Latest News from FINTRAC

November 16, 2020

Keeping on top of the latest advisories and guidances from Canada’s FINTRAC. This blog will update with any new information from the regulator as it becomes available.

 

Nov 16, 2020 – June 2021 Regulatory Amendments and Flexibility

FINTRAC issued an announcement to remind reporting entities (RE) that are subject to the PCMLTFA that the following regulatory amendments will come into force on June 01, 2021:

  • New and revised definitions
  • Additional foreign money services businesses (FMSBs) obligations
  • Virtual currency (VC) obligations for all REs, including submitting Large Virtual Currency Transaction Reports (LVCTRs)
  • Prepaid payment products and accounts obligations for financial entities (FEs)
  • Obligations for life insurance companies, brokers and agents when they are acting as FEs
  • Beneficial ownership obligations extended to all REs
  • Business relationships and ongoing monitoring obligations extended to all REs
  • Politically exposed persons (PEPs) obligations extended to all REs
  • Deemed receipt of funds and VC obligations
  • Repeal of third-party deeming for persons acting on behalf of an employer
  • Certain record keeping obligations

While FINTRAC expects REs to comply with the amendments, the agency  acknowledges that many may be challenged to meet these obligations due to the pandemic. For this reason, FINTRAC also issued guidance on where it will exercise flexibility in assessing and enforcing compliance. Some points to note:

  • Flexibility measures will not apply to the new virtual currency obligations – The agency expects REs to implement all virtual currency related obligations, starting on June 1, 2021.
  • Current Large Cash Transaction Reports (LCTRs), Electronic Funds Transfer Reports (EFTRs), Casino Disbursement Reports (CDRs) and Suspicious Transaction Reports (STRs) – REs are expected to continue submitting reports using the current reporting forms and systems while FINTRAC updates its reporting forms. Also, REs will not be expected to aggregate and submit SWIFT and non-SWIFT transactions in one reporting form until the updated EFT reporting forms are implemented.
  • Aggregating multiple transactions based on the beneficiary for LCTRs and EFTRs (under the 24-hour rule) – The current LCTR and EFTR forms do not allow REs to aggregate information based on the beneficiary. FINTRAC will expect REs to continue complying with the reporting and record keeping obligations until updated reporting forms are implemented.
  • Aggregating transactions of $10,000 or more with transactions of less than $10,000 for LCTRs, EFTRs and CDRs (under the 24-hour rule) – FINTRAC’s current LCTR, EFTR and CDR forms do not allow REs to submit a report that combine aggregated transactions of less than $10,000 made within 24 consecutive hours that total $10,000 or more with a transaction of $10,000 or more. Until the updated reporting forms are implemented, REs are expected to continue submitting a report for each transaction of $10,000 or more, and where two or more transactions of less than $10,000 made within 24 consecutive hours that total $10,000 or more.
  • Application of reasonable measures to obtain reporting information for non-mandatory information for LCTRs, EFTRs, and CDRs – FINTRAC will be flexible when assessing whether an RE took reasonable measures to obtain non-mandatory information but the agency expects REs to have processes in place.
  • Reporting and record keeping of non-mandatory information for existing reports – FINTRAC will be flexible when assessing whether non-mandatory information related to certain fields in the amended Schedules were reported and kept in a record. FINTRAC encourages REs to continue providing this information in STRs and TPR.

To read more details about how FINTRAC will exercise flexibility in assessing and enforcing compliance, visit here.

 

July 27, 2020: FATF and High-Risk Jurisdictions

On June 30, 2020, the FATF issued a statement on high-risk jurisdictions subject to a call for action and a statement on jurisdictions under increased monitoring.

FATF has identified the following:

  • Jurisdictions identified as high-risk jurisdictions: Iran and Democratic People’s Republic of Korea (DPRK)
  • Jurisdictions identified for increased monitoring: Albania, The Bahamas, Barbados, Botswana, Cambodia, Ghana, Jamaica, Mauritius, Myanmar, Nicaragua, Pakistan, Panama. Syria, Uganda, Yemen and Zimbabwe
  • Jurisdictions no longer subject to monitoring: Iceland and Mongolia.

With regards to the DPRK, the Canadian Minister of Finance has provided the following directive:

“Every person or entity referred to in section 5 of the PCMLTFA shall treat all transactions originating from, or destined to, North Korea (Democratic People’s Republic of Korea) as high risk for the purposes of subsection 9.6(3) of the Act.”

With regards to Iran, the Canadian Minister of Finance has provided the following directive:

“Every person or entity referred to in paragraphs 5‍(a), (b) and (h) of the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (the Act) shall

(a) treat every financial transaction originating from or bound for Iran, regardless of its amount, as a high risk transaction for the purposes of subsection 9.6‍(3) of the Act;

(b) verify the identity of any person or entity requesting or benefiting from such a transaction in accordance with the Proceeds of Crime (Money Laundering) and Terrorist Financing Regulations (the Regulations);

(c) exercise customer due diligence, including ascertaining the source of funds in any such transaction, the purpose of the transaction and, where appropriate, the beneficial ownership or control of any entity requesting or benefiting from the transaction;

(d) keep and retain a record of any such transaction, in accordance with the Regulations; and

(e) report all such transactions to the Centre.”

FINTRAC is also reminding all reporting entities subject to the requirements of the PCMLTFA of their obligation to submit a terrorist property report (TPR) to FINTRAC without delay, once they have met the threshold to disclose under the Criminal Code or the Regulations Implementing the United Nations Resolutions on the Suppression of Terrorism (RIUNRST). Guidance related to TPRs can be found on FINTRAC’s website.

Read the entire brief here.

 

July 2020 – Special Bulletin on COVID

FINTRAC has issued a special bulletin on their analysis of transaction reporting during COVID-19 pandemic. This new report follows an earlier guidance on temporary flexibility issued by FINTRAC on March 25, 2020.

While the COVID-19 pandemic has not had a significant impact on the overall volume of suspicious transaction reports (STR) and electronic funds transfer reports (EFTRs), the volume of casino disbursement reports (CDR) and large cash transaction reports (LCTR) has significantly decreased. FINTRAC says the overall decrease in large cash transactions is likely a result of the physical distancing and public health measures as they have resulted in a general decline in cash transactions and business closures, including casinos.

The COVID-19 pandemic represents an unprecedented situation that may lead to unusual transaction activities, FINTRAC stated. While many unusual patterns may reflect legitimate needs to access financial services during this challenging time, some individuals may attempt to profit from the current situation to facilitate money laundering.

The COVID-19 pandemic, and associated closures and physical distancing measures, has disrupted some money laundering methods – particularly those that rely on the placement of illicit cash into cash-intensive businesses – and may expose criminals seeking alternate venues to integrate illicit proceeds into the financial system.

Read the entire brief here

 

Apr 21, 2020 – Reporting Suspicious Transactions

All reporting entities (REs) and individuals employed by REs must report suspicious transactions (STR) under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA) and associated Regulations. An employee is only expected to report STRs to FINTRAC should they believe that their employer has not submitted an STR as prescribed by the PCMLTFA and associated Regulations.

This April 2020 guidance should be read in conjunction with the two other suspicious transaction reporting guidance documents:

This guidance document answers the following questions:

  • What is a suspicious transaction report (STR)?
  • What measures do you need to take to enable your submission of STRs to FINTRAC?
  • What are reasonable grounds to suspect (RGS)?
  • When do you submit an STR to FINTRAC?
  • How does FINTRAC assess your compliance with the obligation to submit STRs?
  • How can you assess your own compliance with the obligation to submit STRs?

Read the full guidance here

 

Alessa is an AML compliance solution that offers customer due diligence, sanctions and watchlist screening, real-time transaction monitoring and regulatory reporting. With the ability to integrate with existing AML and banking systems, the solution provides a holistic view of data so organizations can take a risk-based approach to compliance. To learn how Alessa can be used to comply with PCMLTFA, contact us.

 

Try Alessa