When to verify the identity of persons and entities—Casinos

June 2017 

When to identify individuals and confirm the existence of entities – Casinos

June 2017

This guidance on client identification is applicable to casinos that are subject to the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA) and associated Regulations.

Details on how to identify individuals and confirm the existence of entities is available in FINTRAC’s guidance Methods to identify individuals and confirm the existence of entities.

Throughout this guidance, references to dollar amounts (such as $10,000) are in Canadian dollars. Furthermore, all references to cash mean money in circulation in any country (bank notes or coins) and do not include cheques, money orders or other similar negotiable instruments.

The Proceeds of Crime (Money Laundering) and Terrorist Financing Regulations (PCMLTFR) specify when you must identify an individual or confirm the existence of an entity, and how you must do this. The point at which you identify a client will vary depending on the activity or transaction that is carried out. Knowing your clients includes identifying them in accordance with the Regulations, but you also have further obligations in this regard, such as requirements related to the ongoing monitoring of business relationships and third party determination. Please refer to FINTRAC’s guidance on these subjects for more information.

**Note: Exceptions to your client identification requirements are listed in the last section of this guidance.

Identifying clients

As a casino, you must identify individuals and confirm the existence of entities for certain activities and transactions, as listed below. Entities can be corporations, trusts, partnerships, funds, and unincorporated associations or organizations.

When you have to confirm the existence of an entity that is a corporation, you also have to verify its name and address, and the names of the corporation’s directors.

The formation of business relationships and the ensuing obligations are tied to your requirements to identify clients. You are in a business relationship with every individual or entity that holds an account with you. For non-account-based relationships, you are considered to be in a business relationship with every individual you have had to identify at least twice, and with every entity whose existence you have had to confirm at least twice. If you have not identified an individual or confirmed the existence of an entity because an exception applied, you are still considered to be in a business relationship and must conduct ongoing monitoring and keep certain records.

You are also required to take reasonable measures to determine if a client is acting on the instruction of a third party when opening an account or conducting a large cash transaction. In this case, reasonable measures may include asking the individual, or relying on information you may already have about the individual. If you determine that the individual in front of you is acting on someone else's instructions, that “someone else” is the third party.

As a casino, you are responsible for identifying clients for:

  1. Account openings and signature card creations
  2. Extension of credit of $3,000 or more
  3. Foreign currency exchange of $3,000 or more
  4. Remittance or transmission of $1,000 or more
  5. Casino disbursements
  6. Large cash transactions
  7. Suspicious transactions

1. Account openings and signature card creations

You must identify all individuals that you create a signature card for in relation to an account that you open. A signature card is a document signed by an individual authorized to give instructions on an account, or electronic data that constitutes a signature. It can include the hand written signature of an individual or an electronic signature that is created or adopted by an individual. The electronic signature can be numeric, character-based, or biometric as long as it is unique to the individual and a record can be kept. This must be done before any funds are disbursed.

When you open an account for an entity, you must:

  • confirm its existence; and
  • for an entity that is a corporation, verify its name and address, and the names of its directors.

This must be done before the first transaction is carried out on the account, other than the initial deposit.

When you open a business account, you do not have to identify every individual for whom you create a signature card if you have created a signature card for more than three individuals and have identified at least three of these individuals. These individuals must be identified before any funds are disbursed from the account.

When opening a new account, if you cannot identify an individual or confirm the existence of an entity, you cannot open the account.

2. Extension of credit of $3,000 or more

If you extend credit to a client for $3,000 or more, you must identify the individual who conducts the transaction with you, at the time the transaction takes place.

3. Foreign currency exchange of $3,000 or more

For a foreign currency exchange of $3,000 or more you must identify the individual conducting the transaction at the time the transaction takes place.

4. Remittance or transmission of $1,000 or more

When you remit or transmit $1,000 or more, you have to identify the individual who makes the request at the time the transaction takes place.

For example, when you send an electronic funds transfer (EFT) of $1,000 or more, you must identify the individual who makes the request at the time the transaction takes place. An EFT means the transmission of instructions, through any electronic, magnetic or optical device, telephone instrument or computer, for the transfer of funds to or from Canada.

If you transmit funds as an EFT of any amount at the request of a client, including an EFT sent within Canada that is a SWIFT MT 103 message, you must include the originator information.

If you receive an EFT of any amount, including an EFT sent within Canada that is a SWIFT MT 103 message, you must take reasonable measures to ensure it includes the originator information. In this context, reasonable measures may include contacting the institution that sent the payment instructions.

5. Casino disbursements

You must identify every individual who receives a casino disbursement at the time the transaction takes place. A casino disbursement is any payout, whether in cash or not, of $10,000 or more for the following transactions:

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

A casino disbursement also includes two or more disbursements of less than $10,000 each that total $10,000 or more within a 24-hour period, when you know that the disbursements are received by, or on behalf of, the same individual or entity.

6. Large cash transactions

You must identify every individual who conducts a large cash transaction at the time the transaction takes place. A large cash transaction occurs when you receive $10,000 or more in cash in a single transaction. A large cash transaction also occurs when there are multiple cash transactions of less than $10,000 each that total $10,000 or more within a 24-hour period, when you know they are conducted by, or on behalf of, the same individual or entity.

7. Suspicious transactions

You must take reasonable measures to identify an individual who conducts or attempts to conduct a suspicious transaction before sending a Suspicious Transaction Report. Reasonable measures in this case may include asking the individual to provide photo identification.

All suspicious transactions and attempted suspicious transactions, including transactions that are normally exempt from client identification requirements, require you to take reasonable measures to identify your clients.

Keeping client identification information up to date

You must update client information at a frequency that will vary based on your risk assessment. As part of your ongoing monitoring requirements, you must keep all client identification information up to date. High-risk clients’ identification information must be updated more frequently, and you must take any other appropriate enhanced measures.

To keep client identification information up to date, you must take measures such as asking the client to provide information to confirm or update their identification information. In the case of an individual, this may also include confirming or updating the information by using the options that are available to identify individuals who are not physically present.

In the case of clients that are entities, measures to keep client identification information up to date may include consulting a paper or electronic record or obtaining information verbally.

Exceptions

You do not have to re-identify an individual or re-confirm the existence of an entity if you previously did so using the methods specified in the Regulations in place at the time and kept the associated records, so long as you have no doubts about the information used.

If an individual has an account with you, you do not have to re-identify the individual again if subsequent accounts are opened.

You do not need to verify the names of the directors when you confirm the existence of a corporation that is a securities dealer.

You do not have to identify an individual or confirm the existence of an entity when you undertake the following activities for a public body or very large corporation:

  • open an account
  • extend credit of more than $3,000 to a client
  • conduct a foreign currency exchange of $3,000 or more
  • remit or transmit $1,000 or more

The same is true regarding a subsidiary of either of those types of entities, if the financial statements of the subsidiary are consolidated with those of the public body or very large corporation.

You do not have to identify an individual who conducts a large cash transaction if the cash is received from a financial entity or public body.

You do not have to take reasonable measures to identify the individual who conducts or attempts to conduct a suspicious transaction only if:

  • you have already identified the individual as required and have no doubts about the identification information; or
  • you believe that identifying the individual would inform them that you are submitting a Suspicious Transaction Report.
March 2021 

When to verify the identity of persons and entities—Casinos

March 2021

This guidance comes into effect on June 1, 2021.

This guidance on client identification describes when casinos must verify the identity of persons and entities as required by the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA) and associated Regulations. Details on how to verify the identity of persons and entities are available in FINTRAC's Methods to verify the identity of persons and entities guidance.

This document answers the following questions:

  1. When do I have to verify the identity of persons and entities?
  2. What is the difference between verifying identity and keeping client identification information up to date?
  3. What are the exceptions to client identification requirements?

**Note: Throughout this guidance, references to dollar amounts (such as $10,000) are in Canadian dollars.

1. When do I have to verify the identity of persons and entities?

As a casino, you must verify the identity of clients for the following:

  1. Large cash transactions
  2. Large virtual currency transactions
  3. Suspicious transactions
  4. Casino disbursements
  5. Extension of credit of $3,000 or more
  6. Receipt of funds of $3,000 or more
  7. Foreign currency exchange transactions of $3,000 or more
  8. Initiation of an electronic funds transfer (EFT) of $1,000 or more
  9. Final receipt of an international EFT of $1,000 or more
  10. Accounts—Account holders and persons authorized to give instructions

a. Large cash transactions

You must verify the identity of every person or entity from which you receive $10,000 or more in cash when the transaction takes place.Footnote 1 This includes a situation where you are deemed to have received cash because you have authorized another person or entity to receive it on your behalf.Footnote 2

Large cash transactions include the receipt of $10,000 or more in cash for the following transactions:Footnote 3

  • the sale of chips, tokens or plaques;
  • a front cash deposit;
  • a safekeeping deposit;
  • the repayment of any form of credit, including repayment by a marker or a counter cheque;
  • a bet of fiat currency; and
  • the sale of casino cheques.

**Note: This obligation is subject to the 24-hour rule.Footnote 4

b. Large virtual currency transactions

You must verify the identity of every person or entity from which you receive virtual currency (VC) in an amount equivalent to $10,000 or more when the transaction takes place.Footnote 5 This includes a situation where you are deemed to have received VC because you have authorized another person or entity to receive it on your behalf.Footnote 6

**Note: This obligation is subject to the 24-hour rule.Footnote 7

c. Suspicious transactions

You must take reasonable measures to verify the identity of every person or entity that conducts or attempts to conduct a suspicious transaction, regardless of the transaction amount, and including transactions that would normally be exempt from client identification requirements, before sending a Suspicious Transaction Report (STR).Footnote 8

d. Casino disbursements

You must verify the identity of every person who receives a casino disbursement of $10,000 or more, for which a Casino Disbursement Report (CDR) is required, when the transaction takes place.Footnote 9

**Note: This obligation is subject to the 24-hour rule.Footnote 10

e. Extension of credit of $3,000 or more

You must verify the identity of every person who conducts a transaction for which the casino extends credit of $3,000 or more to a person or entity, when the transaction takes place.Footnote 11

f. Receipt of funds of $3,000 or more

You must verify the identity of every person who conducts a transaction in which you receive $3,000 or more in funds when the transaction takes place.Footnote 12

g. Foreign currency exchange of $3,000 or more

You must verify the identity of every person who requests a foreign currency exchange of $3,000 or more when the transaction takes place.Footnote 13

h. Initiation of an electronic funds transfer (EFT) of $1,000 or more

You must verify the identity of every person who requests the initiation of an EFT of $1,000 or more for a person or entity, when the transaction is being requestedFootnote 14

**Note: The initiation of an international EFT is subject to the 24-hour rule.Footnote 15

i. Final receipt of an international EFT of $1,000 or more

You must verify the identity of every person who is the beneficiary of an international EFT of $1,000 or more that you finally receive, when the transaction takes place.Footnote 16

**Note: The final receipt of an EFT is subject to the 24-hour rule.Footnote 17

j. Accounts—Account holders and persons authorized to give instructions

Account holders

You must verify the identity of every person for whom you open an account before any funds are disbursed.Footnote 18 You must also verify the identity of every corporation and other entity for which you open an account before the first transaction, other than an initial deposit, is carried out on the account.Footnote 19

You cannot open an account for a person, corporation, or other entity if you cannot verify their identity in accordance with the regulations.Footnote 20

Persons authorized to give instructions

You must verify the identity of every person authorized to give instructions on an account that you open before any funds are disbursed.Footnote 21

2. What is the difference between verifying identity and keeping client identification information up to date?

As a part of your ongoing monitoring requirements for business relationships, you must keep client identification information up to date, at a frequency that will vary based on your risk assessment, and as outlined in your policies and procedures.Footnote 22 This does not require you to re-identify clients in accordance with the methods to verify identity. As explained in the ongoing monitoring guidance, the requirement is only for you to keep client identification information up to date. This is understood to be information that you have about your client such as their name and address. In the case of a person, this would also include, but is not limited to, the nature of their principal business or their occupation; and in the case of an entity, the nature of its principal business.

3. What are the exceptions to client identification requirements?

You do not have to re-identify a person or an entity if you previously did so using the methods specified by the Regulations in place at the time, and kept the associated records, so long as you have no doubts about the information used.Footnote 23

Large cash transactions

You do not have to verify the identity of a person or entity that conducts a large cash transaction if:

  • you receive the cash from a client that is a financial entity (FE) or a public body, or from a person who is acting on behalf of a client that is an FE or a public body;Footnote 24 or
  • the amount received is a deposit to a business account or a deposit to an automated banking machine (including a quick drop or night deposit).Footnote 25

Large VC transactions

You do not have to verify the identity of a person or entity that conducts a large VC transaction if you receive the VC from a client that is an FE or a public body, or from a person acting on behalf of a client that is an FE or public body.Footnote 26

When you receive VC as compensation for the validation of a transaction that is recorded in a distributed ledger or you receive a nominal amount of VC for the sole purpose of validating another transaction or a transfer of information—you do not need to keep a large VC transaction record and do not need to verify identity.Footnote 27

Suspicious transactions

You do not have to take reasonable measures to verify the identity of the person or entity that conducts or attempts to conduct a suspicious transaction if:

  • you have already verified the identity of the person or entity as required and have no doubts about the identification information;Footnote 28 or
  • you believe that verifying the identity of the person or entity would inform them that you are submitting an STR.Footnote 29

Receipt of funds of $3,000 or more

You do not have to verify the identity of a person who conducts a transaction in which you receive $3,000 or more in funds if you receive the funds from an FE or a public body or from a person acting on behalf of a client that is an FE or public body.Footnote 30

Public bodies, very large corporations and trusts

You do not have to verify the identity of a person or entity when you undertake the following activities for a public body or very large corporation or trust, or a subsidiary of either of those types of entities, if the financial statements of the subsidiary are consolidated with those of the public body, or very large corporation or trust:Footnote 31

  • open an account;
  • casino disbursement of $10,000 or more;
  • extend credit of $3,000 or more;
  • receive $3,000 or more in funds;
  • conduct a foreign currency exchange of $3,000 or more;
  • initiate an EFT of $1,000 or more; and  
  • finally receive an international EFT of $1,000 or more.

Account openings

You do not have to verify the identity of a person who opens an account, in the following circumstances:Footnote 32

  • if the person already has an account with you and opens a subsequent account;
  • if the person is authorized on a business account, so long as you have verified the identity of at least three persons authorized to give instructions on the account. If one of the three identified persons leaves the business, you must verify the identity of another person authorized on the account.
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