Politically exposed persons and heads of international organizations guidance for non-account-based reporting entity sectors

May 2021

This guidance comes into effect on June 1, 2021.

Accountants, agents of the Crown, British Columbia (B.C.) notaries, dealers in precious metals and precious stones, real estate developers, brokers and sales representatives, money services businesses (MSBs), and foreign money services businesses (FMSBs) (non-account-based reporting entities) 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. However, some requirements and the examples given in this guidance may only apply to certain reporting entities (REs).

Life insurance companies, brokers and agents are also a non-account-based RE. For information on their PEP and HIO requirements see the Politically exposed persons and heads of international organizations guidance for life insurance companies, brokers and agents guidance.

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

This guidance answers the following questions:

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

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

This guidance includes the following annexes, which summarize when non-account-based REs must make a PEP or HIO determination, establish the source of funds, source of virtual currency (VC), and source of wealth, and retain records:

**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 business relationship related PEP, HIO, family member or close associate (of foreign PEP only, in certain circumstances) determination when you:

See Business-relationship-related PEP or HIO determinations below, for an explanation of your requirements in these instances.

You must also take reasonable measures to make PEP, HIO, family member or close associate determinations for the following transactions, as applicable:

See Transaction-related PEP or HIO determinations below, for an explanation of your requirements in these instances.

Business-relationship-related PEP or HIO determinations

Enter into a business relationship

You must take reasonable measures to determine whether a person with whom you enter into a business relationship is a PEP, HIO, family member of one of those persons, or close associate of a foreign PEP.Footnote 1

Periodic monitoring of business relationships

You must periodically take reasonable measures to determine whether a person with whom you have a business relationship is a PEP, HIO, family member of one of those persons, or close associate of a foreign PEP.Footnote 2

Detect a fact about existing business relationships

If you or any of your employees or officers detects a fact that constitutes reasonable grounds to suspect that a person with whom you have a business relationship is a PEP, HIO, or family member or close associate of one of these persons, you must take reasonable measures to determine whether they are such a person.Footnote 3

For more information about what it means to detect a fact about a PEP or HIO, see FINTRAC's Politically exposed persons and heads of international organizations guidance.

Transaction-related PEP or HIO determinations

Receipt of an amount of $100,000 or more in cash or an amount of VC equivalent to $100,000 or more (accountants, agents of the Crown, B.C. notaries, DPMS, and real estate developers, brokers and sale representatives only)

As an accountant, an agent of the Crown, a B.C. notary, a DPMS, or a real estate developer, broker or sales representative, you must take reasonable measures to determine whether a person from whom you receive an amount of $100,000 or more, in cash or an amount of VC equivalent to $100,000 or more is a PEP, HIO, or family member or close associate of one of these persons.Footnote 4

Initiation of an international EFT in the amount of $100,000 or more (MSBs/FMSBs only)

As an MSB or FMSB (when providing services to people located in Canada), you must take reasonable measures to determine whether a person who requests that you initiate an international EFT in the amount of $100,000 or more is a PEP, HIO, or family member or close associate of one of these persons.Footnote 5

Final receipt of an international EFT in the amount of $100,000 or more (MSBs/FMSBs only)

As an MSB or FMSB (when providing services to people located in Canada), you must take reasonable measures to determine whether a beneficiary for whom you finally receive an international EFT in the amount of $100,000 or more is a PEP, HIO, or family member or close associate of one of these persons.Footnote 6

Transfer of an amount of VC equivalent to $100,000 or more (MSBs/FMSBs only)

As an MSB or FMSB (when providing services to people located in Canada), you must take reasonable measures to determine whether a person who requests that you transfer an amount of VC equivalent to $100,000 or more, is a PEP, HIO, or family member or close associate of one of these persons.Footnote 7

Receipt of an amount of VC equivalent to $100,000 or more for remittance to a beneficiary (MSBs/FMSBs only)

As an MSB or FMSB (when providing services to people located in Canada), you must take reasonable measures to determine whether a beneficiary for whom you receive an amount of VC equivalent to $100,000 or more, is a PEP, HIO, or family member or close associate of one of these persons.Footnote 8

2. What are the exceptions to making a PEP or family member determination?

You do not have to make a PEP or family member determination if you already determined that a person is a foreign PEP or a family member of a foreign PEP.Footnote 9

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

Business-relationship-related measures

Foreign PEPs

When you enter into a business relationship, conduct periodic monitoring of business relationships, or detect a fact about an existing business relationship, and determine that a person is a foreign PEP or family member or close associate of a foreign PEP, you must:Footnote 10

Domestic PEPs or HIOs

When you enter into a business relationship, conduct periodic monitoring of business relationships, or detect a fact about an existing business relationship, and determine that a person is a domestic PEP, HIO, or family member of a domestic PEP or HIO, and based on your risk assessment, you consider there to be a high risk of a money laundering (ML) or terrorist activity financing (TF) offence being committed, you must:Footnote 11

When you detect a fact about an existing business relationship, and determine that a person is a close associate of a domestic PEP or HIO and based on your risk assessment, you consider there to be a high risk of an ML or TF offence being committed, you must:Footnote 12

Prescribed timing for taking measures

When you enter into a business relationship with, or detect a fact about a PEP, HIO, or family member or close associate of one of these persons, you have 30 days after the day on which you enter into the business relationship or detect a fact, to take reasonable measures to establish the source of a person's wealth, if applicable.Footnote 13

Transaction-related measures

Foreign PEPs

Accountants, agents of the Crown, B.C. notaries, DPMS, and real estate developers, brokers or sales representatives

When you receive an amount of $100,000 or more in cash or an amount of VC equivalent to $100,000 or more, and determine that a person is a foreign PEP or family member or close associate of a foreign PEP, you must:Footnote 14

MSBs/FMSBs

When as an MSB or FMSB (providing services to people located in Canada), you initiate an international EFT in an amount of $100,000 or more and determine that the person is a foreign PEP or family member or close associate of a foreign PEP, you must:Footnote 15

When as an MSB or FMSB (providing services to people located in Canada), you transfer an amount of VC equivalent to $100,000 or more and determine that the person who requested the transfer is a foreign PEP or family member or close associate of a foreign PEP, you must:Footnote 16

When as an MSB or FMSB (providing services to people located in Canada), you receive an international EFT or an amount of VC equivalent to $100,000 or more for a beneficiary and determine the person is a foreign PEP or family member or close associate of a foreign PEP, you must ensure that a member of senior management reviews the transaction.Footnote 17

Domestic PEPs or HIOs

Accountants, agents of the Crown, B.C. notaries, DPMS, and real estate developers, brokers or sales representatives

When you receive an amount of $100,000 or more in cash or an amount of VC equivalent to $100,000 or more, and determine that the person is a domestic PEP, HIO, or family member or close associate of a domestic PEP or HIO and based on your risk assessment, you consider there to be a high risk of an ML or TF offence being committed, you must:Footnote 18

MSBs/FMSBs

When as an MSB or FMSB (providing services to people located in Canada), you initiate an international EFT in the amount of $100,000 or more at the request of a person and determine that the person is a domestic PEP, HIO, or family member or close associate of a domestic PEP or HIO and based on your risk assessment, you consider there to be a high risk of an ML or TF offence being committed, you must:Footnote 19

When as an MSB or FMSB (providing services to people located in Canada), you transfer an amount of VC equivalent to $100,000 or more and determine that the person is a domestic PEP, HIO, or family member or close associate of a domestic PEP or HIO and based on your risk assessment, you consider there to be a high risk of an ML or TF offence being committed, you must:Footnote 20

When as an MSB or FMSB (providing services to people located in Canada), you receive for a beneficiary an international EFT or an amount of VC equivalent to $100,000 or more and determine that the beneficiary is a domestic PEP, HIO, or family member or close associate of a domestic PEP or HIO and based on your risk assessment, you consider there to be a high risk of an ML or TF offence being committed, you must ensure that a member of senior management reviews the transaction.Footnote 21

Prescribed timing for taking measures

Accountants, agents of the Crown, B.C. notaries, DPMS, and real estate developers, brokers or sales representatives

When you receive an amount of $100,000 or more in cash or an amount of VC equivalent to $100,000 or more, you have 30 days after the day on which the transaction is conducted to:Footnote 22

MSBs/FMSBS

As an MSB or FMSB (when providing services to people located in Canada), for the applicable transactions referred to above, you have 30 days after the day on which the transaction is conducted to:Footnote 23

4. What records do I need to keep about PEPs, HIOs, family members or close associates?

PEP and HIO business relationship records

When you enter into a business relationship, conduct periodic monitoring of business relationships, or detect a fact about an existing business relationship, and determine that the person is a PEP, HIO, or a family member or close associate of one of those persons, you must keep a record of:Footnote 24

Retention: You must keep PEP and HIO business relationship records for at least five years after the day on which they were created.Footnote 25

PEP and HIO transaction records

Accountants, agents of the Crown, B.C. notaries, DPMS, and real estate developers, brokers or sales representatives

If senior management reviews a transaction where you had received an amount of $100,000 or more in cash or an amount of VC equivalent to $100,000 or more for which you made a PEP or HIO determination, then you must keep a record of:Footnote 26

In the case of family members and close associates of PEPs and HIOs, you may also want to include in the record the nature of the relationship between the person and the PEP or HIO, as applicable.

Retention: If you review a prescribed PEP or HIO transaction, then you must keep these transaction records for at least 5 years after the day on which they were created.Footnote 27

MSBs/FMSBs

If as an MSB or FMSB (when providing services to people located in Canada), you review an applicable prescribed transaction listed under Transaction-related PEP or HIO determinations for which you have made a PEP or HIO determination then you must keep a record of:Footnote 28

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

Retention: If you review a prescribed PEP or HIO transaction then you must keep these transaction records for at least 5 years from the day on which the last business transaction is conducted.Footnote 29

Annex 1—When to make a PEP or HIO determination—Non-account-based REs

When to make a PEP or HIO determination Do I need to make a PEP or HIO determination?
Accountants Agents of the Crown B.C. notaries DPMS Real estate MSBs
Enter into business relationship Yes Yes Yes Yes Yes Yes
Periodic monitoring of business relationships Yes Yes Yes Yes Yes Yes
Detect a fact about business relationships Yes Yes Yes Yes Yes Yes
Receipt in the amount of $100,000 or more in cash or an amount of VC equivalent to $100,000 or more Yes Yes Yes Yes Yes
Initiate international EFT in the amount of $100,000 or more Yes
Final receipt of international EFT in the amount of $100,000 or more to a beneficiary Yes
Transfer of  an amount of VC equivalent to $100,000 or more Yes
Beneficiary receives an amount of VC equivalent to $100,000 or more Yes

Annex 2 — Establishing the source of funds, source of VC and source of wealth — Non-account-based REs

When to make a PEP or HIO determination Do I need to establish the source of funds, source of VC, and source of wealth for PEPs or HIOs? Timing for establishing source of funds, source of VC, and source of wealth
Accountants Agents of the Crown B.C. notaries DPMS Real estate MSBs
Enter into business relationship Yes Yes Yes Yes Yes Yes 30 days after the day on which you enter into a business relationship or detect a fact
Periodic monitoring of business relationships Yes Yes Yes Yes Yes Yes
Detect a fact about business relationships Yes Yes Yes Yes Yes Yes
Receipt in the amount of $100,000 or more in cash or an amount of VC equivalent to $100,000 or more  Yes Yes Yes Yes Yes 30 days after the day on which the transaction is conducted
Initiate an international EFT in the amount of $100,000 or more Yes
Final receipt to a beneficiary of an international EFT in the amount of $100,000 or more Yes
Transfer of  an amount of VC equivalent to $100,000 or more Yes
Beneficiary receives an amount of VC equivalent to $100,000 or more Yes

Annex 3 — Retention of PEP and HIO records — Non-account-based REs

PEP or HIO records Do I need to keep PEP or HIO records? Record retention
Accountants Agents of the Crown B.C. notaries DPMS Real estate MSBs
Enter into business relationship Yes Yes Yes Yes Yes Yes At least 5 years after the day on which they were created
Periodic monitoring of business relationships Yes Yes Yes Yes Yes Yes
Detect a fact about business relationships Yes Yes Yes Yes Yes Yes
Receipt in the amount of $100,000 or more in cash or an amount of VC equivalent to $100,000 or more  Yes Yes Yes Yes   At least 5 years from the day on which the last business transaction is conducted
Initiate an international EFT in the amount of $100,000 or more Yes
Final receipt to a  beneficiary of an international EFT in the amount of $100,000 or more Yes
Transfer of  an amount of VC equivalent to $100,000 or more Yes
Beneficiary receives an amount of VC equivalent to $100,000 or more Yes
Date Modified: