Money laundering and terrorist financing indicators - Real estate
This guidance on suspicious transactions is applicable to real estate developers, brokers and sales representatives that are subject to the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA) and associated Regulations. It is recommended that this guidance be read in conjunction with other suspicious transaction report (STR) guidance, including:
This guidance provides money laundering (ML) and terrorist financing (TF) indicators (ML/TF indicators) organized by topic:
- ML/TF indicators related to identifying the person or entity
- ML/TF indicators related to client behaviour
- ML/TF indicators related to the person/entity financial profile
- ML/TF indicators based on atypical transactional activity
- ML/TF indicators related to transactions structured below the reporting or identification requirements
- ML/TF indicators related to transactions that involve non-Canadian jurisdictions
- ML/TF indicators related to use of other parties
- Indicators specifically related to terrorist financing
- ML/TF indicators real estate agents and developers
- ML/TF indicators real estate brokers and sales representatives
ML/TF indicators are potential red flags that could initiate suspicion or indicate that something may be unusual in the absence of a reasonable explanation. Red flags typically stem from one or more factual characteristics, behaviours, patterns or other contextual factors that identify irregularities related to financial transactions. These often present inconsistencies with what is expected of your client based on what you know about them.
The ML/TF indicators in this guidance were developed by FINTRAC through a three-year review of ML/TF cases, a review of high quality STRs, published literature by international organizations such as the Financial Action Task Force (FATF) and the Egmont Group, and consultation with reporting entity sectors. These ML/TF indicators do not cover every possible situation but were developed to provide you with a general understanding of what is or could be unusual or suspicious. On its own, a single ML/TF indicator may not appear suspicious. However, observing an ML/TF indicator(s) could lead you to conduct an assessment of the transaction(s) to determine whether there are further facts, contextual elements or additional ML/TF indicators that require the submission of an STR.
Criminal organizations often combine various methods in different ways in order to avoid the detection of ML/TF. If you detect unusual or suspicious behaviour or a transaction that prompts the need for an assessment, ML/TF indicators combined with facts and context can help you determine if there are reasonable grounds to suspect that the transaction is related to the commission or attempted commission of an ML/TF offence. These ML/TF indicators may also be used to explain or articulate the rationale for your reasonable grounds to suspect in the narrative portion of an STR, as they provide valuable information from a financial intelligence perspective.
One piece of the puzzle
The ML/TF indicators in this guidance are not an exhaustive list of ML/TF indicators to support all suspicious scenarios. These ML/TF indicators should be considered as examples to guide the development of your own process to determine when you have reasonable grounds to suspect that the transaction is related to the commission or attempted commission of an ML/TF offence. These ML/TF indicators are one piece of the puzzle and are designed to complement your own STR program and can be used in conjunction with other publicly-available ML/TF indicators.
During an assessment, FINTRAC will review your policies and procedures to see how you use ML/TF indicators within your STR program. Part of the assessment will include evaluating how the actual policies follow your documented approach and determining its effectiveness with respect to the use of ML/TF indicators. This can include a review of transactions to determine how your STR program identifies potential STRs and assesses them using facts, context and ML/TF indicators. For example, you can receive questions if you have not reported an STR for a client you have assessed as high risk and that client activity also matches against multiple ML/TF indicators.
Combination of facts, context and ML/TF indicators
If the context surrounding a transaction is suspicious, it could lead you to assess a client's financial transactions. Facts, context and ML/TF indicators need to be assessed to determine whether there are reasonable grounds to suspect that the transaction is related to the commission or attempted commission of an ML/TF offence. On its own, a single financial transaction or ML/TF indicator may not appear suspicious. However, this does not mean you should stop your assessment. Additional facts or context about the associated individual or their actions may help you reach the reasonable grounds to suspect threshold.
Alert or triggering system
FINTRAC acknowledges that a reporting entity may have developed a system that relies on specific alerts or triggering events to signal when to assess a transaction to determine if an STR should be submitted to FINTRAC. If you rely on such a system, FINTRAC expects that you review the alerts in a timely manner in order to determine if an STR should be submitted. Regardless of how you choose to operationalize these ML/TF indicators, FINTRAC expects that you will be able to demonstrate that you have an effective process to identify, assess and submit STRs to FINTRAC.
General ML/TF indicators
The ML/TF indicators in the following section are applicable to both suspected money laundering and/or terrorist financing. The ability to detect, prevent and deter money laundering and/or terrorist financing begins with properly identifying the person or entity in order to review and report suspicious financial activity.
As a real estate developer, broker or sales representative, you may observe these ML/TF indicators over the course of your business activities with a client. It is important to note that depending on your business activities, some of these ML/TF indicators may not apply.
ML/TF indicators related to identifying the person or entity
The following are examples of ML/TF indicators that you may observe when identifying persons or entities.
- There is an inability to properly identify the client or there are questions surrounding the client's identity.
- The client refuses or tries to avoid providing information required or provides information that is misleading, vague, or difficult to verify.
- The client refuses to provide information or provides information that is false, conflicting, misleading or substantially incorrect.
- The identification presented by the client cannot be verified (e.g. it is a copy).
- There are inconsistencies in the identification documents or different identifiers provided by the client, such as address, date of birth or phone number.
- Client produces seemingly false information or identification that appears to be counterfeited, altered or inaccurate.
- Client displays a pattern of name variations from one transaction to another or uses aliases.
- Client alters the transaction after being asked for identity documents.
- The client provides only a non-civic address such as a post office box or disguises a post office box as a civic address for the purpose of concealing their physical residence.
- Common identifiers (e.g. addresses, phone numbers, etc.) used by multiple clients purchasing properties that do not appear to be related.
- Transactions involve individual(s) or entity(ies) identified by media, law enforcement and/or intelligence agencies as being linked to criminal activities.
- Attempts to verify the information provided by a new or prospective client are difficult.
ML/TF indicators related to client behaviour
The contextual information acquired through the know your client (KYC) requirements or the behaviour of a client, particularly surrounding a transaction or a pattern of transactions, may lead you to conduct an assessment in order to determine if you are required to submit an STR to FINTRAC. The following are some examples of ML/TF indicators that are linked to contextual behavior and may be used in conjunction with your assessment and your risk based approach.
- Client makes statements about involvement in criminal activities.
- Evidence of untruthfulness on behalf of the client (e.g. providing false or misleading information).
- Client exhibits nervous behaviour.
- The client refuses to provide information when required, or is reluctant to provide information.
- Client has a defensive stance to questioning.
- Client presents confusing details about the transaction or knows few details about its purpose.
- Client avoids contact with reporting entity employees.
- The client refuses to identify a source for funds or provides information that is false, misleading, or substantially incorrect.
- The client exhibits a lack of concern about higher than normal transaction costs or fees.
- Client makes inquiries/statements indicating a desire to avoid reporting or tries to persuade the reporting entity not to file/maintain required reports.
- Insufficient explanation for source of funds.
ML/TF indicators related to the person/entity financial profile
Clearly understanding the expected activity of a person or entity will allow you to assess their financial activity with the proper lens. For example, a person who is unemployed but has a very large budget to purchase a home may be conducting a financial transaction atypical of what is expected. The following are some examples of ML/TF indicators linked to person/entity profile.
- The transactional activity (level or volume) suddenly changes and/or is inconsistent with the client's apparent financial standing, their usual pattern of activities or occupational information (e.g. student, unemployed, social assistance, etc.).
- Client appears to be living beyond their means.
- Rounded sum transactions atypical of what would be expected from the client.
- Size or type of transactions atypical of what is expected from the client.
- There is a sudden change in client's financial profile, pattern of activity or transactions.
- Client uses notes, monetary instruments, or products and/or services that are unusual for such a client.
- Client uses multiple accounts at several financial institutions for no apparent reason.
- Suspected use of personal funds for business purposes, or vice-versa.
- Use of multiple foreign bank accounts for no apparent reason.
ML/TF indicators based on atypical transactional activity
There are certain transactions that are outside the normal conduct of your everyday business. The following transactions are examples that may be indicative of a suspicious transaction, and would require additional assessment.
- A series of complicated transfers of funds for a deposit that seems to be an attempt to hide the source of the funds.
- Transaction is unnecessarily complex for its stated purpose.
- Client presents notes or financial instruments that are packed, transported or wrapped in an uncommon way.
- Transaction consistent with publicly known trend in criminal activity.
- Client transacts using musty, odd smelling or extremely dirty bills.
- Transaction involves a suspected shell entity (an entity that does not have an economical or logical reason to exist).
Structuring of transactions to avoid reporting or identification requirements is a common method for committing or attempting to commit an ML/TF offence. There are multiple thresholds which trigger reporting/identification requirements by a reporting entity. Some examples of ML/TF indicators which may be indicative of a person or entity attempting to evade identification and/or reporting thresholds are listed below.
- Client appears to be structuring amounts to avoid client identification or reporting thresholds.
- Client appears to be collaborating with others to avoid client identification or reporting thresholds.
- Multiple transactions conducted below the reporting threshold within a short time period.
- Client makes inquiries that would indicate a desire to avoid reporting.
- Client exhibits knowledge of reporting thresholds.
ML/TF indicators related to transactions that involve non-Canadian jurisdictions
There are certain types of transactions that may involve jurisdictions outside of Canada where there is higher ML/TF risk due to more permissible laws or the local ML/TF threat environment. The following are examples to consider when making an assessment of the real estate transaction conducted by a person/entity through your business.
- Transactions with a person who lives in or an entity that operates out of a jurisdiction that is known to be at a higher risk to facilitate ML/TF.
- Transactions involving a person who lives in or an entity that operates out of a location of concern, which can include jurisdictions where there are ongoing conflicts (and periphery areas), countries with weak money laundering/terrorist financing controls, or countries with highly secretive banking or other transactional laws such as transfer limits set by a government.
- Transactions involving any countries deemed high risk or non-cooperative by the Financial Action Task Force.
Due to the ever-evolving nature of the ML/TF environment, high risk jurisdictions and trends are often subject to change. To ensure that you are referencing accurate information, FINTRAC encourages you to research publicly-available sources on a regular basis to support these ML/TF indicators as part of your STR program. There are multiple sources that identify jurisdictions of concern, including the FATF which publishes contextual information on high-risk jurisdictions in relation to their risk of money laundering and terrorist financing. You may also observe funds coming from or going to jurisdictions that are reported in the media as locations where terrorists operate/carry out attacks and/or where terrorists have a large support base (state sponsors or private citizens). Identifying high-risk jurisdictions or known trends can also be included as part of your risk based approach and internal STR program.
ML/TF indicators related to use of other parties
In the course of a ‘normal' real estate purchase or sale, there are a ‘normal' number of parties who are engaging in the transaction, depending on the nature of the transaction at hand. For example, in the instance of a real estate purchase, there are generally two parties to the transaction: the individual(s) selling a property and the individual(s) purchasing the property.
Transactions that involve parties not typically associated with a transaction can present an elevated risk of money laundering and/or terrorist financing. These additional parties can be used to allow a criminal to avoid being identified or being linked to an asset. This section includes examples of how the involvement of other parties may be indicative of the structure of a criminal enterprise. Some examples of such other parties include the use of a third party, nominee or gatekeeper.
Use of third party
A third party is any individual or entity that instructs someone to act on their behalf for a financial activity or transaction. There are some situations where there is an apparent and discernable rationale for the inclusion of the third party in a transaction and this may not be suspicious. However, you may become suspicious in a situation where the reason for a third party acting on behalf of another person or entity does not make sense based on what you know about the client or the third party. Use of third parties is one method that money launderers and terrorist financiers use to distance themselves from the proceeds of crime or source of criminally obtained funds. By relying on other parties to conduct transactions they can distance themselves from the transactions that can be directly linked to the suspected ML/TF offence. Some examples of ML/TF indicators related to the use of a third party indicators can be found below.
- Unrelated parties with no apparent relation to the person/entity provide a deposit for the transaction.
- A client conducts transaction while accompanied, overseen or directed by another party.
- Client appears or states to be acting on behalf of another party.
Use of nominee
A nominee is a particular type of other party that is authorized to conduct transactions on behalf of a person of entity. There are legitimate reasons for relying on a nominee to conduct financial activity of behalf of someone else. However, this type of activity is particularly vulnerable to ML/TF as it is a common method used by criminals to distance themselves from the transactions that could be linked to suspected ML/TF offences. Below are some examples of ML/TF indicators relating to the misuse of nominees.
- An individual or entity other than the person or entity purchasing or selling property conducts the majority of the transaction activity which seems unnecessary or excessive.
- Client is involved in a transaction that is suspicious but refuses or is unable to answer questions related to the transaction.
Use of gatekeeper
A gatekeeper is an individual who controls access to the financial system and can act on behalf of a client. Such services can be abused so that criminals have access to the financial system without being identified. Gatekeepers may include lawyers, accountants and other professions which can access the financial system on behalf of a client. While there are many transactions where it is ‘normal' to have a gatekeeper represent the interests of a client, such an appearance of normalcy can also be utilized to the advantage of criminals to provide the veneer of legitimacy to their transactions. The use of gatekeepers themselves is not an indicator of an ML/TF offence. However, entities should consider the following examples which can indicate misuse of the financial system access provided to gatekeepers.
- Gatekeeper avoids identifying their client or disclosing their client's identity when such identification would be normal during the course of a transaction.
- Gatekeeper is willing to pay higher fees and seeks to conduct the transaction quickly when there is no apparent need for such expediency.
Indicators related to terrorism financing
In Canada, terrorist financing offences make it a crime to knowingly collect or provide property, which can include financial or other related services, for terrorist purposes. This section is focused on examples that are specific to the possible commission of a terrorist financing offence. However, please note that the other ML/TF indicators in this guidance may also prove relevant in determining when you have reasonable grounds to suspect the commission of terrorist financing as the methods used by criminals to evade detection of money laundering are similar.
Indicators specifically related to terrorist financing:
These are some examples of indicators relating to terrorist financing.
- Transactions with a person who lives in or an entity that operates out of certain high-risk jurisdictions such as locations in the midst of or in proximity to, armed conflict where terrorist groups operate or locations which are subject to weaker ML/TF controls.
- Client identified by media or law enforcement as having travelled, attempted or intended to travel to high-risk jurisdictions (including cities or districts of concern), specifically countries (and adjacent countries) under conflict and/or political instability or known to support terrorist activities and organizations.
- Transactions involve individual(s) or entity(ies) identified by media and/or sanctions lists as being linked to a terrorist organization or terrorist activities.
- Law enforcement information provided which indicates individual(s) or entity(ies) may be linked to a terrorist organization or terrorist activities.
- Individual or entity states or eludes that they support violent extremism or radicalization.
- Client provides multiple variations of name, address, phone number or additional identifiers.
Indicators specific to real estate agents and developers
In addition to the general ML/TF indicators that have been highlighted in this guidance, there may be more specific ML/TF indicators related to your business, when you act as an agent in the purchase or sale of real estate or as a real estate developer, when you sell a new house, a new condominium unit, a new commercial or industrial building or a new multi-unit residential building to the public. Below are some examples of sector specific ML/TF indicators that you should consider as part of your STR program.
- Client arrives at a real estate closing with a significant amount of cash.
- Client purchases property in someone else's name such as an associate or a relative (other than a spouse).
- Client does not want to put his or her name on any document that would connect him or her with the property or uses different names on Offers to Purchase, closing documents and deposit receipts.
- Client inadequately explains the last minute substitution of the purchasing party's name.
- Client negotiates a purchase for the market value or above the asked price, but requests that a lower value be recorded on documents, paying the difference “under the table”.
- Client pays initial deposit with a cheque from a third party, other than a spouse or a parent.
- Client pays substantial down payment in cash and balance is financed by an unusual source (for example a third party or private lender) or offshore bank.
- Client purchases personal use property through his or her company when this type of transaction is inconsistent with the ordinary business practice of the client.
- Client purchases multiple properties in a short time period, and seems to have few concerns about the location, condition, and anticipated repair costs, etc. of each property.
- Client insists on providing signature on documents by fax only.
- Client over justifies or over explains the purchase.
- Client's home or business telephone number has been disconnected or there is no such number.
- Client uses a post office box or General Delivery address where other options are available.
- Client wants to build a luxury house in non-prime locations.
- Client exhibits unusual concerns regarding the firm's compliance with government reporting requirements and the firm's anti-money laundering or anti-terrorist financing policies.
- Client exhibits a lack of concern regarding risks, commissions, or other transaction costs.
- Client persists in representing his financial situation in a way that is unrealistic or that could not be supported by documents.
- Transactions carried out on behalf of minors, incapacitated persons or other persons who, although not included in these categories, appear to lack the economic capacity to make such purchases.
- A transaction involving legal entities, when there does not seem to be any relationship between the transaction and the activity carried out by the buying company, or when the company has no business activity.
- Transactions in which the parties show a strong interest in completing the transaction quickly, without there being good cause.
- Transactions in which the parties are foreign or non-resident for tax purposes and their only purpose is a capital investment (that is, they do not show any interest in living at the property they are buying).
- Transactions involving payments in cash or in negotiable instruments which do not state the true payer (for example, bank drafts), where the accumulated amount is considered to be significant in relation to the total amount of the transaction.
- Transactions in which the party asks for the payment to be divided in to smaller parts with a short interval between them.
- Transactions in which payment is made in cash, bank notes, bearer cheques or other anonymous instruments.
- Transactions which are completed in seeming disregard of a contract clause penalizing the buyer with loss of the deposit if the sale does not go ahead.
- Recording of the sale of a building plot followed by the recording of the declaration of a completely finished new building at the location at an interval less than the minimum time needed to complete the construction, bearing in mind its characteristics.
- Transaction is completely anonymous–transaction conducted by lawyer–all deposit cheques drawn on lawyer's trust account.
Indicators specific to real estate brokers and sales representatives
In addition to the general ML/TF indicators that have been highlighted in this guidance, there may be more specific ML/TF indicators related to your business as a real estate broker or sales representative. Below are some examples of sector specific ML/TF indicators that you should consider as part of your STR program.
- Client sells property below market value with an additional “under the table” payment.
- Client purchases property without inspecting it.
- Client is known to have paid large remodelling or home improvement invoices with cash, on a property for which property management services are provided.
- Client buys back a property that he or she recently sold.
- Frequent change of ownership of same property, particularly between related or acquainted parties.
- If a property is re-sold shortly after purchase at a significantly different purchase price, without corresponding changes in market values in the same area.
Please refer to the FINTRAC Operational Brief which provides ML/TF indicators that are intended to assist reporting entities involved in real estate transactions to meet their obligations to report suspicious transactions or attempted suspicious transactions that are related to the commission or attempted commission of a money laundering or terrorist financing offence.
A chartered accountant, a certified general accountant, a certified management accountant or, if applicable, a chartered professional accountant.Footnote 1 (comptable)
- Accounting firm
An entity that is engaged in the business of providing accounting services to the public and has at least one partner, employee or administrator that is an accountant.Footnote 2 (cabinet d'expertise comptable)
The Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA).Footnote 3 (la Loi)
- Administrative monetary penalties (AMPs)
Civil penalties that may be issued to reporting entities by FINTRAC for non-compliance with the PCMLTFA and associated Regulations. (pénalité administrative pécuniaire [PAP])
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.Footnote 4 (entité du même groupe)
- As soon as practicable
A time period that falls in-between immediately and as soon as possible, within which a suspicious transaction report (STR) must be submitted to FINTRAC. The completion and submission of the STR should take priority over other tasks. In this context, the report must be completed promptly, taking into account the facts and circumstances of the situation. While some delay is permitted, it must have a reasonable explanation. (aussitôt que possible)
- Attempted transaction
Occurs when an individual or entity starts to conduct a transaction that is not completed. For example, a client or a potential client walks away from conducting a $10,000 cash deposit. (opération tentée)
In respect of a government-issued photo identification document that is used to verify identity, is genuine and has the character of an original, credible, and reliable document issued by the competent authority (such as federal, provincial, or territorial governments). (authentique)
- Authorized person
A person who is authorized under subsection 45(2).Footnote 6 (personne autorisée)
- Authorized user
A person who is authorized by a holder of a prepaid payment product account to have electronic access to funds or virtual currency available in the account by means of a prepaid payment product that is connected to it.Footnote 7 (utilisateur autorisé)
- Beneficial Owner(s)
Beneficial owners are the 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 i) the shares of a corporation or ii) an entity other than a corporation or trust, such as a partnership. The ultimate beneficial owner(s) cannot be another corporation or entity; it must be the actual individual(s) who owns or controls the entity. (bénéficiaire effectif)
A beneficiary is the individual or entity that will ultimately benefit from a transaction and to which the final remittance is made. (bénéficiaire)
A branch is a part of your business at a distinct location other than your main office. (succursale)
- British Columbia notary corporation
An entity that carries on the business of providing notary services to the public in British Columbia in accordance with the Notaries Act, R.S.B.C. 1996, c. 334.Footnote 8 (société de notaires de la Colombie-Britannique)
- British Columbia notary public
A person who is a member of the Society of Notaries Public of British Columbia.Footnote 9 (notaire public de la Colombie-Britannique)
Coins referred to in section 7 of the Currency Act, notes issued by the Bank of Canada under the Bank of Canada Act that are intended for circulation in Canada or coins or bank notes of countries other than Canada.Footnote 10 (espèces)
A government, organization, board or operator that is referred to in any of paragraphs 5(k) to (k.3) of the Act.Footnote 11 (casino)
- Certified translator
An individual that holds the title of professional certified translator granted by a Canadian provincial or territorial association or body that is competent under Canadian provincial or territorial law to issue such certification. (traducteur agréé)
- Clarification request
A clarification request is a method used to communicate with money services businesses (MSBs) or foreign money services businesses (FMSBs) when FINTRAC needs more information about their registration form. This request is usually sent by email. (demande de précisions)
A person or entity that engages in a financial transaction with another person or entity.Footnote 12 (client)
- Client identification information
The identifying information that you have obtained on your clients, such as name, address, telephone number, occupation or nature of principal business, and date of birth for an individual. (renseignements d'identification du client)
- Competent authority
For the purpose of the criminal record check submitted with an application for registration, a competent authority is any person or organization that has the legally delegated or invested authority, capacity, or power to issue criminal record checks. (autorité compétente)
- Completed transaction
Is a transaction conducted by a person or entity, that is completed and results in the movement of funds, virtual currency, or the purchase or sale of an asset. (opération effectuée)
- Compliance officer
The individual, with the necessary authority, that you appoint to be responsible for the implementation of your compliance program. (agent de conformité)
- Compliance policies and procedures
Written methodology outlining the obligations applicable to your business under the PCMLTFA and its associated Regulations and the corresponding processes and controls you put in place to address your obligations. (politiques et procédures de conformité)
- Compliance program
All elements (compliance officer, policies and procedures, risk assessment, training program, effectiveness review) that you, as a reporting entity, are legally required to have under the PCMLTFA and its associated Regulations to ensure that you meet all your obligations. (programme de conformité)
Clarifies a set of circumstances or provides an explanation of a situation or financial transaction that can be understood and assessed. (contexte)
- Correspondent banking relationship
A relationship created by an agreement or arrangement under which an entity referred to in any of paragraphs 5(a), (b), (d) and (e) or an entity that is referred to in section 5 of the Act and that is prescribed undertakes to provide to a foreign financial institution services such as international electronic funds transfers, cash management, cheque clearing and any prescribed services.Footnote 13 (relation de correspondant bancaire)
- Country of residence
The country where an individual has lived continuously for 12 months or more. The individual must have a dwelling in the country concerned. For greater certainty, a person only has one country of residence no matter how many dwelling places they may have, inside or outside of that country. (pays de résidence)
- 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 payments 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.
- Credit union central
A central cooperative credit society, as defined in section 2 of the Cooperative Credit Associations Act, or a credit union central or a federation of credit unions or caisses populaires that is regulated by a provincial Act other than one enacted by the legislature of Quebec.Footnote 14 (centrale de caisses de crédit)
In respect of a document or source of information that is used to verify identity, is up to date, and, in the case of a government-issued photo identification document, must not have been expired when the ID was verified. (à jour)
- Dealer in precious metals and stones
A person or entity that, in the course of their business activities, buys or sells precious metals, precious stones or jewellery. It includes a department or an agent of Her Majesty in right of Canada or an agent or mandatary of Her Majesty in right of a province when the department or the agent or mandatary carries out the activity, referred to in subsection 65(1), of selling precious metals to the public.Footnote 15 (négociant en métaux précieux et pierres précieuses)
- Deferred profit sharing plan
- Deposit slip
A record that sets out:Footnote 17
- (a) the date of the deposit;
- (b) the name of the person or entity that makes the deposit;
- (c) the amount of the deposit and of any part of it that is made in cash;
- (d) the method by which the deposit is made; and
- (e) the number of the account into which the deposit is made and the name of each account holder.
- Directing Services
A business is directing services at persons or entities in Canada if at least one of the following applies:
- The business's marketing or advertising is directed at persons or entities located in Canada;
- The business operates a ".ca" domain name; or,
- The business is listed in a Canadian business directory.
Additional criteria may be considered, such as if the business describes its services being offered in Canada or actively seeks feedback from persons or entities in Canada. (diriger des services)
- Distributed ledger
For the purpose of section 151 of the Proceeds of Crime (Money Laundering) and Terrorist Financing Regulations (PCMLTFR), a digital ledger that is maintained by multiple persons or entities and that can only be modified by a consensus of those persons or entities. Footnote 18 (registres distribués)
With respect to a reportable transaction, the disposition is what the funds or virtual currency was used for. For example, an individual arrives at a bank with cash and purchases a bank draft. The disposition is the purchase of the bank draft. (répartition)
- Electronic funds transfer
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 or instructions for the transfer of funds: Footnote 19
- (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 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.
- Employees profit sharing plan
A body corporate, a trust, a partnership, a fund or an unincorporated association or organization.Footnote 21 (entité)
Actual events, actions, occurrences or elements that exist or are known to have happened or existed. Facts are not 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)
- Family member
For the purposes of subsection 9.3(1) of the Act, a prescribed family member of a politically exposed foreign person, a politically exposed domestic person or a head of an international organization is:Footnote 22
- (a) their spouse or common-law partner;
- (b) their child;
- (c) their mother or father;
- (d) the mother or father of their spouse or common-law partner; or
- (e) a child of their mother or father.
- Fiat currency
A currency that is issued by a country and is designated as legal tender in that country.Footnote 23 (monnaie fiduciaire)
- Final receipt
In respect of an electronic funds transfer, means the receipt of the instructions by the person or entity that is to make the remittance to a beneficiary.Footnote 24 (destinataire)
- Financial entity
Means: Footnote 25
- (a) an entity that is referred to in any of paragraphs 5(a), (b) and (d) to (f) of the Act;
- (b) a financial services cooperative;
- (c) a life insurance company, or an entity that is a life insurance broker or agent, in respect of loans or prepaid payment products that it offers to the public and accounts that it maintains with respect to those loans or prepaid payment products, other than:
- (iii) advance payments to which the policy holder is entitles that are made to them by the insurer;
- (d) a credit union central when it offers financial services to a person, or to an entity that is not a member of that credit union central; and
- (e) a department, or an entity that is an agent of Her Majesty in right of Canada or an agent or mandatary of Her Majesty in right of a province, when it carries out an activity referred to in section 76.
- Financial Action Task Force
The Financial Action Task Force on Money Laundering established in 1989.Footnote 26 (Groupe d'action financière)
- Financial services cooperative
A financial services cooperative that is regulated by an Act respecting financial services cooperatives, CQLR, c. C-67.3, other than a caisse populaire.Footnote 27 (coopérative de services financiers)
- Foreign currency
A fiat currency that is issued by a country other than Canada.Footnote 28 (devise)
- Foreign currency exchange transaction
An exchange, at the request of another person or entity, of one fiat currency for another. Footnote 29 (opération de change en devise)
- Foreign currency exchange transaction ticket
A record respecting a foreign currency exchange transaction—including an entry in a transaction register—that sets out: Footnote 30
- (a) the date of the transaction;
- (b) in the case of a transaction of $3,000 or more, the name and address of the person or entity that requests the exchange, the nature of their principal business or their occupation and, in the case of a person, their date of birth;
- (c) the type and amount of each of the fiat currencies involved in the payment made and received by the person or entity that requests the exchange;
- (d) the method by which the payment is made and received;
- (e) the exchange rates used and their source;
- (f) the number of every account that is affected by the transaction, the type of account and the name of each account holder; and
- (g) every reference number that is connected to the transaction and has a function equivalent to that of an account number.
- Foreign money services business
Persons and entities that do not have a place of business in Canada, that are engaged in the business of providing at least one of the following services that is directed at persons or entities in Canada, and that provide those services to their clients in Canada: Footnote 31
- (i) foreign exchange dealing,
- (iv) dealing in virtual currencies, or
- (v) any prescribed service.
- Foreign state
Except for the purposes of Part 2 of the Act, means a country other than Canada and includes any political subdivision or territory of a foreign state.Footnote 32 (État étranger)
- (a) cash and other fiat currencies, and securities, negotiable instruments or other financial instruments that indicate a title or right to or interest in them; or
- (b) a private key of a cryptographic system that enables a person or entity to have access to a fiat currency other than cash.
For greater certainty, it does not include virtual currency.Footnote 33 (fonds)
- Head of an international organization
A person who, at a given time, holds—or has held within a prescribed period before that time—the office or position of head of an international organization that is established by the governments of states or the head of an institution of any such organization.Footnote 34 (dirigeant d'une organisation internationale)
- Information record
A record that sets out the name and address of a person or entity and:Footnote 35
- (a) in the case of a person, their date of birth and the nature of their principal business or their occupation; and
- (b) in the case of an entity, the nature of its principal business.
In respect of an electronic funds transfer, means the first transmission of the instructions for the transfer of funds.Footnote 36 (amorcer)
- Institutional trust
For the purpose of section 15 of the Proceeds of Crime (Money Laundering) and Terrorist Financing Regulations (PCMLTFR), means a trust that is established by a corporation or other entity for a particular business purpose and includes a pension plan trust, a pension master trust, a supplemental pension plan trust, a mutual fund trust, a pooled fund trust, a registered retirement savings plan trust, a registered retirement income fund trust, a registered education savings plan trust, a group registered retirement savings plan trust, a deferred profit sharing plan trust, an employee profit sharing plan trust, a retirement compensation arrangement trust, an employee savings plan trust, a health and welfare trust, an unemployment benefit plan trust, a foreign insurance company trust, a foreign reinsurance trust, a reinsurance trust, a real estate investment trust, an environmental trust and a trust established in respect of endowment, a foundation or a registered charity.Footnote 37 (fiducie institutionnelle)
- International electronic funds transfer
An electronic funds transfer other than for the transfer of funds within Canada.Footnote 38 (télévirement international)
- Inter vivos trust
A personal trust, other than a trust created by will. Footnote 39 (fiducie entre vifs)
Objects that are made of gold, silver, palladium, platinum, pearls or precious stones and that are intended to be worn as a personal adornment.Footnote 40 (bijou)
- Large cash transaction record
A record that indicates the receipt of an amount of $10,000 or more in cash in a single transaction and that contains the following information:Footnote 41
- (a) the date of the receipt;
- (b) if the amount is received for deposit into an account, the number of the account, the name of each account holder and the time of the deposit or an indication that the deposit is made in a night deposit box outside the recipient's normal business hours;
- (d) the type and amount of each fiat currency involved in the receipt;
- (e) the method by which the cash is received;
- (f) if applicable, the exchange rates used and their source;
- (g) the number of every other account that is affected by the transaction, the type of account and the name of each account holder
- (h) every reference number that is connected to the transaction and has a function equivalent to that of an account number;
- (i) the purpose of the transaction;
- (j) the following details of the remittance of, or in exchange for, the cash received:
- (i) the method of remittance;
- (ii) if the remittance is in funds, the type and amount of each type of funds involved;
- (k) if the amount is received by a dealer in precious metals and precious stones for the sale of precious metals, precious stones or jewellery:
- (i) the type of precious metals, precious stones or jewellery;
- (iii) the wholesale value of the precious metals, precious stones or jewellery.
- Large virtual currency transaction record
A record that indicates the receipt of an amount of $10,000 or more in virtual currency in a single transaction and that contains the following information:Footnote 42
- (a) the date of the receipt;
- (b) if the amount is received for deposit into an account, the name of each account holder;
- (d) the type and amount of each virtual currency involved in the receipt;
- (e) the exchange rates used and their source;
- (f) the number of every other account that is affected by the transaction, the type of account and the name of each account holder;
- (g) every reference number that is connected to the transaction and has a function equivalent to that of an account number;
- (h) every transaction identifier, including the sending and receiving addresses; and
- (i) if the amount is received by a dealer in precious metals and precious stones for the sale of precious metals, precious stones or jewellery:
- (i) the type of precious metals, precious stones or jewellery;
- (iii) the wholesale value of the precious metals, precious stones or jewellery
- Life insurance broker or agent:
A person or entity that is authorized under provincial legislation to carry on the business of arranging contracts of life insurance.Footnote 43 (représentant d'assurance-vie)
- Life insurance company
- Listed person
Has the same meaning as in section 1 of the Regulations Implementing the United Nations Resolutions on the Suppression of Terrorism.Footnote 45 (personne inscrite)
- Marketing or Advertising
When a person or entity uses promotional materials such as advertisements, graphics for websites or billboards, etc., with the intent to promote money services business (MSB) services and to acquire business from persons or entities in Canada. (marketing ou publicité)
In relation to sections 24.1 to 39, the Minister of Public Safety and Emergency Preparedness and, in relation to any other provision of this Act, the Minister of Finance.Footnote 46 (ministre)
- Money laundering offence
An offence under subsection 462.31(1) of the Criminal Code.Footnote 47 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. (infraction de recyclage des produits de la criminalité)
- 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 services business
A person or entity that has a place of business in Canada and that is engaged in the business of providing at least one of the following services: Footnote 48
- (i) foreign exchange dealing,
- (iv) dealing in virtual currencies, or
- (v) any prescribed service.
- Money services business agent
An individual or entity authorized to deliver services on behalf of a money services business (MSB). It is not an MSB branch. (mandataire d'une entreprise de services monétaires)
- Nature of principal business
An entity's type or field of business. Also applies to an individual in the case of a sole proprietorship. (nature de l'entreprise principale)
- New developments
Changes to the structure or operations of a business when new services, activities, or locations are put in place. For example, changes to a business model or business restructuring. (nouveaux développements)
- New technologies
The adoption of a technology that is new to a business. For example, when a business adopts new systems or software such as transaction monitoring systems or client onboarding and identification tools. (nouvelles technologies)
- No apparent reason
There is no clear explanation to account for suspicious behaviour or information. (sans raison apparente)
The job or profession of an individual. (profession ou métier)
An individual.Footnote 49 (personne)
- Politically exposed domestic person
A person who, at a given time, holds—or has held within a prescribed period before that time—one of the offices or positions referred to in any of paragraphs (a) to (j) in or on behalf of the federal government or a provincial government or the office or position referred to in paragraph (k) in a municipal government:Footnote 50
- (a) Governor General, lieutenant governor or head of government;
- (b) member of the Senate or House of Commons or member of a legislature;
- (c) deputy minister or equivalent rank;
- (d) ambassador, or attaché or counsellor of an ambassador;
- (e) military officer with a rank of general or above;
- (f) president of a corporation that is wholly owned directly by Her Majesty in right of Canada or a province;
- (g) head of a government agency;
- (h) judge of an appellate court in a province, the Federal Court of Appeal or the Supreme Court of Canada;
- (i) leader or president of a political party represented in a legislature;
- (j) holder of any prescribed office or position; or
- (k) mayor
- Politically exposed foreign person
A person who holds or has held one of the following offices or positions in or on behalf of a foreign state:Footnote 51
- (a) head of state or head of government;
- (b) member of the executive council of government or member of a legislature;
- (c) deputy minister or equivalent rank;
- (d) ambassador, or attaché or counsellor of an ambassador;
- (e) military officer with a rank of general or above;
- (f) president of a state-owned company or a state-owned bank;
- (g) head of a government agency;
- (h) judge of a supreme court, constitutional court or other court of last resort;
- (i) leader or president of a political party represented in a legislature; or
- (j) holder of any prescribed office or position.
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 related to the commission or attempted commission of an ML/TF offence. (possibilité)
- Precious metal
Gold, silver, palladium or platinum in the form of coins, bars, ingots or granules or in any other similar form.Footnote 52 (métal précieux)
- Precious stones
Diamonds, sapphires, emeralds, tanzanite, rubies or alexandrite.Footnote 53 (pierre précieuse)
- Prepaid payment product
A product that is issued by a financial entity and that enables a person or entity to engage in a transaction by giving them electronic access to funds or virtual currency paid to a prepaid payment product account held with the financial entity in advance of the transaction. It excludes a product that: Footnote 54
- (a) enables a person or entity to access a credit or debit account or one that is issued for use only with particular merchants; or
- (b) is issued for single use for the purposes of a retail rebate program.
- Prepaid payment product account
An account – other than an account to which only a public body or, if doing so for the purposes of humanitarian aid, a registered charity as defined in subsection 248(1) of the Income Tax Act, can add funds or virtual currency – that is connected to a prepaid payment product and that permits:Footnote 55
- (a) funds or virtual currency that total $1,000 or more to be added to the account within a 24-hour period; or
- (b) a balance of funds or virtual currency of $1,000 or more to be maintained.
Prescribed by regulations made by the Governor in Council.Footnote 56 (Version anglaise seulement)
The likelihood in regards to completing a suspicious transaction report (STR) that a financial transaction is related to a money laundering/terrorist financing (ML/TF) offence. For example, based on facts, having 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
- (a) a department or an agent of Her Majesty in right of Canada or an agent or mandatary of Her Majesty in right of a province;
- (b) 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
- (c) 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.Footnote 57
- Real estate broker or sales representative
A person or entity that is authorized under provincial legislation to act as an agent or mandatary for purchasers or vendors in respect of the purchase or sale of real property or immovables.Footnote 58 (courtier ou agent immobilier)
- Real estate developer
A person or entity that, in any calendar year after 2007, has sold to the public, other than in the capacity of a real estate broker or sales representative: Footnote 59
- (a) five or more new houses or condominium units;
- (b) one or more new commercial or industrial buildings; or
- (c) one or more new multi-unit residential buildings each of which contains five or more residential units, or two or more new multi-unit residential buildings that together contain five or more residential units.
- Reasonable measures
Steps taken to achieve a desired outcome, even if they do not result in the desired outcome. For example, this can include doing one or more of the following:
- asking the client,
- conducting open source searches,
- retrieving information already available, including information held in non-digital formats, or
- consulting commercially available information.
- Receipt of funds record
A record that indicates the receipt of an amount of funds and that contains the following information: Footnote 60
- (a) the date of the receipt;
- (b) if the amount is received from a person, their name, address and date of birth and the nature of their principal business or their occupation;
- (c) if the amount is received from or on behalf of an entity, the entity's name and address and the nature of their principal business;
- (d) the amount of the funds received and of any part of the funds that is received in cash;
- (e) the method by which the amount is received;
- (f) the type and amount of each fiat currency involved in the receipt;
- (g) if applicable, the exchange rates used and their source;
- (h) the number of every account that is affected by the transaction in which the receipt occurs, the type of account and the name of each account holder;
- (i) the name and address of every other person or entity that is involved in the transaction, the nature of their principal business or their occupation and, in the case of a person, their date of birth;
- (j) every reference number that is connected to the transaction and has a function equivalent to that of an account number; and
- (k) the purpose of the transaction.
- Registered pension plan
- Registered retirement income fund
In respect of information that is used to verify identity, means that the source is well known, reputable, and is considered one that you trust to verify the identity of the client. (fiable)
- Representative for service
An individual in Canada that has been appointed by a person or entity that is a foreign money services business (FMSB), pursuant to the PCMLTFA, to receive notices and documents on behalf of the FMSB. (représentant du service)
- Risk assessment
The review and documentation of potential money laundering/terrorist financing risks in order to help a business establish policies, procedures and controls to detect and mitigate these risks and their impact. (évaluation des risques)
- Securities dealer
A person or entity that is referred to in paragraph 5(g) of the Act.Footnote 63 (courtier en valeurs mobilières)
- Senior officer
In respect of an entity, means: Footnote 64
- (a) a director of the entity who is one of its full-time employees;
- (b) the entity's chief executive officer, chief operating officer, president, secretary, treasurer, controller, chief financial officer, chief accountant, chief auditor or chief actuary, or any person who performs any of those functions; or
- (c) any other officer who reports directly to the entity's board of directors, chief executive officer or chief operating officer.
- Service agreement
An agreement between a money services business (MSB) and an organization according to which the MSB will provide any of the following MSB services on an ongoing basis:
- money transfers;
- foreign currency exchange;
- issuing or redeeming money orders, traveller's cheques or anything similar; or
- dealing in virtual currencies.
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 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)
- Shell bank
A foreign financial institution that: Footnote 65
- (a) does not have a place of business that:
- (b) is not controlled by, or under common control with, a depository institution, credit union or foreign financial institution that maintains a place of business referred to in paragraph (a) in Canada or in a foreign country
- (a) does not have a place of business that:
Includes an electronic signature or other information in electronic form that is created or adopted by a client of a person or entity referred to in section 5 of the Act and that is accepted by the person or entity as being unique to that client. Footnote 66 (signature)
- Signature card
In respect of an account, means a document that is signed by a person who is authorized to give instructions in respect of the account, or electronic data that constitutes the signature of such a person. Footnote 67 (fiche-signature)
The issuer or provider of information or documents for verifying identification. (source)
The Society for Worldwide Interbank Financial Telecommunication. Footnote 68 (SWIFT)
- Terrorist activity
- 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. Footnote 70 (infraction de financement des activités terroristes)
- Third party
Any individual or entity that instructs another individual or entity to act on their behalf for a financial activity or transaction. (tiers)
- Threats to the security of Canada
- Training program
A written and implemented program outlining the ongoing training for your employees, agents or other individuals authorized to act on your behalf. It should contain information about all your obligations and requirements to be fulfilled under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act and its associated Regulations (programme de formation)
A right of property held by one individual or entity (a trustee) for the benefit of another individual or entity (a beneficiary). (fiducie)
- Trust company
A company that is referred to in any of paragraphs 5(d) to (e.1) of the Act. Footnote 72 (société de fiducie)
A trustee is the individual or entity authorized to hold or administer the assets of a trust. (fiduciaire)
In the context of civil law, a person who has been lawfully appointed to the care of the person and property of a minor. (tuteur)
- Two year effectiveness review:
A review, conducted every two years (at a minimum), by an internal or external auditor to test the effectiveness of your policies and procedures, risk assessment, and training program. (examen bisannuel de l'efficacité)
In respect of a document or information that is used to verify identity, 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. (valide)
- Verify client identity
To refer to certain information or documentation, in accordance with the prescribed methods, to identify a client. (vérifier l'identité d'un client)
- Very large corporation or trust
A corporation or trust that has minimum net assets of $75 million CAD on its last audited balance sheet. The corporation's shares or units have to be traded on a Canadian stock exchange or on a stock exchange designated under subsection 262(1) of the Income Tax Act. The corporation or trust also has to operate in a country that is a member of the Financial Action Task Force (FATF). (personne morale ou fiducie dont l'actif est très important)
A contravention of the Act or the regulations that is designated as a violation by regulations made under subsection 73.1(1).Footnote 73 (violation)
- Virtual currency
Means: Footnote 74
- (a) a digital representation of value that can be used for payment or investment purposes that is not a fiat currency and that can be readily exchanged for funds or for another virtual currency that can be readily exchanged for funds; or
- (b) a private key of a cryptographic system that enables a person or entity to have access to a digital representation of value referred to in paragraph (a).
- Virtual currency exchange transaction
An exchange, at the request of another person or entity, of virtual currency for funds, funds for virtual currency or one virtual currency for another.Footnote 75 (opération de change en monnaie virtuelle)
- Virtual currency exchange transaction ticket
A record respecting a virtual currency exchange transaction—including an entry in a transaction register—that sets out: Footnote 76
- (a) the date of the transaction;
- (b) in the case of a transaction of $1,000 or more, the name and address of the person or entity that requests the exchange, the nature of their principal business or their occupation and, in the case of a person, their date of birth;
- (c) the type and amount of each type of funds and each of the virtual currencies involved in the payment made and received by the person or entity that requests the exchange;
- (d) the method by which the payment is made and received;
- (e) the exchange rates used and their source;
- (f) the number of every account that is affected by the transaction, the type of account and the name of each account holder;
- (g) every reference number that is connected to the transaction and has a function equivalent to that of an account number; and
- (h) every transaction identifier, including the sending and receiving addresses.
- Working days
In respect of an electronic funds transfer (EFT) report or a large virtual currency transaction report, a working day is a day between and including Monday to Friday. It excludes Saturday, Sunday, and a public holiday. (jour ouvrable)
- Date Modified: