Correspondent banking relationship requirements


March 2021

This guidance comes into effect on June 1, 2021.

This guidance explains the correspondent banking relationship requirements under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA) and associated Regulations that apply to financial entities.

It answers the following questions:

  1. What is a correspondent banking relationship?
  2. What must I do to meet the correspondent banking relationship requirements?
  3. What correspondent banking relationship records do I need to keep?
  4. What must I do if the client of a foreign financial institution has direct access to services I provide?
  5. What are the exceptions to correspondent banking relationship requirements?

1. What is a correspondent banking relationship?

A correspondent banking relationship is created by an agreement or arrangement between a foreign financial institution and a Canadian financial entity (as defined below). In this relationship, the Canadian financial entity provides services to the foreign financial institution, such as international electronic funds transfers, cash management, and cheque clearing services.Footnote 1

For the purposes of a correspondent banking relationship, a Canadian financial entity is a:Footnote 2

2. What must I do to meet correspondent banking relationship requirements?

Before you enter into a correspondent banking relationship, you must:Footnote 3

You must also do the following for a correspondent banking relationship that you enter into:

3. What correspondent banking relationship records do I need to keep?

When you enter into a correspondent banking relationship, you must keep the following records about the foreign financial institution:Footnote 8

In a correspondent banking relationship, you do not need to keep account opening and transaction records when you open an account for a foreign financial institution.Footnote 9

Retention: At least five years after the day on which the last business transaction is conducted.Footnote 10

4. What must I do if the client of a foreign financial institution has direct access to the services I provide?

If, as part of a correspondent banking relationship, a client of the foreign financial institution has direct access to services you provide, you must take reasonable measures to verify whether the foreign financial institution:Footnote 11

5. What are the exceptions to correspondent banking relationship requirements?

Correspondent banking relationship requirements do not apply to your activities related to the processing of payments by credit card or prepaid payment product for a merchant, including:Footnote 12

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