When to verify the identity of persons and entities — Life insurance companies, brokers and agents


March 2021

This guidance comes into effect on June 1, 2021.

This guidance on client identification describes when life insurance companies, brokers and agents must verify the identity of persons and entities under 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 guidance Methods to verify the identity of persons and entities.

This guidance does not apply to life insurance brokers and agents when they are acting as managing general agents.Footnote 1

If you are a life insurance company or an entity that is a broker or an agent that offers loans or prepaid payment products (PPPs) to the public, and maintains accounts in respect of those activities, you are considered to be a financial entity (FE). You can find guidance on financial entities' client identification obligations in FINTRAC's When to verify the identity of persons and entities – Financial 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 my 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 life insurance company, broker or agent, you must verify the identity of clients for the following:

  1. Large cash transactions
  2. Large virtual currency (VC) transactions
  3. Suspicious transactions
  4. Information records
  5. Group plans

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 places.Footnote 2 This includes situations where you are deemed to have received cash because you have authorized another person or entity to receive it on your behalf.Footnote 3

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

b. Large virtual currency (VC) transactions

You must verify the identity of every person or entity from which you receive VC in an amount equivalent to $10,000 or more at the time the transaction takes place.Footnote 5 This includes situations 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. Information records

You must verify the identity of every person or entity for which an information record is kept in connection with the sale of an immediate or deferred annuity or a life insurance policy:Footnote 9

This includes verifying the identity of the annuitant or the policy holder listed in the information record that is kept in connection with the sale if you are to receive $10,000 or more over the duration of the annuity or policy.Footnote 10

This also includes verifying the identity of the beneficiary listed in the information record, before you first remit funds or VC to them, in connection with the sale, if you are to remit $10,000 or more over the duration of the annuity or policy.Footnote 11

As applicable, the annuitants or policy holders, and beneficiaries must be identified within 30 days of the creation of the information record.Footnote 12

e. Group plans

In the case of a group life insurance policy or annuity, you must verify the identity of the applicant, for which an information record is kept.Footnote 13 You must also identify the beneficiaries, for which information records are required.Footnote 14

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

As part of your ongoing monitoring requirements for business relationships, you must keep all 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 15 You are not required to re-identify clients in accordance with the methods to verify identity. As described in the Ongoing monitoring guidance, the requirement is for client identification information to be kept 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 occupation; and in the case of an entity, the nature of its principal business.

3. What are the exceptions to my client identification requirements?

The client identification requirements in this guidance do not apply if you are dealing in reinsurance, except for those requirements associated with suspicious transactions.Footnote 16

Also, you do not have to re-identify a person or 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.Footnote 17

Large cash transactions

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

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 20

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 21

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 only if:

Public bodies, very large corporations and trusts

You do not have to verify the identity of a person or entity in connection with an information record if the client is:Footnote 24

Other activities exempted from client identification requirements

You do not have to verify the identity of persons and entities  for the following activities:Footnote 25

These exceptions do not apply to large cash transactions, large VC transactions, or suspicious transactions.

Date Modified: