When to verify the identity of persons and entities—Money services businesses and foreign money services businesses


March 2021

This guidance comes into effect on June 1, 2021.

This guidance on client identification describes when money services businesses (MSBs) and foreign money services businesses (FMSBs) 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 guidance 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 an MSB or FMSB, you must verify the identity of clients for the following:

  1. Large cash transactions
  2. Large virtual currency (VC) transactions
  3. Suspicious transactions
  4. Issuing or redeeming traveller's cheques, money orders, or similar negotiable instruments of $3,000 or more
  5. Transmitting $1,000 or more in funds by means other than an electronic funds transfer (EFT)
  6. Initiating an EFT of $1,000 or more
  7. Foreign currency exchange transactions of $3,000 or more
  8. Transferring VC in an amount equivalent to $1,000 or more
  9. Exchanging VC in an amount equivalent to $1,000 or more
  10. Remitting funds in the amount of $1,000 or more to a beneficiary, by means other than an EFT
  11. Remitting funds to the beneficiary of an international EFT of $1,000 or more
  12. Remitting VC to a beneficiary in an amount equivalent to $1,000 or more
  13. Information records

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

**Note: This obligation is subject to the 24-hour rule.Footnote 3

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 when the transaction takes place.Footnote 4 This includes a situation where you are deemed to have received virtual currency because you have authorized another person or entity to receive it on your behalf.Footnote 5

**Note: This obligation is subject to the 24-hour rule.Footnote 6

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 7

d. Issuing or redeeming traveller's cheques, money orders, or similar negotiable instruments of $3,000 or more

You must verify the identity of every person who requests that you issue or redeem $3,000 or more in traveller's cheques, money orders, or similar negotiable instruments when the transaction takes place.Footnote 8

e. Transmitting $1,000 or more in funds by means other than an electronic funds transfer (EFT)

You must verify the identity of every person who requests that you transmit $1,000 or more in funds by means other than an EFT (for example, by using an informal value transfer system such as Hawala remittance systems), when the transaction takes place.Footnote 9

f. Initiating an EFT of $1,000 or more

You must verify the identity of every person who requests that you initiate an EFT of $1,000 or more, when the transaction takes place.Footnote 10

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

You must verify the identity of every person who conducts a foreign currency exchange of $3,000 or more when the transaction takes place.Footnote 11

h. Transferring VC in an amount equivalent to $1,000 or more

You must verify the identity of every person who requests that you transfer VC in an amount equivalent to $1,000 or more when the transaction takes place.Footnote 12

i. Exchange VC in an amount equivalent to $1,000 or more

You must verify the identity of every person who requests that you exchange VC for funds, funds for VC, or one VC for another, in an amount equivalent to $1,000 or more when the transaction takes place.Footnote 13

j. Remitting funds in the amount of $1,000 or more to a beneficiary by means other than an EFT

You must verify the identity of every person who is the beneficiary of a remittance received in an amount of $1,000 or more by means other than an EFT (for example, by using an informal value transfer system such as Hawala remittance systems) when the transaction takes place.Footnote 14

k. Remitting funds to the beneficiary of an international EFT of $1,000 or more

You must verify the identity of every person you remit funds to as the beneficiary of an international EFT of $1,000 or more when transaction takes place.Footnote 15

l. Remitting VC to a beneficiary in an amount equivalent to $1,000 or more

You must verify the identity of every person you remit VC to as the beneficiary of a transfer that is equivalent to $1,000 or more when the transaction takes place.Footnote 16

m. Information records

You must verify the identity of a corporation or other entity 30 days after the day on which the information record is created for:Footnote 17

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 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 18 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, corporation or other entity if you previously did so using the methods specified under the Regulations in place at the time and kept the associated records, so long as you have no doubts about the information used.Footnote 19

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 public body, or from a person acting on behalf of a client that is an FE or public body.Footnote 22

When you transfer or receive VC as compensation for the validation of a transaction that is recorded in a distributed ledger or you exchange, transfer or 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 23

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:

Service agreements

You do not have to verify the identity of an authorized employee who conducts a transaction for their employer under a service agreement.Footnote 26

Information records

You do not have to verify the identity of a corporation or other entity when you create an information record if the entity is:

Date Modified: