Record keeping requirements for money services businesses

June 2017

This guidance on record keeping is applicable to money services businesses that are subject to the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA) and associated Regulations.

In order to comply with your record keeping requirements, you are required to keep records in a manner in which they can be provided to FINTRAC within 30 days upon request. These records may also be requested through a judicial order by law enforcement to support an investigation of money laundering or terrorist activity financing. A record (or a copy) may be kept in a machine-readable or electronic form, so long as a paper copy can easily be produced.

Employees who keep records for you are not required to keep them after the end of their employment with you. The same is true for individuals in a contractual relationship with you, after the end of that contractual relationship. This means that you have to obtain and keep the records that were kept for you by any employee or contractor before the end of that individual's employment or contract with you.

There may be situations where you are required to keep records for purposes other than your requirements under the PCMLTFA. For example, a federal or provincial regulator for your sector may require you to keep records in addition to those described in this guidance. If this is the case, you must still meet the requirements explained in this guidance. For example, the retention period for your records can be longer than what is described, but it cannot be shorter.

Please note that as a money services business, you have record keeping requirements in addition to those described in this guidance. These additional requirements are detailed in the following Know your client guidance documents:

As a money services business, you must keep the following records:

  1. Suspicious transaction report records
  2. Large cash transaction records
  3. Records for transactions of $3,000 or more
    1. If you receive $3,000 or more for the issuance of traveller's cheques, money orders or other similar negotiable instruments
    2. If you cash $3,000 or more in money orders
  4. Records of remitting or transmitting funds of $1,000 or more
  5. Foreign currency exchange records
  6. Internal memorandum received or created in the normal course of business
  7. Records about ongoing service agreements
  8. Reasonable measures records

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

**Note: When recording the nature of the principal business or occupation of a client, you must be as descriptive as possible 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 same is true when recording the nature of the principal business of an entity. For example, in the case of an entity in the field of sales, the nature of the principal business should specify the type of sales, such as “pharmaceutical sales” or “retail sales”.

1. Suspicious transaction report records

If you submit a suspicious transaction report (STR) to FINTRAC, you must keep a copy of it. This includes STRs for completed and attempted transactions.

Retention: You must keep an STR for at least five years from the date the report was submitted.

2. Large cash transaction records

You must keep a record of every large cash transaction. A large cash transaction occurs when you receive $10,000 or more in cash from a client 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.

When your client conducts a large cash transaction, your record must indicate the receipt of an amount of $10,000 or more in cash, along with the following:

Retention: You must keep large cash transaction records for at least five years from the date the record was created.

3. Records for transactions of $3,000 or more

a. When you receive $3,000 or more for the issuance of traveller's cheques, money orders or other similar negotiable instruments from an individual or entity, you must record:

b. When money orders of $3,000 or more are cashed, you must record:

Retention: You must keep a record of transactions of $3,000 or more for at least five years from the date the record was created.

4. Records of remitting or transmitting funds of $1,000 or more

When you remit or transmit $1,000 or more, whether internationally or domestically, you must record:

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 originator information.

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

Retention: You must keep a record for the remittance or transmission of $1,000 or more for at least five years from the date the record was created.

5. Foreign currency exchange records

You must keep a transaction ticket for every foreign currency exchange transaction you conduct, regardless of the amount. Each ticket must include:

Retention: You must keep foreign currency exchange records for at least five years from the date they are created.

6. Internal memorandum received or created in the normal course of business

You must keep a record of every internal memorandum (i.e. any memo, note, message or similar communication) that you create or receive in the normal course of business regarding services you provide to clients.

Retention: You must keep internal memoranda records for at least five years from the date they are created.

7. Records for ongoing service agreements

You have to keep certain records when you enter into either of the following agreements:

In either of these cases, you have to keep the following records:

Retention: You must keep these records, other than client information records, for five years from the day the last business transaction was conducted. Client information records must be kept for five years from the day they were created.

8. Reasonable measures records

The term “reasonable measures” refers to activities you are expected to undertake in order to meet certain obligations. The PCMLTFA and associated Regulations explicitly state when you must take reasonable measures to meet an obligation.

As of June 17, 2017, the Proceeds of Crime (Money Laundering) and Terrorist Financing Regulations have been changed to require that a record be kept when reasonable measures were taken, but were unsuccessful. A reasonable measure is unsuccessful when you do not obtain a response, such as a yes or no, and you are unable to make a conclusive determination. Refer to section 67.3 of the Regulations for every activity where you are required to keep records when reasonable measures were unsuccessful.

When reasonable measures are unsuccessful, you must record the following information:

You must outline the reasonable measures that you take in your compliance policies and procedures. This can form part of your unsuccessful reasonable measures record, or you could document, on a case-by-case basis, the measure taken in each record for unsuccessful reasonable measures.

For example, if you ask a client if they are conducting a large cash transaction on behalf of a third party and they refuse to answer the question – your record should indicate that you asked, the date you asked and the fact that the client refused to answer yes or no.

Should you take a measure that is not included in your policies and procedures, you would have to include details of that measure taken in your record of unsuccessful reasonable measures.

Retention: You must keep records of your unsuccessful reasonable measures for at least five years following the date they were created.

Exceptions to record keeping requirements

If you are required to keep a record about information that is readily available in other records that you have kept, you do not have to record the same information again. This means that if you keep the required information and can produce it during a FINTRAC examination you do not need to create a new record to meet your obligations.

You are not required to keep a large cash transaction record if the cash is received from a financial entity or a public body.

If you receive $3,000 or more from a financial entity or public body for the issuance of traveller’s cheques, money orders or other similar negotiable instruments, you do not have to keep a record of the transaction.

Definitions

Administrative monetary penalties (AMPs)

Civil penalties that may be issued to reporting entities by FINTRAC for non-compliance with the PCMLTFA and related regulations. (pénalité administrative pécuniaire [PAP])

Affiliate

An entity is affiliated with another entity if one of them is wholly owned by the other, if both are wholly owned by the same entity or if their financial statements are consolidated. (entité du même groupe)

Attempted transaction

Occurs when an individual initiates a transaction and it does not result in the movement of funds or purchase of an asset because the transaction is not completed. For example, a potential client walks away from conducting a $10,000 cash deposit because they do not want to provide their identification. (opération tentée)

Beneficial Owner(s)

Beneficial owners are the actual individuals who are the trustees, and known beneficiaries and settlors of a trust, or who directly or indirectly own or control 25% or more of a corporation or an entity other than a corporation or trust, such as a partnership. The ultimate beneficial owners cannot be another corporation or entity; they must be the actual individuals who are the owners or controllers of the entity. (bénéficiaire effectif)

Beneficiary

A beneficiary is the individual or entity who will ultimately benefit from a transaction and be the final recipient of the funds. (bénéficiaire)

Branch

A branch is a part of your own business at a distinct location other than your main office. (succursale)

Clarification request

A clarification request is a method used to communicate with money services businesses when we need more information about their registration form. This request is usually sent by email. If they do not reply to a clarification request, their registration can be denied or revoked. (demande de précisions)

Client/customer

A person or entity that engages in financial transactions through your business. (client)

Completed transaction

Is a transaction initiated by a person or entity that results in the movement of funds or purchase of an asset. (opération effectuée)

Compliance officer

The individual you appoint to be responsible for the implementation of your compliance program. Your compliance officer should have the authority and the resources necessary to discharge his or her responsibilities effectively. (agent de conformité)

Compliance policies and procedures

Written methodology outlining all of your obligations applicable to your business under the PCMLTFA and associated Regulations and the corresponding processes and controls you have put in place to address your obligations. (politiques et procédures de conformité)

Compliance program

All elements that you, as a reporting entity, are legally required to have under the PCMLTFA and associated Regulations to ensure that you meet all of your reporting, record keeping, client identification, and know-your-client requirements. (programme de conformité)

Context

Clarifying a set of circumstances or providing an explanation of a situation or financial transaction that can be understood and assessed. (contexte)

Credit card acquiring business

A credit card acquiring business is a financial entity that has an agreement with a merchant to provide the following services:

  • enabling a merchant to accept credit card payments by cardholders for goods and services and to receive payment for credit card purchases;
  • processing services, payment settlements and providing point-of-sale equipment (such as computer terminals); and
  • providing other ancillary services to the merchant. (entreprise d’acquisition de cartes de crédit)
Current

A document or information that is up to date and must not have been expired when the ID was verified. (document ou renseignement à jour)

Disposition

With respect to a financial transaction, the disposition is what the funds were used for. For example, an individual arrives at a bank with cash and purchases a bank draft. The purchase of the bank draft is the disposition. (répartition de fonds)

Electronic funds transfer (EFT)

An electronic funds transfer (money transfer) means the transmission of instructions for the transfer of funds to or from Canada. An electronic funds transfer does not include the instructions for the transfer of funds from one place in Canada to another in Canada. (télévirement)

Entity

Can be a corporation, trust, partnership, fund, or an unincorporated association or organization. (entité)

Facts

Actual events, actions, occurrences or elements that exist or are known to have happened or existed. Facts cannot be opinions. For example, facts surrounding a transaction or multiple transactions could include the date, time, location, amount or type of transaction or could include the account details, particular business lines, or the client’s financial history. (faits)

Financial account

Refers to deposit, credit card or other loan accounts held by a financial entity. This does not include investment accounts such as Registered Retirement Savings Plans (RRSPs). (compte financier)

Financial entity

A financial entity includes:

  • a bank that is regulated by the Bank Act;
  • an authorized foreign bank, as defined in section 2 of that Act, in respect of its business in Canada;
  • a cooperative credit society, savings and credit union or caisse populaire that is regulated by a provincial Act;
  • an association that is regulated by the Cooperative Credit Associations Act;
  • a financial services cooperative, a credit union central, a company that is regulated by the Trust and Loan Companies Act;
  • a trust company or loan company that is regulated by a provincial Act; and
  • a department or an entity that is an agent or mandatary of Her Majesty in right of Canada or of a province when it is carrying out an activity referred to in section 45 of the PCMLTFR. (entité financière)
Independent

For the purposes of ascertaining client identity, the term "independent" means that the sources must be different; the information cannot be derived from the same source. (source indépendante)

Individual or person

A human being. (individu ou personne)

Institutional trust

An institutional trust is a trust that is established by a corporation, partnership or other entity for a particular business purpose and includes pension plan trusts, pension master trusts, supplemental pension plan trusts, mutual fund trusts, pooled fund trusts, registered retirement savings plan trusts, registered retirement income fund trusts, registered education savings plan trusts, group registered retirement savings plan trusts, deferred profit sharing plan trusts, employee profit sharing plan trusts, retirement compensation arrangement trusts, employee savings plan trusts, health and welfare trusts, unemployment benefit plan trusts, foreign insurance company trusts, foreign reinsurance trusts, reinsurance trusts, real estate investment trusts, environmental trusts and trusts established in respect of endowments, foundations and registered charities. (fiducie institutionnelle)

Inter vivos trust

Also known as a living trust, this is a trust that is not created by a will. This type of trust is established by a living individual for the benefit of another individual, such as a trust created by a parent for a child. Its assets can be distributed to the beneficiary during or after a settlor’s lifetime. (fiducie entre vifs)

Listed person

A listed person means anyone on a list published in the Regulations Implementing the United Nations Resolutions on the Suppression of Terrorism issued under the United Nations Act. You can consult that list of names on the Office of the Superintendent of Financial Institutions' Web site: http://www.osfi-bsif.gc.ca/Eng/fi-if/amlc-clrpc/atf-fat/Pages/default.aspx.

A listed person includes an individual, a corporation, a trust, a partnership or fund or an unincorporated association or organization that is believed to:

  • have carried out, attempted to carry out, participated in or facilitated a terrorist activity; or
  • be controlled directly or indirectly by, be acting on behalf of, at the direction of, or in association with any individual or entity conducting any of the above activities.(personne inscrite)
Minute book

A record that contains the corporate documents of a company. It can include documents such as the articles of incorporation, general operating by-laws, first director resolution, registers, forms, share certificates and minutes of shareholders and directors meetings. (registre des procès-verbaux)

Money laundering and terrorist financing indicators (ML/TF indicators)

Potential red flags that could initiate suspicion or indicate that something may be unusual in the absence of a reasonable explanation.[Indicateurs de blanchiment d’argent (BA) et de financement du terrorisme (FT) (indicateurs de BA/FT)]

Money laundering

The United Nations defines money laundering as "any act or attempted act to disguise the source of money or assets derived from criminal activity." Essentially, money laundering is the process whereby "dirty money"— produced through criminal activity— is transformed into "clean money," the criminal origin of which is difficult to trace. (recyclage des produits de la criminalité [blanchiment d’argent])

Money service business agent

An individual or organization that you have authorized to act on a money service business’s (MSB's) behalf. Do not mistake an MSB agent with a branch. If you are an MSB, an agent is a separate individual or organization that you authorize to deliver your services. (mandataire d’une entreprise de services monétaires)

No apparent reason

There is no clear explanation to account for suspicious behaviour or information. (sans raison apparente)

Occupation

The job or profession of a client. For example, in the case of a person who is a sales representative, the occupation recorded would reflect sales, but should also reflect the area of sales such as "insurance sales representative". (profession ou métier)

Organization

An organization is an entity such as a corporation, a trust, a partnership, or an association. It does not include an individual. (organisation)

Original

Original refers to any paper or electronic document as it is sent from the issuer directly to the client. (document original)

Possibility

In regards to completing a suspicious transaction report (STR), the likelihood that a transaction may be related to a money laundering/terrorist financing (ML/TF) offence. For example, based on your assessment of facts, context and ML/TF indicators you have reasonable grounds to suspect that a transaction is possibly related to the commission or attempted commission of an ML/TF offence. (possibilité)

Principal business

The nature of the primary business of an entity. For example, in the case of an entity in the field of insurance, the nature of the principal business should specify the type of insurance, such as "health insurance". (entreprise principale)

Probability

The likelihood in regards to completing an suspicious transaction report (STR) that a financial transaction is related to a money laundering/terrorist financing (ML/TF) offence. For example, based on facts you have reasonable grounds to believe that a transaction is probably related to the commission or attempted commission of an ML/TF offence. (probabilité)

Production order

A judicial order that compels a person or entity to disclose records to peace officers or public officers. (ordonnance de communication)

Public body
  1. any department or agent or mandatary of Her Majesty in right of Canada or of a province;
  2. an incorporated city or town, village, metropolitan authority, township, district, county, rural municipality or other incorporated municipal body in Canada or an agent or mandatary in Canada of any of them; and
  3. an organization that operates a public hospital and that is designated by the Minister of National Revenue as a hospital authority under the Excise Tax Act, or an agent or mandatary of such an organization. (organisme public)
Purpose and intended nature (PIN) record

Record that documents the purpose and intended nature of a business relationship, and includes information that could help you anticipate the types of transactions and activities your client may conduct. (document sur l’objet et la nature projetée de la relation)

Reasonable measures

Reasonable measures means that you must take steps to collect certain information but it is not mandatory. For example, this can include doing one or more of the following:

  • asking the client,
  • conducting open source searches, or
  • consulting commercially available information. (mesures raisonnables).
Reliable

In reference to a source, the term "reliable" means that the source is well known, reputable, and is considered one that you trust to verify the identity of the client. (source fiable)

Risk Assessment

A risk assessment is an analysis of potential risks and vulnerabilities that could expose your business to money laundering/terrorist financing (ML/TF) activities. This assessment will allow you to identify your inherent risk and will assist you and those authorized to act on your behalf in developing mitigation measures to deal with these risks. (évaluation des risques)

Senior officer

A senior officer of an organization can be:

  • a director who is also a full time employee;
  • a chief executive officer, chief operating officer, president, secretary treasurer, controller, chief financial officer, chief accountant, chief auditor or chief actuary, or any individual who performs these similar duties; or
  • any other officer who reports directly to the board of directors, chief executive officer or chief operating officer. (cadre dirigeant)
Service agreement

With respect to money services businesses (MSBs), a service agreement is an agreement between you and another organization for you to provide any of the following MSB services:

  • money transfers;
  • foreign currency exchange; or
  • issuing or redeeming money orders, traveller's cheques or anything similar. (accord de relation commerciale)
Settlor

A settlor is an individual or entity that creates a trust with a written trust declaration. The settlor ensures that legal responsibility for the trust is then given to a trustee and that the trustee is provided with a trust instrument document that explains how the trust is to be used for the beneficiaries. A settlor includes any individual or entity that contributes financially to that trust, either directly or indirectly. (constituant)

Source

The issuer or provider of information or documents for verifying identification. (source)

SWIFT

The Society for Worldwide Interbank Financial Telecommunication (SWIFT) network is a global member-owned cooperative and an international provider of secure financial messaging services. (SWIFT)

Terrorist activity financing offence

A terrorist financing offence is knowingly collecting or giving property (such as money) to carry out terrorist activities. This includes the use and possession of any property to help carry out the terrorist activities. The money earned for terrorist financing can be from legal sources, such as personal donations and profits from a business or charitable organization or from criminal sources, such as the drug trade, the smuggling of weapons and other goods, fraud, kidnapping and extortion. (infraction de financement des activités terroristes)

Third party

Any individual or entity that instructs someone to act on their behalf for a financial activity or transaction. The third party is not the person who owns or benefits from the money, or who is carrying out the activity, but rather the entity or individual who gives the instructions to handle the money or conduct a particular activity. For example, a third party may instruct someone to deposit cash into an account. (tiers)

Training program

A written and implemented program for employees, agents or other individuals authorized to act on your behalf which outlines the ongoing training on your obligations under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act and associated Regulations. (programme de formation)

Trust

A right of property held by one individual or entity (a trustee) for the benefit of another individual or entity (a beneficiary). (fiducie)

Trustee

A trustee is the individual or entity authorized to hold or administer the assets of a trust. (fiduciaire)

Two year effectiveness review

A review of your compliance policies and procedures, risk assessment, and training program, conducted a minimum of every two years, to ensure that these are effective and that you are meeting all of your obligations under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act and associated Regulations. (examen bisannuel de l'efficacité)

Valid

Refers to a document or information that appears legitimate or authentic and does not appear to have been altered or had any information redacted. The information must also be valid according to the issuer, for example if a passport is invalid because of a name change, it is not valid for FINTRAC purposes. (document ou renseignement valide)

Verify client identity

To refer to certain information or documentation to identify a client and ensure that their information matches what you know about them. (vérifier l’identité d’un client)

Very large corporation

Has minimum net assets of $75 million CAD on its last audited balance sheet. The corporation's shares have to be traded on a Canadian stock exchange or on a stock exchange outside Canada that is designated by the Minister of Finance. The corporation also has to operate in a country that is a member of the Financial Action Task Force (FATF). (personne morale dont l’actif est très important)

Working days

A working day is a day between and including Monday to Friday. It excludes Saturday, Sunday, and a public holiday. (jour ouvrable)

Date Modified: