FINTRAC Policy Interpretations

Record Keeping

Casino ROFR obligations triggered by funds received in a slot machine

Question:

Does the 24 hour rule apply to the receipt of funds record (ROFR) obligations at 74(2)(f) for a Casino when $3,000 or more is received?

Also, is an ROFR required for funds received in a slot machine?

Answer:

Effective June 1, 2021, a receipt of funds record (ROFR) obligation will be added for the casino sector. Specifically, per paragraph 74(2)(f) of the PCMLTFR, a casino will be required to keep an ROFR if it receives an amount of $3000 or more in a single transaction. It should be noted that this particular reference to "single transaction" is NOT a reference to the 24 hour rule (a deemed single transaction), but rather refers to a true one-time transaction of $3000 or more.

Where a person can add funds to a slot machine one bill at a time until an amount of $3000 or more is inserted - without any play of the money - the obligation to keep an ROFR is triggered.

Should the client choose to play part or all of the funds, any number of times, on the way to reaching an amount received of $3000 or more, then the RE's ROFR obligation is not triggered. For example, the person adds $1,500 worth of bills to the slot machine, plays these funds, adds another $1,500 worth of bills and continues to play, this would not trigger an ROFR, as the playing of the slot machine has created a break in the transaction. This presumes that at no time does the amount increase by $3000 or more without an amount being played. For example, the person adds $1,500 worth of bills to the slot machine, plays on these funds, adds another $3,000 worth of bills and continues to play. In this case, the $3,000 addition would trigger an ROFR.

Date answered: 2021-03-22

PI Number: PI-11467

Activity Sector(s): Casinos

Obligation(s): Record Keeping

Regulations: 74(2)(f)

Receipt of Funds Record not required when less than $3000 received or for VC

Question:

Q1. Could you confirm that when receiving funds of less than $3,000 reporting entities are not required to keep a Receipt of Funds Record?

Q2. Given that “funds” do not include virtual currency by definition, could you confirm that a Receipt of Funds Record is not required when less than $10,000 in virtual currency is received and therefore there is no obligation to identify the client?

Answer:

Pursuant to the amended Proceeds of Crime (Money Laundering) and Terrorist Financing Regulations (PCMLTFR):

  • 43 A British Columbia (BC) notary public or BC notary corporation shall keep the following records in connection with an activity referred to in section 38:
    • (a) a receipt of funds record in respect of every amount of $3,000 or more that they receive, unless the amount is received from a financial entity or public body or from a person who is acting on behalf of a client that is a financial entity or public body; and
    • (b) if the receipt of funds record is in respect of a corporation, a copy of the part of official corporate records that contains any provision relating to the power to bind the corporation in respect of transactions with the British Columbia notary public or British Columbia notary corporation.
  • 52 An accountant or accounting firm shall keep the following records in connection with an activity referred to in section 47:
    • (a) a receipt of funds record in respect of every amount of $3,000 or more that they receive, unless the amount is received from a financial entity or public body or from a person who is acting on behalf of a client that is a financial entity or public body; and
    • (b) if the receipt of funds record is in respect of a corporation, a copy of the part of official corporate records that contains any provision relating to the power to bind the corporation in respect of transactions with the accountant or accounting firm.
  • 58(1) A real estate broker or sales representative shall keep the following records in connection with an activity referred to in section 53:
    • (a) a receipt of funds record in respect of every amount that they receive, unless the amount is received from a financial entity or public body or from a person who is acting on behalf of a client that is a financial entity or public body;
    • (c) if the receipt of funds record or information record is in respect of a corporation, a copy of the part of official corporate records that contains any provision relating to the power to bind the corporation in respect of transactions with the real estate broker or sales representative.
  • 64 A real estate developer shall keep the following records in connection with an activity referred to in section 59:
    • (a) a receipt of funds record in respect of every amount that they receive, unless the amount is received from a financial entity or public body or from a person who is acting on behalf of a client that is a financial entity or public body;
    • (c) if the receipt of funds record or information record is in respect of a corporation, a copy of the part of official corporate records that contains any provision relating to the power to bind the corporation in respect of transactions with the real estate developer.
  • 74(2)(f) if the casino receives an amount of $3,000 or more from a person or entity in a single transaction, a receipt of funds record in respect of that amount, unless that amount is received from a financial entity or public body or from a person who is acting on behalf of a client that is a financial entity or public body.

 

Q1. As such, it is the receipt of $3,000 or more in a true one time transaction that triggers the obligation to keep an ROFR, as noted above. The provisions related to the obligation to verify identity can be found starting at section 84 of the amended PCMLTFR, which includes the obligation to take reasonable measures to verify the identity of a person or entity that conducts or attempts to conduct a suspicious transaction. BC Notaries, accountants, real estate brokers, sales representatives and developers, and casinos are required to verify the identity of a person who conducts a transaction in respect of which they are required to keep a record, including an ROFR.

Q2. It is the receipt of funds, as defined in subsection 1(2) of the amended PCMLTFR that triggers the obligation to keep an ROFR. As such, the receipt of $3,000 or more in virtual currency would not trigger the obligation to keep an ROFR.

Date answered: 2021-02-10

PI Number: PI-11465

Activity Sector(s): Accountants, British Columbia notaries, Casinos, Real estate

Obligation(s): Record Keeping

Regulations: 43, 52, 58(1), 64, 74(2)(f)

EFT definition vs. new record keeping for remitting and transmitting

Question:

  1. For clarification, the definition of an EFT is being changed to include both international and domestic? In the past, I was advised that EFT by its definition meant international only due to the following in the Interpretation section of the PCMLTFR
  2. Why are there new record keeping requirements for MSBs and FMSBs for remitting and transmitting “other than in the case of an electronic funds transfer” at 36(c.1) and (c.2)?

Answer:

1. Yes, the definition of an EFT has been amended. Previously, an EFT was international by definition. Now, in the PCMLTFR, you will find the amended definition, which states:

Electronic funds transfer means 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 of instructions for the transfer of funds:

  • (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 a 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.

Now, the definition of an EFT is simply the transmission of instructions for the transfer of funds, and therefore includes both domestic and international transfers. A definition has also been added for International EFT – which means an electronic funds transfer other than for the transfer of funds within Canada.

You’ll now find the requirements re: international or not, within the text of the obligations themselves (e.g. the record keeping obligations).

 

2. As per the previous language in the PCMLTFR the reporting for MSBs related to “an electronic funds transfer of $10,000 or more in the course of a single transaction”, which by definition required the transmission to be international and have an electronic component. However, the record-keeping language was “where an amount of $1,000 or more is remitted or transmitted…”. This difference in terminology required MSBs to keep a record when $1,000 was transferred even domestically, and by non-electronic means.

The obligations at paragraphs 36(c.1) and (c.2) were therefore added so as not to lose the requirements that previously existed outside of EFTs.

Date answered: 2020-08-24

PI Number: PI-11473

Activity Sector(s): Casinos, Financial entities, Money services businesses

Obligation(s): Record Keeping

Regulations: 1(2), 36(c.1) & (c.2)

Occupation information – NOC Index

Question:

Does the Canadian National Occupational Classification (NOC) Index (https://noc.esdc.gc.ca/Home/Welcome/3cfdff585f164b90a79bebe78f7988de) provide a fulsome list of possible occupations for reporting entities required to collect this information?

Answer:

FINTRAC has consistently indicated that reporting entities (REs) must be as descriptive as possible when recording the occupation of a client, in order to be able to determine whether a transaction or activity is consistent with what would be expected for that client. For example, in the case of a person who is a manager, the occupation recorded should reflect the area of management, such as “hotel reservations manager” or “retail clothing store manager”.

The NOC Index was developed as part of a collaborative partnership between Employment and Social Development Canada and Statistics Canada for collecting, analyzing, and disseminating occupational data for labour market information and employment-related program administration.

Upon review of the NOC codes it appears that many group titles such as “5252 - Coaches” would not be sufficiently detailed for use by REs to meet their obligations. The occupations within a group, while related, are sufficiently diverse that simply stating the group title (e.g. NOC 5252) would not allow an RE to reasonably assess the expected activities, expected income and other factors of that individual. For example, A University basketball coach, a Canadian Football League football Coach and a National Hockey League Coach all fall within code 5252 – Coaches, but they are not interchangeable and would encompass different activities and salary ranges. Therefore the use of NOC codes in lieu of specific occupation titles for record keeping purposes is not acceptable.

That said, an RE could consider a combination of the NOC code and additional detail, to meet its obligations pursuant to the PCMLTFA and its associated Regulations. For example, NOC 5252 – XYZ University basketball coach.

Finally, given that an RE’s record-keeping obligations support its reporting obligations, it is important to consider how this information will be reported to FINTRAC. If an RE chooses to use the combination of the NOC code and additional detail, then, when completing a report, the RE should first provide the additional detail in the field to ensure that this information is not truncated due to the character limitations of the field.

Date answered: 2020-06-05

Answer updated on: 2021-08-20

PI Number: PI-10654

Activity Sector(s): Accountants, British Columbia notaries, Casinos, Dealers in precious metals and stones, Financial entities, Life insurance, Money services businesses, Real estate, Securities dealers

Obligation(s): Record Keeping

Unsuccessful reasonable measures

Question:

Was the requirement to keep records for unsuccessful reasonable measures removed from the Regulations?

Answer:

In June 2016, a requirement was added to the Regulations at section 67.3 that required reporting entities to keep a record of any “unsuccessful reasonable measures” they have taken. A reporting entity was required to record the measures taken, the date the measures were taken and the reason they were unsuccessful.

Following the coming into force of this new requirement in June 2017, it was determined (through stakeholder feedback) that this was too onerous, and imposed a significant administrative burden on reporting entities. The amended Regulations therefore repeals section 67.3 of the PCMLTFR, and will come into force on June 1, 2021.

That said, similar record keeping requirements will still exist for certain instances where reasonable measures must be taken. Additionally, a new record keeping requirement was added to capture this information when the real estate sector is required to take reasonable measures to verify the identity of an unrepresented party.

Specifically, subsection 101(4) of the PCMLTFR states “If a real estate broker or sales representative is unable to verify the identity of a party under subsection (3), they shall keep a record that sets out the measures taken, the date on which each measure was taken and the reasons why the measures were unsuccessful.”

Date answered: 2019-09-18

PI Number: PI-11469

Activity Sector(s): Accountants, British Columbia notaries, Casinos, Dealers in precious metals and stones, Financial entities, Life insurance, Money services businesses, Real estate, Securities dealers

Obligation(s): Record Keeping

Legal land description as an address

Question:

I am seeking clarification regarding whether a legal land description satisfies the requirements of an address when the conventional civic address does not exist.

Answer:

FINTRAC has previously indicated that the address referred to in the Proceeds of Crime (Money Laundering) and Terrorist Financing Regulations (PCMLTFR) is the physical address where the client lives or where the physical location of the place of business is found. In cases where the client resides in an area where there is no civic address, a description, in as much detail as possible, of all information or features that may be useful to locate the physical location of the person is required.

For intelligence purposes, obtaining a precise description of an address allows FINTRAC to analyze evidence and to establish connections between a client’s physical location, financial transactions and trends that are suspected of being related to money laundering, terrorist financing or other threats to the security of Canada. This is also of great importance when disclosing intelligence to partners, which can contribute to criminal investigations by identifying new targets or hidden proceeds of crime and by disclosing facts that are necessary in obtaining warrants. 

Therefore, to address your question, it has been determined that a legal land description can be acceptable, so long as the legal land description is specific enough to pinpoint the physical location where the client lives.

That said, if the legal land description refers to an area or a parcel of land on which multiple properties are located, the legal land description would not, in this case, be sufficient. It could replace the absence of a postal code, but would not in itself be an address for the purpose of the PCMLTFR.

Date answered: 2017-05-31

Answer updated on: 2021-08-20

PI Number: PI-7654

Activity Sector(s): Accountants, British Columbia notaries, Casinos, Dealers in precious metals and stones, Financial entities, Life insurance, Money services businesses, Real estate, Securities dealers

Obligation(s): Record Keeping, Reporting

Address for transient Canadian or foreign clients

Question:

What type of information should be provided in reports for the address of clients who are transient and do not have a set physical address? For example, people living in cars, RV’s, working in camp and then staying in a motor home on their days off and people visiting Canada and travelling/living in Canada with only an RV and no fixed address.

Answer:

While it appears that you have inquired about the implications for reporting only, it is important to highlight the fact that a client’s address is also required to fulfil certain record keeping obligations and may be required to verify a client’s identity, depending on the method used.

FINTRAC has previously indicated that the address referred to in the Proceeds of Crime (Money Laundering) and Terrorist Financing Regulations (PCMLTFR) is the physical address where the client lives or where the physical location of the place of business is found.

Therefore, for Canadian residents, their permanent Canadian address is required, even if that is not where they are currently residing; for foreign clients travelling in Canada for a short period of time, their foreign residential address is required; and should the foreign client be living in Canada for a longer period of time (e.g. a student or new comer to Canada), then the client’s temporary Canadian address should be provided.

Date answered: 2016-10-25

Answer updated on: 2021-08-20

PI Number: PI-7650

Activity Sector(s): Accountants, British Columbia notaries, Casinos, Dealers in precious metals and stones, Financial entities, Life insurance, Money services businesses, Real estate, Securities dealers

Obligation(s): Record Keeping, Reporting

Occupation information as Unemployed

Question:

Is “unemployed” an acceptable occupation in all cases (record keeping and FINTRAC reporting), or only in the case of Large Cash Transaction Reports (LCTRs) and Suspicious Transaction Reports (STRs)?

Answer:

“Unemployed” is an acceptable occupation in all reporting and record keeping cases, as applicable.

Date answered: 2014-11-18

Answer updated on: 2021-08-20

PI Number: PI-6258

Activity Sector(s): Accountants, British Columbia notaries, Casinos, Dealers in precious metals and stones, Financial entities, Life insurance, Money services businesses, Real estate, Securities dealers

Obligation(s): Record Keeping, Reporting

Definition of ''Account''

Question:

Can you clarify the definition of “account” and how it pertains to financial entities in The Proceeds of Crime (Money Laundering) and Terrorist Financing Regulations (PCMLTFR)?

Answer:

The term “account” is not defined in the PCMLTFA, nor its associated Regulations. While the opening of an account for the purpose of holding a client’s assets is clearly understood to be an account opening, FINTRAC has taken the position that, in other cases, it is generally for a reporting entity to determine whether or not an account has been opened. Generally, financial entities have their policies and procedures, and know when an “account opening” has taken place.

It is important to note that to be considered an account, there does not need to be a deposit component. As indicated above, in cases other than deposit taking accounts, FINTRAC will generally respect the entity’s determination of whether or not it has opened an account in any given case.

Date answered: 2014-06-05

Answer updated on: 2021-08-20

PI Number: PI-6156

Activity Sector(s): Financial entities

Obligation(s): Record Keeping

Guidance:

Postal codes for record keeping / reporting obligations

Question:

All the research I have done on various government websites is conclusive that civic address consists of: "the number, the street or road name, and the community name assigned to residential, commercial, institutional and industrial buildings." No mention of Postal Code anywhere.

Further, Canada Post tells us that: "The Postal Code is an integral part of every postal address in Canada. The Postal Code was designed to aid in sorting mail by both mechanized and manual methods. It also enables the Customer to pre-sort mail, thereby bypassing a number of sorting processes within Canada Post and reducing costs."

So, here are my questions: 

Does FINTRAC require Postal Code to be included in reports as part of a civic address? Also, what is required for international clients or First Nations clients when it is difficult to find the civic address? Could P.O. Boxes be acceptable?

Answer:

A "valid", "full", or "civic" address does not require a postal code.

In terms of international or foreign addresses, there is no specific formula. It should be information relevant to help locate the person physically. It is difficult to give you a complete answer since every country has its own conventions.

In regards to First Nations clients, we would suggest that if they do not have a civic address, then they should provide as many details as possible in regards to where their personal housing unit is situated (i.e. the name of the street, and the name of the reserve they are on or any other similar type of information).

Unfortunately, our policy interpretation in regards to the civic/personal address would not allow any relief in this case, P.O. Boxes would still not be acceptable.

Date answered: 2012-11-05

Answer updated on: 2021-08-20

PI Number: PI-5464

Activity Sector(s): Accountants, British Columbia notaries, Casinos, Dealers in precious metals and stones, Financial entities, Life insurance, Money services businesses, Real estate, Securities dealers

Obligation(s): Record Keeping, Reporting

Civic Address (vs. postal address)

Question:

Is the address a postal installation or a physical address?

Answer:

Rural Route addresses denoting group postal boxes with individual compartments as well as PO Box addresses are postal installations- e.g. RR 1, SITE 4, COMP 10. This would NOT qualify as a physical address as this indicates a postal installation box/compartment, not an actual physical house or land address.

However, rural routing addresses that contain the street number of the residence qualify as physical addresses where the person lives- e.g. 123 Main Street, RR 6 (this includes a house number on a particular rural route- route 6. This would be a rural route with mail delivery to a little mailbox at the end of a driveway- where somebody lives).

Therefore, the address must serve to represent the physical address where the person lives.

Date answered: 2012-04-26

Answer updated on: 2021-08-20

PI Number: PI-5402

Activity Sector(s): Accountants, British Columbia notaries, Casinos, Dealers in precious metals and stones, Financial entities, Life insurance, Money services businesses, Real estate, Securities dealers

Obligation(s): Record Keeping

Occupation question for bank account holder

Question:

I'm a little confused about the requirement for the occupation, and is "retired" an occupation?  

Answer:

The legislative requirement is to record keep the individual's personal occupation (as in lawyer, accountant, engineer, bus driver, financial advisor, loans officer, etc.).

We have indicated in the past that "retired" can be indicated as the individual's occupation. After all, that is the present occupation of that person and secondly, it does give a good indication in regards to what their income should look like.

Date answered: 2010-03-11

Answer updated on: 2021-08-20

PI Number: PI-5335

Activity Sector(s): Accountants, British Columbia notaries, Casinos, Dealers in precious metals and stones, Financial entities, Life insurance, Money services businesses, Real estate, Securities dealers

Obligation(s): Record Keeping

Guidance: Record keeping requirements

Date Modified: