO;
business partners with, or who beneficially owns or controls a business with, a PEP or HIO;
in a romantic relationship with a PEP or HIO, such as a boyfriend, girlfriend or mistress;
involved in financial transactions with a PEP or a HIO;
a prominent member of the same political party or union as a PEP or HIO;
serving as a member of the same board as a PEP or HIO; or
closely carrying out charitable works with a PEP or HIO.

The examples provided are only a sample of considerations to assist you in identifying close associates. Because a close associate is not meant to be every person associated to a PEP or HIO, you will need to have a means to determine if this is a close association you need to identify and treat as such.

You need to use reasonable measures to determine if a person is a close associate of a PEP or HIO. However, if you have actual knowledge of a close association, you must act on this, even if such association is not otherwise widely or publicly known.

The reasonable measures you take to identify a close association may include processes you have in place for other purposes such as media monitoring; the ongoing monitoring of your business relationships; questions you ask of your clients; access to a database that outlines associations; or a third party credible source that identifies these connections between a PEP or HIO and your client.

When do I make the determination?

As a life insurance company, broker or agent, the requirement for you to determine if a person is a PEP, a HIO, or their family member or close associate is triggered by that person making a lump-sum payment of $100,000 or more towards an immediate or deferred annuity or life insurance policy on their own behalf or at the instruction of someone else.

What do I do once the determination is made?

If you determine that the person is a foreign PEP, or a family member or close associate of a foreign PEP, you must also take reasonable measures to determine the source of the funds for the transaction and have a member of senior management review the transaction.

Within 30 days after the day of the transaction, you must take the reasonable measures to determine whether the person is a foreign PEP, or a family member or close associate of a foreign PEP, establish the source of the funds for the transaction and have a member of senior management review the transaction.
If you determine that the person is a domestic PEP, a HIO, or their family member or close associate, you must then perform a risk assessment of the person. If you determine that the person is a high risk for a money laundering or a terrorist financing offence, you must also take reasonable measures to determine the source of the funds for the transaction and have a member of senior management review the transaction.

Within 30 days after the day of the transaction, you must take the reasonable measures to determine whether the person is a domestic PEP, a HIO, or a family member or close associate of a domestic PEP or HIO, conduct the risk assessment, and, if applicable, establish the source of the funds for the transaction and have a member of senior management review the transaction.

Risk assessment of a PEP, HIO, family member, or close associate

If you determine that the person who makes the lump-sum payment of $100,000 or more is a foreign PEP, or a family member of, or person closely associated with a foreign PEP, you must consider that person as high-risk. As a high-risk client, you must proceed to establish the source of funds for the transaction, and have a member of senior management review the transaction.

If you determine that the person is a domestic PEP, a HIO, or a family member or close associate of a domestic PEP or HIO, your risk assessment must determine if this person is a high-risk for a money laundering or a terrorist activity financing offence. Should you determine that a domestic PEP, a HIO, or a family member or close associate of a domestic PEP or HIO is high risk, you must take reasonable measures to establish the source of the funds for the transaction and have senior management review the transaction.

You must consider that:

foreign PEPs, and their family members and close associates are always high-risk clients;
the risk assessment of domestic PEPs and HIOs, and their family members and close associates is needed as part of your risk-based approach;
the measures you put in place in respect of each client are based on the level of risk assigned.

What could make a domestic PEP, a HIO, their family member, or close associates high-risk?

To determine the level of risk for a domestic PEP or HIO, or the family member or close associate of a domestic PEP or HIO, you should consider the same indicators you already use to assess all of your clients. However, additional indicators may include:

the amount of time that has passed since the person held the position – after 5 years a person is no longer considered a domestic PEP, so you may consider the length of time that has passed since the person held the position as an indication of risk;
the organization or institution where the person held the position – there may be certain organizations that you determine are higher risk based on previously reported vulnerabilities to corruption;
if the person attempts to shield their identity to prevent detection;
the person makes use of intermediaries and this does not match the normal business practice;
the person seems uncomfortable providing information about source of wealth or source of funds
the type of transaction(s) conducted or expected to be conducted by your client;
Transparency International identifies certain industries as more vulnerable to corruption;
a change in activity following their PEP, HIO, family member, or close associate status change;
the person provides information you find to be inaccurate or incomplete;
the person does not reveal additional positions they hold elsewhere.

Should you determine that a domestic PEP, a HIO, their family member or close associate is not a high risk, FINTRAC's expectation is that you will document this assessment as it supports how you will consider that person going forward, as per your compliance program's risk-based approach.

The documenting of an assessment can be done on a case-by-case basis or you could bucket or group your clients into categories of risk and treat these clients accordingly. In the course of a FINTRAC examination, you may be asked to demonstrate why a person meets the criteria of a particular risk category, so as to explain the way you are treating that person.

How do I establish the source of funds?

The requirement to establish the source of funds is linked to PEP and HIO clients that are determined to be high-risk. However, you may have a need to ask about the source of funds in the context of other obligations.

With respect to your high-risk PEP and HIO obligations, you must use reasonable measures to establish the source of funds used for the transaction. For example, you could ask the person or refer to information available about the transaction. If you determine that the transaction activity is not in line with the information you have about the source of funds, one of the measures you may use is to follow up with the person to determine if there are reasons for that. If the information remains inconsistent with what you may know about the person or you are not satisfied with the person’s response, and have reasonable grounds to suspect that the transaction is related to the commission or the attempted commission of a money laundering offence or of a terrorist activity offence, you must file a suspicious transaction report.

Who can review the transaction?

A member of senior management can review the transaction. A member of senior management means an individual who has:

authority to make and be held accountable for management decisions about transactions;
awareness of the money laundering or terrorist financing risks to which life insurance companies, brokers or agents are exposed; and
awareness and understanding of the concepts of PEP, HIO, family member, and close associate.

If you are a sole proprietor with no employees, agents or other individuals authorized to act on your behalf, you are considered the senior manager.

Do I need to keep a record about the PEP, HIO, family member, or close associate?

Yes. You must keep a record after you determine that a person is a foreign PEP, a high-risk domestic PEP, a high-risk HIO, or the high-risk family member or high-risk close associate of any of these AND senior management has reviewed the transaction. The information you have to record includes:

the office or position of the PEP or HIO;
the name of the organization or institution of the PEP or HIO;
the source of the funds, if known, that were used for the transaction;
the date you determined the individual to be a PEP, HIO, their family member or close associate;
the name of the member of senior management who reviewed the transaction, and
the date the transaction was reviewed.

You may also want to include in the record, the nature of the relationship between your client and the PEP or HIO, as applicable.

Retention: You must keep PEP and HIO account records for at least five years from the day the account to which they relate is closed.

Reasonable measures record

The regulations have been revised so that any time you are required to take reasonable measure you must keep a record if the reasonable measure was unsuccessful. A reasonable measure is unsuccessful when you do not obtain a response, such as a yes or no, so you are unable to make a conclusive determination. The record you need to keep for an unsuccessful reasonable measure must include:

the measure taken;
the date on which the measure was taken; and
the reason why the measure was unsuccessful.

Because the reasonable measures your organization takes must be outlined in your policies and procedures, this can form part of your unsuccessful reasonable measures record, or you could document, on a case-by-case basis, the measure taken in each record for unsuccessful reasonable measures.

For example you may document that you have an automated approach to run the names of persons who make a lump-sum payment of $100,000 or more against a commercial database that lists PEPs, HIOs, their family members and their associations. Similarly, your policies and procedures may indicate that you ask questions of any person who makes such a lump-sum payment. Since the reasonable measures your entity takes must be documented in your policies and procedures, this can form part of the record of unsuccessful reasonable measures. You then must document the reason why any reasonable measure was unsuccessful, and the date the reasonable measure was taken.

Should you take a measure that is not included in your policies and procedures, you would have to include details of that measure taken in your record of unsuccessful reasonable measures.

This obligation to document unsuccessful reasonable measures, however, applies to other obligations as well, such as establishing the source of funds.

Examples of documenting unsuccessful reasonable measures:

If, when a lump-sum payment of $100,000 or more is made, to determine if the person was a PEP or HIO, you called the person who made the payment and the person did not call you back, then your record would need to indicate the measure you took, the date you did this and the fact that the client did not respond.
If you ask a high-risk domestic PEP, who makes the lump-sum payment, to tell you the source of the funds for the transaction and the person does not want to specify the source, your record must indicate that you asked the person for the source of funds information, the date you did this and that the person refused to provide the information.

You have 30 days from the day of the transaction to take and document your reasonable measures.

There are two scenarios where you may want to consider an approach that allows you to clearly demonstrate that you are considering persons appropriately and in line with your compliance program's risk-based approach.

The record-keeping obligations apply to unsuccessful reasonable measures. There is no requirement to keep a record if you determine that a person is a domestic PEP, HIO, their family member or close associate, and assess that person as low risk. However, during a FINTRAC examination, you may be asked to demonstrate that you conducted the risk assessment for a domestic PEP and HIO in accordance with your risk-based approach.
If you receive a negative response to a reasonable measure taken to determine if a person is a PEP or HIO, or their family member or close associate, recording this response would show that a determination was carried out. During a FINTRAC examination, FINTRAC may ask you to demonstrate how you applied your policies and procedures for PEP or HIO obligations.

Examples of records you may consider keeping:

If you asked the person making the lump-sum payment of $100,000 or more if they were a domestic PEP or HIO, or a family member or close associate of one, and the person answered "yes", but you assessed the person as a low risk, then your record could indicate that you asked the person, and that you assessed the person is a low risk.
If you conducted an open source internet search and did not find any information to suggest that a person who made a lump-sum payment of $100,000 or more is a PEP or HIO, or a family member or close associate of one, then you could record the measure taken, and that the results did not suggest a PEP or HIO status for the person.

Risk-based approach considerations

You are already required to assess any potential threats and vulnerabilities to money laundering and terrorist financing to which your business is exposed.

As part of the overall assessment of client-risk you may want to consider offices or positions that are not prescribed to be those of a foreign or domestic PEP because you may deem these other offices or positions to also be vulnerable to being used for money laundering or the financing of terrorist activities.

You may also want to consider other international organizations, for example, organizations operating across multiple jurisdictions but not necessarily created by governments, if you think they could also be vulnerable to being used for money laundering or the financing of terrorist activities. Similarly, you are required to determine the head of an international organization, the primary person who leads that organization, but part of your risk assessment may indicate there are additional senior positions that you may want to consider because they also have the ability to make financial or contractual decisions for the entity.

As part of your risk assessment processes, you may determine that some individuals not prescribed as family members could be considered as a close associate of a PEP or HIO.

All of these considerations may impact the risk assessment of your client and serve to elevate the level of risk associated to that client.

Enhanced measures for high-risk clients

For high-risk clients, your compliance program must include enhanced measures to keep client identification information up to date and mitigate against the risks these high-risk clients may pose.

You could consider the following measures to monitor high-risk clients:

reviewing transactions on a schedule to identify those that management must approve;
preparing reports or performing more frequent reviews of reports that identify high-risk transactions;
flagging unusual activities and elevating your concerns as necessary;
setting business limits or parameters regarding transactions that would trigger early warning signals and require mandatory review;
reviewing transactions more frequently against suspicious transaction indicators relevant to the relationship.

There are additional measures you can take to mitigate the risk of all high-risk clients, which can include:

obtaining additional information on the client (e.g., occupation, assets, information available through public databases, Internet, etc.);
obtaining information on the source of funds or source of wealth of the client;
obtaining information on the reasons for intended or conducted transactions;
obtaining the approval of senior management to enter into or maintain the business relationship;
identifying patterns of transactions that need further examination;
increased monitoring of transactions of higher-risk products, services and channels;
establishing more stringent thresholds for ascertaining identification;
gathering additional documents, data or information, or taking additional steps to verify the documents obtained;
establishing transaction limits;
increasing awareness of high-risk activities and transactions;
increasing internal controls of high-risk business relationships;
obtaining the approval of senior management at the transaction level for products and services that are new for that client.

**Table 1 – Summary of PEP and HIO obligations**
Triggering Activity	Determination	How a determination is made	Obligations	Record Keeping
Lump-sum payment of $100,000 or more	Foreign PEP	Take reasonable measures to determine if the person is a foreign PEP, or a family member or close associate of a foreign PEP. If the determination is yes, you must carry out the associated obligations.	Action to take if a determination is made: Take reasonable measures to establish the source of funds for the transaction. Ensure that a member of senior management reviews the transaction.	You must record: the office or position of the PEP or HIO; the name of the organization or institution of the PEP or HIO; the source of the funds, if known, that were used for the transaction; the date you determined the individual to be a PEP, HIO, their family member or close associate; the name of the member of senior management who reviewed the transaction; and the date the transaction was reviewed. You may also want to include the nature of the relationship between your client and the PEP or HIO, as applicable.
Lump-sum payment of $100,000 or more	Domestic PEP or HIO	Take reasonable measures to determine if the person is a domestic PEP, a HIO, or their family member or close associate. If the determination is yes, AND you assess the client as a high risk for a money laundering or terrorist financing offence, you must carry out the associated obligations.

Note: If you have made a successful determination for a PEP, HIO or their family member or close associate, you must complete the associated obligations within 30 days after the day of the transaction.

Note: A person determined to be a foreign PEP is forever a foreign PEP. A person ceases to be a domestic PEP 5 years after they have left the office. Once a person is no longer the head of an international organization, that person is no longer a HIO.

Annex A: Examples of international organizations and institutions established by international organizations

African Development Bank Group (Established by the Agreement Establishing the African Development Bank)

Arctic Council (Established by the Declaration on the Establishment of the Arctic Council)

Asian Development Bank (Established by the Agreement Establishing the Asian Development Bank – ADB Charter)

Association of Southeast Asian Nations (ASEAN) (Established by the Asean Declaration)

Bank for International Settlements (Established by the Constituent Charter of the Bank for International Settlements)

Basel Committee on Banking Supervision (Established by the Basel Committee on Banking Supervision Charter)

Caribbean Development Bank (Established by the Agreement Establishing the Caribbean Development Bank)

Commonwealth (Established by the Balfour Declaration, Statute of Westminster and London Declaration)

Community of Democracies (Warsaw Declaration)

Council of Europe (Established by the European Convention on Human Rights)

European Bank for Reconstruction and Development (Established by the Agreement Establishing the European Bank for Reconstruction and Development)

European Free Trade Association Secretariat (Established by the European Free Trade Agreement Convention)

European Space Agency (Established by the Convention for the establishment of a European Space Agency)

Inter-American Development Bank (IDB) (Established by the Agreement Establishing the Inter-American Development Bank)

International Criminal Court (Established by the Rome Statute of the International Criminal Court)

International Commission of Missing Persons (Established by the Agreement on the status and functions of the International Commission on Missing Persons)

International Criminal Police Organization (Established by the Constitution of the ICPO-INTERPOL)

International Energy Agency (Established by the Agreement on an International Energy Program)

International Energy Forum (Established by the International Energy Forum Charter)

International Joint Commission (Established by the Boundary Waters Treaty)

International Mobile Satellite Organization (Established by the Convention on the International Maritime Satellite Organization)

International Organization for Migration (Established by the Constitution of the Intergovernmental Committee for European Migration)

International Seabed Authority (Established by the United Nations Convention on the Law of the Sea)

International Telecommunications Satellite Organization (Established by the Agreement relating to the International Telecommunications Satellite Organization)

International Union for Conservation of Nature (Established by the formal act of 1948 constituting the International Union for Protection of Nature)

La Francophonie (Established by the l'Agence de Coopération Culturelle et Technique (ACCT) Convention)

North Atlantic Treaty Organization (NATO) (Established by the North Atlantic Treaty)

Organization for Economic Co-operation and Development (Established by the Organisation for Economic Co-operation and Development Convention)

Organization for Security and Co-operation in Europe (Established by the Helsinki Final Act)

Organization of American States (Established by the Charter of the Organization of American States)

Permanent Court of Arbitration (Established under Article 20 of the 1899 Hague Convention for the Pacific Settlement of International Disputes)

World Customs Organization (Established by the Convention establishing a Customs Co-operation Council)

Examples of institutions established by international organizations

United Nations (Established by the Charter of the United Nations)

Food and Agriculture Organization of the United Nations (Established by the Constitution of the Food and Agriculture Organization)
International Civil Aviation Organization (Established by the Convention on International Civil Aviation)
International Labour Organization (Established by International Labour Organization Constitution)
International Maritime Organization (Established by the Convention on the International Maritime Organization)
International Monetary Fund (Established by the Articles of Agreement of the International Monetary Fund)
International Telecommunication Union (Established by the International Telegraph Convention. However, in 1934 the International Telegraph Convention of 1865 was then combined with the International Radiotelegraph Convention of 1906 to form the International Telecommunication Convention.)
United Nations Educational, Scientific and Cultural Organization (UNESCO) (Established by the Constitution of UNESCO)
World Bank Group (Established by the Bretton Woods agreements)
World Health Organization (Established by the constitution of the World Health Organization)
World Intellectual Property Organization (Established by the Convention Establishing the World Intellectual Property Organization)
World Meteorological Organization (Established by the World Meteorological Convention)
World Tourism Organization (Established by the Statutes of the World Tourism Organization)
Preparatory Commission for the Comprehensive Nuclear-Test-Ban Treaty Organization (Established by the Comprehensive Nuclear-Test-Ban Treaty)
International Atomic Energy Agency (Established by the Statute of the International Atomic Energy Agency)
Organisation for the Prohibition of Chemical Weapons (Established by the Chemical Weapons Convention)
World Trade Organization (Established by the Marrakesh Agreement)

The Association of Southeast Asian Nations (ASEAN) established the:

Economic Research Institute for ASEAN and East Asia (ERIA) established by the adoption of the formal statement agreed to at the 3^rd East Asia Summit in Singapore

The North Atlantic Treaty Organization (NATO) established the:

NATO Communication and Information Agency (NCI Agency) established by the NCIO Charter, which transferred and amalgamated the functions of various agencies into the NCI Agency
NATO Support and Procurement Organization (NSPO) established by the NSPO Charter, which merged the names and roles of two NATO agencies into NSPO

February 2021

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

February 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:

When must I make a PEP, HIO, family member or close associate determination?
What are the exceptions to making a PEP, HIO, family member or close associate determination?
What measures do I need to take after making a PEP, HIO, family member or close associate determination?
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 virtual currency (VC) equivalent to $100,000 or more in respect of an immediate or deferred annuity or a life insurance policy; and
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 of a life insurance policy.

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:

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}
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.
You do not need to make a PEP or HIO determination when you are dealing in reinsurance.^{Footnote 5}
You do not need to determine if a person is a PEP, HIO, family member, or close associate, as applicable, or keep the related records for the following:^{Footnote 6}
- the sale of an exempt policy as defined in subsection 306(1) of the Income Tax Regulations;
- the sale of a group life insurance policy that does not provide for a cash surrender value or a savings component;
- the sale of an immediate or deferred annuity that is paid for entirely with funds that are directly transferred from a registered pension plan or from a pension plan that is required to be registered under the Pension Benefits Standards Act, 1985 or similar provincial legislation;
- the sale of a registered annuity policy or a registered retirement income fund;
- a public body, or its subsidiary if the financial statements are consolidated with those of the public body;
- a very large corporation or trust, or the subsidiary of either if the financial statements are consolidated with those of the very large corporation or trust; or
- the sale of an immediate or deferred annuity that is paid for entirely with funds from the proceeds of a group life insurance policy.

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 7}

take reasonable measures to establish the source of the funds or source of the VC used for the transaction, and to establish the source of the person's wealth; and
ensure that a member of senior management reviews the transaction.

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 8}

take reasonable measures to establish the source of the funds or source of the VC that you receive from the annuitant of an immediate or deferred annuity or from the holder of a life insurance policy, and to establish the source of the beneficiary's wealth; and
ensure that a member of senior management reviews the transaction.

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 poses a high risk (based on your risk assessment), you must:^{Footnote 9}

take reasonable measures to establish the source of the funds or source of the VC used for the transaction, and to establish the source of the person's wealth; and
ensure that a member of senior management reviews the transaction.

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 poses a high risk (based on your risk assessment), you must:^{Footnote 10}

take reasonable measures to establish the source of the funds or source of the VC that you receive from the annuitant of an immediate or deferred annuity or from the holder of a life insurance policy, and to establish the source of the beneficiary's wealth; and
ensure that a member of senior management reviews the transaction.

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 11}

take reasonable measures to make a PEP, HIO, family member, or close associate determination; and
if applicable, if you determine the person is a PEP, HIO, or close associate or family member of a PEP or HIO, take reasonable measures to establish the source of the funds or source of the VC used for the transaction and to establish the person's source of wealth, and ensure that a member of senior management reviews the transaction.

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 12}

take reasonable measures to make a PEP, HIO, family member, or close associate determination;
if applicable, if you determine the person is a PEP, HIO, or close associate or family member of a PEP or HIO, take reasonable measures to establish the source of the funds or source of the VC that you receive from the annuitant of an immediate or deferred annuity or from a holder of a life insurance policy and to establish the source of the beneficiary's wealth, and ensure that a member of senior management reviews the transaction.

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 13}

the office or position and the name of the organization or institution of the PEP or HIO;
the date of the determination;
the source of the funds or source of the VC used for a lump-sum payment or received from the annuitant of an immediate or deferred annuity or the holder of a life insurance policy, if known;
the source of the person's wealth, if known;
the name of the member of senior management who reviewed the transaction; and
the date of that review.

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 14}

Footnote 1

Proceeds of Crime (Money Laundering) and Terrorist Financing Regulations (PCMLTFR), SOR/2002-184, s. 117(a) (as will be amended when SOR/2019-240 comes into force).

Return to footnote1

Footnote 2

PCMLTFR, SOR/2002-184, s. 117(b) (as will be amended when SOR/2019-240 comes into force).

Return to footnote2

Footnote 3

PCMLTFR, SOR/2002-184, s. 155(4) (as will be amended when SOR/2019-240 comes into force).

Return to footnote3

Footnote 4

PCMLTFR, SOR/2002-184, s. 154(3)(a) and (b) (as will be amended when SOR/2019-240 comes into force).

Return to footnote4

Footnote 5

PCMLTFR, SOR/2002-184, s. 118 (as will be amended when SOR/2019-240 comes into force).

Return to footnote5

Footnote 6

PCMLTFR, SOR/2002-184, s. 154(2) (as will be amended when SOR/2020-112 comes into force).

Return to footnote6

Footnote 7

PCMLTFR, SOR/2002-184, s. 122(1) (as will be amended when SOR/2020-112 comes into force).

Return to footnote7

Footnote 8

PCMLTFR, SOR/2002-184, s. 122(4) (as will be amended when SOR/2019-240 comes into force).

Return to footnote8

Footnote 9

PCMLTFR, SOR/2002-184, s. 122(5) (as will be amended when SOR/2020-112 comes into force).

Return to footnote9

Footnote 10

PCMLTFR, SOR/2002-184, s. 122(8) (as will be amended when SOR/2019-240 comes into force).

Return to footnote10

Footnote 11

PCMLTFR, SOR/2002-184, s. 122(9) (as will be amended when SOR/2020-112 comes into force).

Return to footnote11

Footnote 12

PCMLTFR, SOR/2002-184, s. 122(10) (as will be amended when SOR/2019-240 comes into force).

Return to footnote12

Footnote 13

PCMLTFR, SOR/2002-184, s. 123 (3) (as will be amended when SOR/2019-240 comes into force).

Return to footnote13

Footnote 14

PCMLTFR, SOR/2002-184, s. 148 (1)(b) (as will be amended when SOR/2019-240 comes into force).

Return to footnote14

Definitions

Accountant

A chartered accountant, a certified general accountant, a certified management accountant or, if applicable, a chartered professional accountant.^{Footnote 1} (comptable)

Accounting firm

An entity that is engaged in the business of providing accounting services to the public and has at least one partner, employee or administrator that is an accountant.^{Footnote 2} (cabinet d'expertise comptable)

Act

The Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA).^{Footnote 3} (la Loi)

Administrative monetary penalties (AMPs)

Civil penalties that may be issued to reporting entities by FINTRAC for non-compliance with the PCMLTFA and associated Regulations. (pénalité administrative pécuniaire [PAP])

Affiliate

An entity is affiliated with another entity if one of them is wholly owned by the other, if both are wholly owned by the same entity or if their financial statements are consolidated.^{Footnote 4} (entité du même groupe)

Annuity

Has the same meaning as in subsection 248(1) of the Income Tax Act^{Footnote 5} (rente)

As soon as practicable

A time period that falls in-between immediately and as soon as possible, within which a suspicious transaction report (STR) must be submitted to FINTRAC. The completion and submission of the STR should take priority over other tasks. In this context, the report must be completed promptly, taking into account the facts and circumstances of the situation. While some delay is permitted, it must have a reasonable explanation. (aussitôt que possible)

Attempted transaction

Occurs when an individual or entity starts to conduct a transaction that is not completed. For example, a client or a potential client walks away from conducting a $10,000 cash deposit. (opération tentée)

Authentic

In respect of a government-issued photo identification document that is used to verify identity, is genuine and has the character of an original, credible, and reliable document issued by the competent authority (such as federal, provincial, or territorial governments). (authentique)

Authorized person

A person who is authorized under subsection 45(2).^{Footnote 6} (personne autorisée)

Authorized user

A person who is authorized by a holder of a prepaid payment product account to have electronic access to funds or virtual currency available in the account by means of a prepaid payment product that is connected to it.^{Footnote 7} (utilisateur autorisé)

Beneficial Owner(s)

Beneficial owners are the individuals who are the trustees, and known beneficiaries and settlors of a trust, or who directly or indirectly own or control 25% or more of i) the shares of a corporation or ii) an entity other than a corporation or trust, such as a partnership. The ultimate beneficial owner(s) cannot be another corporation or entity; it must be the actual individual(s) who owns or controls the entity. (bénéficiaire effectif)

Beneficiary

A beneficiary is the individual or entity that will benefit from a transaction or to which the final remittance is made. (bénéficiaire)

Branch

A branch is a part of your business at a distinct location other than your main office. (succursale)

British Columbia notary corporation

An entity that carries on the business of providing notary services to the public in British Columbia in accordance with the Notaries Act, R.S.B.C. 1996, c. 334.^{Footnote 8} (société de notaires de la Colombie-Britannique)

British Columbia notary public

A person who is a member of the Society of Notaries Public of British Columbia.^{Footnote 9} (notaire public de la Colombie-Britannique)

Cash

Coins referred to in section 7 of the Currency Act, notes issued by the Bank of Canada under the Bank of Canada Act that are intended for circulation in Canada or coins or bank notes of countries other than Canada.^{Footnote 10} (espèces)

Casino

A government, organization, board or operator that is referred to in any of paragraphs 5(k) to (k.3) of the Act.^{Footnote 11} (casino)

Certified translator

An individual that holds the title of professional certified translator granted by a Canadian provincial or territorial association or body that is competent under Canadian provincial or territorial law to issue such certification. (traducteur agréé)

Clarification request

A clarification request is a method used to communicate with money services businesses (MSBs) or foreign money services businesses (FMSBs) when FINTRAC needs more information about their registration form. This request is usually sent by email. (demande de précisions)

Client

A person or entity that engages in a financial transaction with another person or entity.^{Footnote 12} (client)

Client identification information

The identifying information that you have obtained on your clients, such as name, address, telephone number, occupation or nature of principal business, and date of birth for an individual. (renseignements d'identification du client)

Competent authority

For the purpose of the criminal record check submitted with an application for registration, a competent authority is any person or organization that has the legally delegated or invested authority, capacity, or power to issue criminal record checks. (autorité compétente)

Completed transaction

Is a transaction conducted by a person or entity, that is completed and results in the movement of funds, virtual currency, or the purchase or sale of an asset. (opération effectuée)

Compliance officer

The individual, with the necessary authority, that you appoint to be responsible for the implementation of your compliance program. (agent de conformité)

Compliance policies and procedures

Written methodology outlining the obligations applicable to your business under the PCMLTFA and its associated Regulations and the corresponding processes and controls you put in place to address your obligations. (politiques et procédures de conformité)

Compliance program

All elements (compliance officer, policies and procedures, risk assessment, training program, effectiveness review) that you, as a reporting entity, are legally required to have under the PCMLTFA and its associated Regulations to ensure that you meet all your obligations. (programme de conformité)

Context

Clarifies a set of circumstances or provides an explanation of a situation or financial transaction that can be understood and assessed. (contexte)

Correspondent banking relationship

A relationship created by an agreement or arrangement under which an entity referred to in any of paragraphs 5(a), (b), (d) and (e) or an entity that is referred to in section 5 of the Act and that is prescribed undertakes to provide to a foreign financial institution services such as international electronic funds transfers, cash management, cheque clearing and any prescribed services.^{Footnote 13} (relation de correspondant bancaire)

Country of residence

The country where an individual has lived continuously for 12 months or more. The individual must have a dwelling in the country concerned. For greater certainty, a person only has one country of residence no matter how many dwelling places they may have, inside or outside of that country. (pays de résidence)

Credit card acquiring business

A credit card acquiring business is a financial entity that has an agreement with a merchant to provide the following services:

enabling a merchant to accept credit card payments by cardholders for goods and services and to receive payments for credit card purchases;
processing services, payment settlements and providing point-of-sale equipment (such as computer terminals); and
providing other ancillary services to the merchant.

(entreprise d'acquisition de cartes de crédit)

Credit union central

A central cooperative credit society, as defined in section 2 of the Cooperative Credit Associations Act, or a credit union central or a federation of credit unions or caisses populaires that is regulated by a provincial Act other than one enacted by the legislature of Quebec.^{Footnote 14} (centrale de caisses de crédit)

Current

In respect of a document or source of information that is used to verify identity, is up to date, and, in the case of a government-issued photo identification document, must not have been expired when the ID was verified. (à jour)

Dealer in precious metals and stones

A person or entity that, in the course of their business activities, buys or sells precious metals, precious stones or jewellery. It includes a department or an agent of Her Majesty in right of Canada or an agent or mandatary of Her Majesty in right of a province when the department or the agent or mandatary carries out the activity, referred to in subsection 65(1), of selling precious metals to the public.^{Footnote 15} (négociant en métaux précieux et pierres précieuses)

Deferred profit sharing plan

Has the same meaning as in subsection 248(1) of the Income Tax Act.^{Footnote 16} (régime de participation différée aux bénéfices)

Deposit slip

A record that sets out:^{Footnote 17}

(a) the date of the deposit;
(b) the name of the person or entity that makes the deposit;
(c) the amount of the deposit and of any part of it that is made in cash;
(d) the method by which the deposit is made; and
(e) the number of the account into which the deposit is made and the name of each account holder.

(relevé de dépôt)

Directing Services

A business is directing services at persons or entities in Canada if at least one of the following applies:

The business's marketing or advertising is directed at persons or entities located in Canada;
The business operates a ".ca" domain name; or,
The business is listed in a Canadian business directory.

Additional criteria may be considered, such as if the business describes its services being offered in Canada or actively seeks feedback from persons or entities in Canada. (diriger des services)

Distributed ledger

For the purpose of section 151 of the Proceeds of Crime (Money Laundering) and Terrorist Financing Regulations (PCMLTFR), a digital ledger that is maintained by multiple persons or entities and that can only be modified by a consensus of those persons or entities. ^{Footnote 18} (registres distribués)

Disposition

With respect to a reportable transaction, the disposition is what the funds or virtual currency was used for. For example, an individual arrives at a bank with cash and purchases a bank draft. The disposition is the purchase of the bank draft. (répartition)

Electronic funds transfer

The transmission—by any electronic, magnetic or optical means—of instructions for the transfer of funds, including a transmission of instructions that is initiated and finally received by the same person or entity. In the case of SWIFT messages, only SWIFT MT-103 messages and their equivalent are included. It does not include a transmission or instructions for the transfer of funds: ^{Footnote 19}

(a) that is carried out by means of a credit or debit card or a prepaid payment product if the beneficiary has an agreement with the payment service provider that permits payment by that means for the provision of goods and services;
(b) that involves the beneficiary withdrawing cash from their account;
(c) that is carried out by means of a direct deposit or pre-authorized debit;
(d) that is carried out by cheque imaging and presentment
(e) that is both initiated and finally received by persons or entities that are acting to clear or settle payment obligations between themselves; or
(f) that is initiated or finally received by a person or entity referred to in paragraphs 5(a) to (h.1) of the Act for the purpose of internal treasury management, including the management of their financial assets and liabilities, if one of the parties to the transaction is a subsidiary of the other or if they are subsidiaries of the same corporation.

(télévirement)

Employees profit sharing plan

Has the same meaning as in subsection 248(1) of the Income Tax Act.^{Footnote 20} (régime de participation des employés aux bénéfices)

Entity

A body corporate, a trust, a partnership, a fund or an unincorporated association or organization.^{Footnote 21} (entité)

Facts

Actual events, actions, occurrences or elements that exist or are known to have happened or existed. Facts are not opinions. For example, facts surrounding a transaction or multiple transactions could include the date, time, location, amount or type of transaction or could include the account details, particular business lines, or the client's financial history. (faits)

Family member

For the purposes of subsection 9.3(1) of the Act, a prescribed family member of a politically exposed foreign person, a politically exposed domestic person or a head of an international organization is:^{Footnote 22}

(a) their spouse or common-law partner;
(b) their child;
(c) their mother or father;
(d) the mother or father of their spouse or common-law partner; or
(e) a child of their mother or father.

(membre de la famille)

Fiat currency

A currency that is issued by a country and is designated as legal tender in that country.^{Footnote 23} (monnaie fiduciaire)

Final receipt

In respect of an electronic funds transfer, means the receipt of the instructions by the person or entity that is to make the remittance to a beneficiary.^{Footnote 24} (destinataire)

Financial entity

Means: ^{Footnote 25}

(a) an entity that is referred to in any of paragraphs 5(a), (b) and (d) to (f) of the Act;
(b) a financial services cooperative;
(c) a life insurance company, or an entity that is a life insurance broker or agent, in respect of loans or prepaid payment products that it offers to the public and accounts that it maintains with respect to those loans or prepaid payment products, other than:
1. (i) loans that are made by the insurer to a policy holder if the insured person has a terminal illness that significantly reduces their life expectancy and the loan is secured by the value of an insurance policy;
2. (ii) loans that are made by the insurer to the policy holder for the sole purpose of funding the life insurance policy; and
3. (iii) advance payments to which the policy holder is entitles that are made to them by the insurer;
(d) a credit union central when it offers financial services to a person, or to an entity that is not a member of that credit union central; and
(e) a department, or an entity that is an agent of Her Majesty in right of Canada or an agent or mandatary of Her Majesty in right of a province, when it carries out an activity referred to in section 76.

(entité financière)

Financial Action Task Force

The Financial Action Task Force on Money Laundering established in 1989.^{Footnote 26} (Groupe d'action financière)

Financial services cooperative

A financial services cooperative that is regulated by an Act respecting financial services cooperatives, CQLR, c. C-67.3, other than a caisse populaire.^{Footnote 27} (coopérative de services financiers)

Foreign currency

A fiat currency that is issued by a country other than Canada.^{Footnote 28} (devise)

Foreign currency exchange transaction

An exchange, at the request of another person or entity, of one fiat currency for another. ^{Footnote 29} (opération de change en devise)

Foreign currency exchange transaction ticket

A record respecting a foreign currency exchange transaction—including an entry in a transaction register—that sets out: ^{Footnote 30}

(a) the date of the transaction;
(b) in the case of a transaction of $3,000 or more, the name and address of the person or entity that requests the exchange, the nature of their principal business or their occupation and, in the case of a person, their date of birth;
(c) the type and amount of each of the fiat currencies involved in the payment made and received by the person or entity that requests the exchange;
(d) the method by which the payment is made and received;
(e) the exchange rates used and their source;
(f) the number of every account that is affected by the transaction, the type of account and the name of each account holder; and
(g) every reference number that is connected to the transaction and has a function equivalent to that of an account number.

(fiche d'opération de change en devise)

Foreign money services business

Persons and entities that do not have a place of business in Canada, that are engaged in the business of providing at least one of the following services that is directed at persons or entities in Canada, and that provide those services to their clients in Canada: ^{Footnote 31}

(i) foreign exchange dealing,
(ii) remitting funds or transmitting funds by any means or through any person, entity or electronic funds transfer network,
(iii) issuing or redeeming money orders, traveller's cheques or other similar negotiable instruments except for cheques payable to a named person or entity,
(iv) dealing in virtual currencies, or
(v) any prescribed service.

(entreprise de services monétaires étrangère)

Foreign state

Except for the purposes of Part 2 of the Act, means a country other than Canada and includes any political subdivision or territory of a foreign state.^{Footnote 32} (État étranger)

Funds

Means:

(a) cash and other fiat currencies, and securities, negotiable instruments or other financial instruments that indicate a title or right to or interest in them; or
(b) a private key of a cryptographic system that enables a person or entity to have access to a fiat currency other than cash.

For greater certainty, it does not include virtual currency.^{Footnote 33} (fonds)

Head of an international organization

A person who, at a given time, holds—or has held within a prescribed period before that time—the office or position of head of an international organization that is established by the governments of states or the head of an institution of any such organization.^{Footnote 34} (dirigeant d'une organisation internationale)

Information record

A record that sets out the name and address of a person or entity and:^{Footnote 35}

(a) in the case of a person, their date of birth and the nature of their principal business or their occupation; and
(b) in the case of an entity, the nature of its principal business.

(dossier de renseignements)

Initiation

In respect of an electronic funds transfer, means the first transmission of the instructions for the transfer of funds.^{Footnote 36} (amorcer)

Institutional trust

For the purpose of section 15 of the Proceeds of Crime (Money Laundering) and Terrorist Financing Regulations (PCMLTFR), means a trust that is established by a corporation or other entity for a particular business purpose and includes a pension plan trust, a pension master trust, a supplemental pension plan trust, a mutual fund trust, a pooled fund trust, a registered retirement savings plan trust, a registered retirement income fund trust, a registered education savings plan trust, a group registered retirement savings plan trust, a deferred profit sharing plan trust, an employee profit sharing plan trust, a retirement compensation arrangement trust, an employee savings plan trust, a health and welfare trust, an unemployment benefit plan trust, a foreign insurance company trust, a foreign reinsurance trust, a reinsurance trust, a real estate investment trust, an environmental trust and a trust established in respect of endowment, a foundation or a registered charity.^{Footnote 37} (fiducie institutionnelle)

International electronic funds transfer

An electronic funds transfer other than for the transfer of funds within Canada.^{Footnote 38} (télévirement international)

Inter vivos trust

A personal trust, other than a trust created by will. ^{Footnote 39} (fiducie entre vifs)

Jewellery

Objects that are made of gold, silver, palladium, platinum, pearls or precious stones and that are intended to be worn as a personal adornment.^{Footnote 40} (bijou)

Large cash transaction record

A record that indicates the receipt of an amount of $10,000 or more in cash in a single transaction and that contains the following information:^{Footnote 41}

(a) the date of the receipt;
(b) if the amount is received for deposit into an account, the number of the account, the name of each account holder and the time of the deposit or an indication that the deposit is made in a night deposit box outside the recipient's normal business hours;
(c) the name and address of every other person or entity that is involved in the transaction, the nature of their principal business or their occupation and, in the case of a person, their date of birth;
(d) the type and amount of each fiat currency involved in the receipt;
(e) the method by which the cash is received;
(f) if applicable, the exchange rates used and their source;
(g) the number of every other account that is affected by the transaction, the type of account and the name of each account holder
(h) every reference number that is connected to the transaction and has a function equivalent to that of an account number;
(i) the purpose of the transaction;
(j) the following details of the remittance of, or in exchange for, the cash received:
1. (i) the method of remittance;
2. (ii) if the remittance is in funds, the type and amount of each type of funds involved;
3. (iii) if the remittance is not in funds, the type of remittance and its value, if different from the amount of cash received; and
4. (iv) the name of every person or entity involved in the remittance and their account number or policy number or, if they have no account number or policy number, their identifying number; and
(k) if the amount is received by a dealer in precious metals and precious stones for the sale of precious metals, precious stones or jewellery:
1. (i) the type of precious metals, precious stones or jewellery;
2. (ii) the value of the precious metals, precious stones or jewellery, if different from the amount of cash received, and
3. (iii) the wholesale value of the precious metals, precious stones or jewellery.

(relevé d'opération importante en espèces)

Large virtual currency transaction record

A record that indicates the receipt of an amount of $10,000 or more in virtual currency in a single transaction and that contains the following information:^{Footnote 42}

(a) the date of the receipt;
(b) if the amount is received for deposit into an account, the name of each account holder;
(c) the name and address of every other person or entity that is involved in the transaction, the nature of their principal business or their occupation and, in the case of a person, their date of birth;
(d) the type and amount of each virtual currency involved in the receipt;
(e) the exchange rates used and their source;
(f) the number of every other account that is affected by the transaction, the type of account and the name of each account holder;
(g) every reference number that is connected to the transaction and has a function equivalent to that of an account number;
(h) every transaction identifier, including the sending and receiving addresses; and
(i) if the amount is received by a dealer in precious metals and precious stones for the sale of precious metals, precious stones or jewellery:
1. (i) the type of precious metals, precious stones or jewellery;
2. (ii) the value of the precious metals, precious stones or jewellery, if different from the amount of virtual currency received; and
3. (iii) the wholesale value of the precious metals, precious stones or jewellery

(relevé d'opération importante en monnaie virtuelle)

Life insurance broker or agent:

A person or entity that is authorized under provincial legislation to carry on the business of arranging contracts of life insurance.^{Footnote 43} (représentant d'assurance-vie)

Life insurance company

A life company or foreign life company to which the Insurance Companies Act applies or a life insurance company regulated by a provincial Act.^{Footnote 44} (société d'assurance-vie)

Listed person

Has the same meaning as in section 1 of the Regulations Implementing the United Nations Resolutions on the Suppression of Terrorism.^{Footnote 45} (personne inscrite)

Mandatary

A person who acts, under a mandate or agreement, for another person or entity. (mandataire)

Marketing or Advertising

When a person or entity uses promotional materials such as advertisements, graphics for websites or billboards, etc., with the intent to promote money services business (MSB) services and to acquire business from persons or entities in Canada. (marketing ou publicité)

Minister

In relation to sections 24.1 to 39, the Minister of Public Safety and Emergency Preparedness and, in relation to any other provision of this Act, the Minister of Finance.^{Footnote 46} (ministre)

Money laundering offence

An offence under subsection 462.31(1) of the Criminal Code.^{Footnote 47} The United Nations defines money laundering as "any act or attempted act to disguise the source of money or assets derived from criminal activity." Essentially, money laundering is the process whereby "dirty money"—produced through criminal activity—is transformed into "clean money," the criminal origin of which is difficult to trace. (infraction de recyclage des produits de la criminalité)

Money laundering and terrorist financing indicators (ML/TF indicators)

Potential red flags that could initiate suspicion or indicate that something may be unusual in the absence of a reasonable explanation. [Indicateurs de blanchiment d'argent (BA) et de financement du terrorisme (FT) (indicateurs de BA/FT)]

Money services business

A person or entity that has a place of business in Canada and that is engaged in the business of providing at least one of the following services: ^{Footnote 48}

(i) foreign exchange dealing,
(ii) remitting funds or transmitting funds by any means or through any person, entity or electronic funds transfer network,
(iii) issuing or redeeming money orders, traveller's cheques or other similar negotiable instruments except for cheques payable to a named person or entity,
(iv) dealing in virtual currencies, or
(v) any prescribed service.

(entreprise de services monétaires)

Money services business agent

An individual or entity authorized to deliver services on behalf of a money services business (MSB). It is not an MSB branch. (mandataire d'une entreprise de services monétaires)

Nature of principal business

An entity's type or field of business. Also applies to an individual in the case of a sole proprietorship. (nature de l'entreprise principale)

New developments

Changes to the structure or operations of a business when new services, activities, or locations are put in place. For example, changes to a business model or business restructuring. (nouveaux développements)

New technologies

The adoption of a technology that is new to a business. For example, when a business adopts new systems or software such as transaction monitoring systems or client onboarding and identification tools. (nouvelles technologies)

No apparent reason

There is no clear explanation to account for suspicious behaviour or information. (sans raison apparente)

Occupation

The job or profession of an individual. (profession ou métier)

Person

An individual.^{Footnote 49} (personne)

Politically exposed domestic person

A person who, at a given time, holds—or has held within a prescribed period before that time—one of the offices or positions referred to in any of paragraphs (a) to (j) in or on behalf of the federal government or a provincial government or the office or position referred to in paragraph (k) in a municipal government:^{Footnote 50}

(a) Governor General, lieutenant governor or head of government;
(b) member of the Senate or House of Commons or member of a legislature;
(c) deputy minister or equivalent rank;
(d) ambassador, or attaché or counsellor of an ambassador;
(e) military officer with a rank of general or above;
(f) president of a corporation that is wholly owned directly by Her Majesty in right of Canada or a province;
(g) head of a government agency;
(h) judge of an appellate court in a province, the Federal Court of Appeal or the Supreme Court of Canada;
(i) leader or president of a political party represented in a legislature;
(j) holder of any prescribed office or position; or
(k) mayor

(national politiquement vulnérable)

Politically exposed foreign person

A person who holds or has held one of the following offices or positions in or on behalf of a foreign state:^{Footnote 51}

(a) head of state or head of government;
(b) member of the executive council of government or member of a legislature;
(c) deputy minister or equivalent rank;
(d) ambassador, or attaché or counsellor of an ambassador;
(e) military officer with a rank of general or above;
(f) president of a state-owned company or a state-owned bank;
(g) head of a government agency;
(h) judge of a supreme court, constitutional court or other court of last resort;
(i) leader or president of a political party represented in a legislature; or
(j) holder of any prescribed office or position.

(étranger politiquement vulnérable)

Possibility

In regards to completing a suspicious transaction report (STR), the likelihood that a transaction may be related to a money laundering/terrorist financing (ML/TF) offence. For example, based on your assessment of facts, context and ML/TF indicators you have reasonable grounds to suspect that a transaction is related to the commission or attempted commission of an ML/TF offence. (possibilité)

Precious metal

Gold, silver, palladium or platinum in the form of coins, bars, ingots or granules or in any other similar form.^{Footnote 52} (métal précieux)

Precious stones

Diamonds, sapphires, emeralds, tanzanite, rubies or alexandrite.^{Footnote 53} (pierre précieuse)

Prepaid payment product

A product that is issued by a financial entity and that enables a person or entity to engage in a transaction by giving them electronic access to funds or virtual currency paid to a prepaid payment product account held with the financial entity in advance of the transaction. It excludes a product that: ^{Footnote 54}

(a) enables a person or entity to access a credit or debit account or one that is issued for use only with particular merchants; or
(b) is issued for single use for the purposes of a retail rebate program.

(produit de paiement prépayé)

Prepaid payment product account

An account – other than an account to which only a public body or, if doing so for the purposes of humanitarian aid, a registered charity as defined in subsection 248(1) of the Income Tax Act, can add funds or virtual currency – that is connected to a prepaid payment product and that permits:^{Footnote 55}

(a) funds or virtual currency that total $1,000 or more to be added to the account within a 24-hour period; or
(b) a balance of funds or virtual currency of $1,000 or more to be maintained.

(compte de produit de paiement prépayé)

Prescribed

Prescribed by regulations made by the Governor in Council.^{Footnote 56} (Version anglaise seulement)

Probability

The likelihood in regards to completing a suspicious transaction report (STR) that a financial transaction is related to a money laundering/terrorist financing (ML/TF) offence. For example, based on facts, having reasonable grounds to believe that a transaction is probably related to the commission or attempted commission of an ML/TF offence. (probabilité)

Production order

A judicial order that compels a person or entity to disclose records to peace officers or public officers. (ordonnance de communication)

Public body

Means

(a) a department or an agent of Her Majesty in right of Canada or an agent or mandatary of Her Majesty in right of a province;
(b) an incorporated city or town, village, metropolitan authority, township, district, county, rural municipality or other incorporated municipal body in Canada or an agent or mandatary in Canada of any of them; and
(c) an organization that operates a public hospital and that is designated by the Minister of National Revenue as a hospital authority under the Excise Tax Act, or an agent or mandatary of such an organization.^{Footnote 57}

(organisme public)

Real estate broker or sales representative

A person or entity that is authorized under provincial legislation to act as an agent or mandatary for purchasers or vendors in respect of the purchase or sale of real property or immovables.^{Footnote 58} (courtier ou agent immobilier)

Real estate developer

A person or entity that, in any calendar year after 2007, has sold to the public, other than in the capacity of a real estate broker or sales representative: ^{Footnote 59}

(a) five or more new houses or condominium units;
(b) one or more new commercial or industrial buildings; or
(c) one or more new multi-unit residential buildings each of which contains five or more residential units, or two or more new multi-unit residential buildings that together contain five or more residential units.

(promoteur immobilier)

Reasonable measures

Steps taken to achieve a desired outcome, even if they do not result in the desired outcome. For example, this can include doing one or more of the following:

asking the client,
conducting open source searches,
retrieving information already available, including information held in non-digital formats, or
consulting commercially available information.

(mesures raisonnables)

Receipt of funds record

A record that indicates the receipt of an amount of funds and that contains the following information: ^{Footnote 60}

(a) the date of the receipt;
(b) if the amount is received from a person, their name, address and date of birth and the nature of their principal business or their occupation;
(c) if the amount is received from or on behalf of an entity, the entity's name and address and the nature of their principal business;
(d) the amount of the funds received and of any part of the funds that is received in cash;
(e) the method by which the amount is received;
(f) the type and amount of each fiat currency involved in the receipt;
(g) if applicable, the exchange rates used and their source;
(h) the number of every account that is affected by the transaction in which the receipt occurs, the type of account and the name of each account holder;
(i) the name and address of every other person or entity that is involved in the transaction, the nature of their principal business or their occupation and, in the case of a person, their date of birth;
(j) every reference number that is connected to the transaction and has a function equivalent to that of an account number; and
(k) the purpose of the transaction.

(relevé de réception de fonds)

Registered pension plan

Has the same meaning as in subsection 248(1) of the Income Tax Act.^{Footnote 61} (régime de pension agréé)

Registered retirement income fund

Has the same meaning as in subsection 248(1) of the Income Tax Act.^{Footnote 62} (fonds enregistré de revenu de retraite)

Reliable

In respect of information that is used to verify identity, means that the source is well known, reputable, and is considered one that you trust to verify the identity of the client. (fiable)

Representative for service

An individual in Canada that has been appointed by a person or entity that is a foreign money services business (FMSB), pursuant to the PCMLTFA, to receive notices and documents on behalf of the FMSB. (représentant du service)

Risk assessment

The review and documentation of potential money laundering/terrorist financing risks in order to help a business establish policies, procedures and controls to detect and mitigate these risks and their impact. (évaluation des risques)

Securities dealer

A person or entity that is referred to in paragraph 5(g) of the Act.^{Footnote 63} (courtier en valeurs mobilières)

Senior officer

In respect of an entity, means: ^{Footnote 64}

(a) a director of the entity who is one of its full-time employees;
(b) the entity's chief executive officer, chief operating officer, president, secretary, treasurer, controller, chief financial officer, chief accountant, chief auditor or chief actuary, or any person who performs any of those functions; or
(c) any other officer who reports directly to the entity's board of directors, chief executive officer or chief operating officer.

(cadre dirigeant)

Service agreement

An agreement between a money services business (MSB) and an organization according to which the MSB will provide any of the following MSB services on an ongoing basis:

money transfers;
foreign currency exchange;
issuing or redeeming money orders, traveller's cheques or anything similar; or
dealing in virtual currencies.

(accord de relation commerciale)

Settlor

A settlor is an individual or entity that creates a trust with a written trust declaration. The settlor ensures that legal responsibility for the trust is given to a trustee and that the trustee is provided with a trust instrument document that explains how the trust is to be used for the beneficiaries. A settlor includes any individual or entity that contributes financially to that trust, either directly or indirectly. (constituant)

Shell bank

A foreign financial institution that: ^{Footnote 65}

(a) does not have a place of business that:
1. (i) is located at a fixed address—where it employs one or more persons on a full-time basis and maintains operating records related to its banking activities—in a country in which it is authorized to conduct banking activities; and
2. (ii) is subject to inspection by the regulatory authority that licensed it to conduct banking activities; and
(b) is not controlled by, or under common control with, a depository institution, credit union or foreign financial institution that maintains a place of business referred to in paragraph (a) in Canada or in a foreign country

(banque fictive)

Signature

Includes an electronic signature or other information in electronic form that is created or adopted by a client of a person or entity referred to in section 5 of the Act and that is accepted by the person or entity as being unique to that client. ^{Footnote 66} (signature)

Signature card

In respect of an account, means a document that is signed by a person who is authorized to give instructions in respect of the account, or electronic data that constitutes the signature of such a person. ^{Footnote 67} (fiche-signature)

Source

The issuer or provider of information or documents for verifying identification. (source)

Source of funds or of virtual currency (VC)

The origin of the particular funds or VC used to carry out a specific transaction or to attempt to carry out a transaction. It is how the funds were acquired, not where the funds may have been transferred from. For example, the source of funds could originate from activities or occurrences such as employment income, gifts, the sale of a large asset, criminal activity, etc. (origine des fonds ou de la monnaie virtuelle (MV))

Source of wealth

The origin of a person's total assets that can be reasonably explained, rather than what might be expected. For example, a person's wealth could originate from an accumulation of activities and occurrences such as business undertakings, family estates, previous and current employment income, investments, real estate, inheritance, lottery winnings, etc. (origine de la richesse)

SWIFT

The Society for Worldwide Interbank Financial Telecommunication. ^{Footnote 68} (SWIFT)

Terrorist activity

Has the same meaning as in subsection 83.01(1) of the Criminal Code.^{Footnote 69} (activité terroriste)

Terrorist activity financing offence

An offence under section 83.02, 83.03 or 83.04 of the Criminal Code or an offence under section 83.12 of the Criminal Code arising out of a contravention of section 83.08 of that Act.

A terrorist financing offence is knowingly collecting or giving property (such as money) to carry out terrorist activities. This includes the use and possession of any property to help carry out the terrorist activities. The money earned for terrorist financing can be from legal sources, such as personal donations and profits from a business or charitable organization or from criminal sources, such as the drug trade, the smuggling of weapons and other goods, fraud, kidnapping and extortion. ^{Footnote 70} (infraction de financement des activités terroristes)

Third party

Any individual or entity that instructs another individual or entity to act on their behalf for a financial activity or transaction. (tiers)

Threats to the security of Canada

Has the same meaning as in section 2 of the Canadian Security Intelligence Service Act.^{Footnote 71} (menaces envers la sécurité du Canada)

Training program

A written and implemented program outlining the ongoing training for your employees, agents or other individuals authorized to act on your behalf. It should contain information about all your obligations and requirements to be fulfilled under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act and its associated Regulations (programme de formation)

Trust

A right of property held by one individual or entity (a trustee) for the benefit of another individual or entity (a beneficiary). (fiducie)

Trust company

A company that is referred to in any of paragraphs 5(d) to (e.1) of the Act. ^{Footnote 72} (société de fiducie)

Trustee

A trustee is the individual or entity authorized to hold or administer the assets of a trust. (fiduciaire)

Tutor

In the context of civil law, a person who has been lawfully appointed to the care of the person and property of a minor. (tuteur)

Two year effectiveness review:

A review, conducted every two years (at a minimum), by an internal or external auditor to test the effectiveness of your policies and procedures, risk assessment, and training program. (examen bisannuel de l'efficacité)

Valid

In respect of a document or information that is used to verify identity, appears legitimate or authentic and does not appear to have been altered or had any information redacted. The information must also be valid according to the issuer, for example if a passport is invalid because of a name change, it is not valid for FINTRAC purposes. (valide)

Verify client identity

To refer to certain information or documentation, in accordance with the prescribed methods, to identify a client. (vérifier l'identité d'un client)

Very large corporation or trust

A corporation or trust that has minimum net assets of $75 million CAD on its last audited balance sheet. The corporation's shares or units have to be traded on a Canadian stock exchange or on a stock exchange designated under subsection 262(1) of the Income Tax Act. The corporation or trust also has to operate in a country that is a member of the Financial Action Task Force (FATF). (personne morale ou fiducie dont l'actif est très important)

Violation

A contravention of the Act or the regulations that is designated as a violation by regulations made under subsection 73.1(1).^{Footnote 73} (violation)

Virtual currency

Means: ^{Footnote 74}

(a) a digital representation of value that can be used for payment or investment purposes that is not a fiat currency and that can be readily exchanged for funds or for another virtual currency that can be readily exchanged for funds; or
(b) a private key of a cryptographic system that enables a person or entity to have access to a digital representation of value referred to in paragraph (a).

(monnaie virtuelle)

Virtual currency exchange transaction

An exchange, at the request of another person or entity, of virtual currency for funds, funds for virtual currency or one virtual currency for another.^{Footnote 75} (opération de change en monnaie virtuelle)

Virtual currency exchange transaction ticket

A record respecting a virtual currency exchange transaction—including an entry in a transaction register—that sets out: ^{Footnote 76}

(a) the date of the transaction;
(b) in the case of a transaction of $1,000 or more, the name and address of the person or entity that requests the exchange, the nature of their principal business or their occupation and, in the case of a person, their date of birth;
(c) the type and amount of each type of funds and each of the virtual currencies involved in the payment made and received by the person or entity that requests the exchange;
(d) the method by which the payment is made and received;
(e) the exchange rates used and their source;
(f) the number of every account that is affected by the transaction, the type of account and the name of each account holder;
(g) every reference number that is connected to the transaction and has a function equivalent to that of an account number; and
(h) every transaction identifier, including the sending and receiving addresses.

(fiche d'opération de change en monnaie virtuelle)

Working days

In respect of an electronic funds transfer (EFT) report or a large virtual currency transaction report, a working day is a day between and including Monday to Friday. It excludes Saturday, Sunday, and a public holiday. (jour ouvrable)

Footnote 1

Proceeds of Crime (Money Laundering) and Terrorist Financing Regulations (PCMLTFR), SOR/2002-184, s. 1(2) (as will be amended when SOR/2019-240 comes into force).

Return to footnote1

Footnote 2

PCMLTFR, SOR/2002-184, s. 1(2).

Return to footnote2

Footnote 3

Proceeds of Crime (Money Laundering) and Terrorist Financing Administrative Monetary Penalties Regulations (PCMLTFAMPR), SOR/2007-292, s. 1, Proceeds of Crime (Money Laundering) and Terrorist Financing Registration Regulations (PCMLTFRR), SOR/2007-121, s. 1, PCMLTFR, SOR/2002-184, s. 1(2), and Proceeds of Crime (Money Laundering) and Terrorist Financing Suspicious Transaction Reporting Regulations (PCMLTFSTRR), SOR/2001-317, s. 1(2).

Return to footnote3

Footnote 4

PCMLTFR, SOR/2002-184, s. 4 (as will be amended when SOR/2019-240 comes into force).

Return to footnote4

Footnote 5

PCMLTFR, SOR/2002-184, s. 1(2).

Return to footnote5

Footnote 6

Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA), S.C. 2000, c 17, s. 2(1).

Return to footnote6

Footnote 7

PCMLTFR, SOR/2002-184, s. 1(2) (as will be amended when SOR/2019-240 comes into force).

Return to footnote7

Footnote 8

Ibid.

Return to footnote8

Footnote 9

PCMLTFR, SOR/2002-184, s. 1(2).

Return to footnote9

Footnote 10

PCMLTFR, SOR/2002-184, s. 1(2) (as will be amended when SOR/2019-240 comes into force) and PCMLTFSTRR, SOR/2001-317, s. 1(2) (as will be amended when SOR/2019-240 comes into force).

Return to footnote10

Footnote 11

Ibid.

Return to footnote11

Footnote 12

PCMLTFA, S.C. 2000, c 17, s. 2(1).

Return to footnote12

Footnote 13

PCMLTFA, S.C. 2000, c 17, s. 9.4(3) and PCMLTFR, SOR/2002-184, s. 16(1)(b) (as will be amended when SOR/2019-240 comes into force).

Return to footnote13

Footnote 14

PCMLTFR, SOR/2002-184, s. 1(2).

Return to footnote14

Footnote 15

PCMLTFR, SOR/2002-184, s. 1(2) (as will be amended when SOR/2019-240 comes into force).

Return to footnote15

Footnote 16

PCMLTFR, SOR/2002-184, s. 1(2).

Return to footnote16

Footnote 17

PCMLTFR, SOR/2002-184, s. 1(2) (as will be amended when SOR/2019-240 comes into force).

Return to footnote17

Footnote 18

PCMLTFR, SOR/2002-184, s. 151(2) (as will be amended when SOR/2019-240 comes into force).

Return to footnote18

Footnote 19

PCMLTFR, SOR/2002-184, s. 1(2) (as will be amended when SOR/2019-240 comes into force).

Return to footnote19

Footnote 20

PCMLTFR, SOR/2002-184, s. 1(2).

Return to footnote20

Footnote 21

PCMLTFA, S.C. 2000, c 17, s. 2(1).

Return to footnote21

Footnote 22

PCMLTFR, SOR/2002-184, s. 2(1) (as will be amended when SOR/2019-240 comes into force).

Return to footnote22

Footnote 23

PCMLTFR, SOR/2002-184, s. 1(2) (as will be amended when SOR/2019-240 comes into force) and PCMLTFSTRR, SOR/2001-317, s. 1(2) (as will be amended when SOR/2019-240 comes into force).

Return to footnote23

Footnote 24

PCMLTFR, SOR/2002-184, s. 1(2) (as will be amended when SOR/2019-240 comes into force).

Return to footnote24

Footnote 25

Ibid.

Return to footnote25

Footnote 26

PCMLTFA, S.C. 2000, c 17, s. 2(1).

Return to footnote26

Footnote 27

PCMLTFR, SOR/2002-184, s. 1(2).

Return to footnote27

Footnote 28

PCMLTFR, SOR/2002-184, s. 1(2) (as will be amended when SOR/2019-240 comes into force).

Return to footnote28

Footnote 29

Ibid.

Return to footnote29

Footnote 30

Ibid.

Return to footnote30

Footnote 31

PCMLTFA, S.C. 2000, c 17, s. 5(h.1), PCMLTFRR, SOR/2007-121, s. 1 (as will be amended when SOR/2019-240 comes into force) and PCMLTFR, SOR/2002-184, s. 1(2) (as will be amended when SOR/2019-240 comes into force).

Return to footnote31

Footnote 32

PCMLTFA, S.C. 2000, c 17, s. 2(1).

Return to footnote32

Footnote 33

PCMLTFR, SOR/2002-184, s. 1(2) (as will be amended when SOR/2019-240 comes into force) and PCMLTFSTRR, SOR/2001-317, s. 1(2) (as will be amended when SOR/2019-240 comes into force).

Return to footnote33

Footnote 34

PCMLTFA, S.C. 2000, c 17, s. 9.3(3).

Return to footnote34

Footnote 35

PCMLTFR, SOR/2002-184, s. 1(2) (as will be amended when SOR/2019-240 comes into force).

Return to footnote35

Footnote 36

Ibid.

Return to footnote36

Footnote 37

PCMLTFR, SOR/2002-184, s. 15(2) (as will be amended when SOR/2019-240 comes into force).

Return to footnote37

Footnote 38

PCMLTFR, SOR/2002-184, s. 1(2) (as will be amended when SOR/2019-240 comes into force).

Return to footnote38

Footnote 39

PCMLTFR, SOR/2002-184, s. 1(2).

Return to footnote39

Footnote 40

Ibid.

Return to footnote40

Footnote 41

PCMLTFR, SOR/2002-184, s. 1(2) (as will be amended when SOR/2019-240 comes into force).

Return to footnote41

Footnote 42

Ibid.

Return to footnote42

Footnote 43

Ibid.

Return to footnote43

Footnote 44

PCMLTFR, SOR/2002-184, s. 1(2).

Return to footnote44

Footnote 45

PCMLTFSTRR, SOR/2001-317, s. 1(2).

Return to footnote45

Footnote 46

PCMLTFA, S.C. 2000, c 17, s. 2(1).

Return to footnote46

Footnote 47

PCMLTFA, S.C. 2000, c 17, s. 2(1) and PCMLTFR, SOR/2002-184, s. 1(2).

Return to footnote47

Footnote 48

PCMLTFA, S.C. 2000, c 17, s. 5(h), PCMLTFRR, SOR/2007-121, s. 1 and PCMLTFR, SOR/2002-184, s. 1(2).

Return to footnote48

Footnote 49

PCMLTFA, S.C. 2000, c 17, s. 2(1).

Return to footnote49

Footnote 50

PCMLTFA, S.C. 2000, c 17, s. 9.3(3).

Return to footnote50

Footnote 51

Ibid.

Return to footnote51

Footnote 52

PCMLTFR, SOR/2002-184, s. 1(2).

Return to footnote52

Footnote 53

Ibid.

Return to footnote53

Footnote 54

PCMLTFR, SOR/2002-184, s. 1(2) (as will be amended when SOR/2019-240 comes into force).

Return to footnote54

Footnote 55

Ibid.

Return to footnote55

Footnote 56

PCMLTFA, S.C. 2000, c 17, s. 2(1).

Return to footnote56

Footnote 57

PCMLTFR, SOR/2002-184, s. 1(2) (as will be amended when SOR/2019-240 comes into force).

Return to footnote57

Footnote 58

Ibid.

Return to footnote58

Footnote 59

Ibid.

Return to footnote59

Footnote 60

Ibid.

Return to footnote60

Footnote 61

PCMLTFR, SOR/2002-184, s. 1(2).

Return to footnote61

Footnote 62

Ibid.

Return to footnote62

Footnote 63

Ibid.

Return to footnote63

Footnote 64

PCMLTFR, SOR/2002-184, s. 1(2) (as will be amended when SOR/2019-240 comes into force).

Return to footnote64

Footnote 65

PCMLTFR, SOR/2002-184, s. 1(1) (as will be amended when SOR/2019-240 comes into force).

Return to footnote65

Footnote 66

PCMLTFR, SOR/2002-184, s. 1(2).

Return to footnote66

Footnote 67

Ibid.

Return to footnote67

Footnote 68

Ibid.

Return to footnote68

Footnote 69

PCMLTFA, S.C. 2000, c 17, s. 2(1).

Return to footnote69

Footnote 70

Ibid.

Return to footnote70

Footnote 71

Ibid.

Return to footnote71

Footnote 72

PCMLTFR, SOR/2002-184, s. 1(2) (as will be amended when SOR/2019-240 comes into force).

Return to footnote72

Footnote 73

PCMLTFA, S.C. 2000, c 17, s. 2(1).

Return to footnote73

Footnote 74

PCMLTFR, SOR/2002-184, s. 1(2) (as will be amended when SOR/2019-240 comes into force) and PCMLTFSTRR, SOR/2001-317, s. 1(2) (as will be amended when SOR/2019-240 comes into force).

Return to footnote74

Footnote 75

PCMLTFR, SOR/2002-184, s. 1(2) (as will be amended when SOR/2019-240 comes into force).

Return to footnote75

Footnote 76

Ibid.

Return to footnote76

Date Modified:: 2021-02-18

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

What reasonable measures should I use to make the determination?

Who is a foreign PEP?

Who is a domestic PEP?

Who is the head of an international organization?

What is an international organization?

Why is it important to consider the family member or close associate of a PEP or HIO?

Who is considered to be the family member of a PEP or a HIO?

Is the niece of a PEP considered a family member?

Is the step-child of a PEP or the step-child of a PEP's mother or father considered a family member?

Who is considered to be a close associate of a PEP or a HIO?

When do I make the determination?

Risk assessment of a PEP, HIO, family member, or close associate

What could make a domestic PEP, a HIO, their family member, or close associates high-risk?

How do I establish the source of funds?

Who can review the transaction?

Do I need to keep a record about the PEP, HIO, family member, or close associate?

Reasonable measures record

Risk-based approach considerations

Enhanced measures for high-risk clients

Annex A: Examples of international organizations and institutions established by international organizations

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

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

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

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?

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

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

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

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

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

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

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

Definitions