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Non Face To Face Identification in Canada

Regulated entities in Canada must use specific methods listed in Schedule 7 of the Proceeds of Crime (Money Laundering) and Terrorist Financing Regulations to identify customers non face to face (NF2F). There is also the option to use a mandatary, a person or organization that meets with your customers face to face and identifies them on your behalf. In order to use the mandatary method, you must have a written agreement in place before any customers are identified, and the mandatary must collect the same information that you would collect if you were meeting with your customer. The mandatary method is the only method that can be used for customers outside of Canada, and can also be used to identify customers within Canada.

Without using the mandatary method, reporting entities can identify customers NF2F using the following combinations of methods:

  • Identification Product and Attestation,
  • Identification Product and Cleared Cheque
  • Identification Product and Confirmation of a Deposit Account,
  • Credit File and Attestation,
  • Credit File and Cleared Cheque,
  • Credit File and Confirmation of a Deposit Account,
  • Attestation and Cleared Cheque, or
  • Attestation and Confirmation of a Deposit Account.

Each method comes with specific records that reporting entities need to maintain. It may come as a surprise to some reporting entities that these methods are required every time that a customer makes a qualifying transaction- unless the customer is recognized either visually or by voice.

We’ve summarized each method, including the records that need to be maintained and vendors that may offer these services, including pricing. There are additional methods that only apply to credit card account, but we’ve omitted these here to avoid confusion.

The Big Disclaimer

The information that follows is based on our recent conversations with vendors. The prices may be subject to change at any time at the vendors’ discretion. While we’ve done our best to include only reputable vendors in this list, we don’t endorse or guarantee any vendors’ products or services.

If you are a vendor, and we’ve misrepresented your services or price points (or left you out altogether) please feel free to contact us. Our goal is to get quality information to our friends and customers, and we’ll endeavor to correct any errors quickly.

Identification Product

From the regulations: This method of ascertaining a person’s identity consists of referring to an independent and reliable identification product that is based on personal information in respect of the person and a Canadian credit history of the person of at least six month’s duration.

Description: This method allows customers who have at least six (6) months of Canadian credit bureau history to be identified using their credit bureau data. Generally customers must answer a number of questions about their credit history, and if they “pass” by answering enough questions correctly, they are considered to be identified.

Records Required: You must keep a record of the name of the identification product, the name of the entity offering it, the search reference number and the date you used the product to ascertain the individual’s identity.

Vendors: Vendors are listed in alphabetical order.

Equifax offers a product called EID Verifier. There is an implementation cost as well as additional costs per query (the cost per query varies depending on the volume). For more information contact Christopher Downer ([email protected]).

TransUnion offers a product called Authentication Engine.   No pricing was available for this product, however, it was stated that the price would vary depending on the volume of queries. For more information contact Darren Webster ([email protected]).

Credit File

From the regulations: This method of ascertaining a person’s identity consists of confirming, after obtaining authorization from the person, their name, address and date of birth by referring to a credit file in respect of that person in Canada that has been in existence for at least six months.

Description: In order to use the credit file method, you must match your customer’s name, date of birth and address with a credit file. The customer must have at least six months of Canadian credit history.

Records Required: You must keep a record of the name of the entity keeping the credit file and the date you consulted it.

Vendors: Vendors are listed in alphabetical order.

Equifax offers a product called EID Compare that matches the credit file header (name address and date of birth) to your customer’s data and returns a pass/fail.  There is an implementation cost as well as additional costs per query (the cost per query varies depending on the volume).   For more information contact Christopher Downer ([email protected]).

IDology offers a product called ExpectID that may have the ability to do credit header matches based on name, address and date of birth, as well as return a flag if there is less than 6 months of Canadian credit bureau data. In our brief conversation with IDology’s representatives, they mentioned matching other data sources such as phone books (these cannot be used under the PCMLTFR to identify Canadian customers). Unfortunately, we’re of the opinion that the solution may not be suitable unless you are willing to push hard to ensure that implementation is in line with your Canadian requirements. The representative noted that the company “offers solutions, but not advice on whether or not the solution is compliant” (paraphrased). No pricing or contact information was provided, but a demo can be arranged via the company’s website at: www.idology.com.

TransUnion offers a product called Enhanced Bureau Verification Services (EBVS).   The implementation cost is about $1,500, and there are additional costs per query (about $0.70). For more information contact Darren Webster ([email protected]).

Attestation

From the regulations: (1) This method of ascertaining a person’s identity consists of obtaining an attestation from a commissioner of oaths in Canada, or a guarantor in Canada, that they have seen one of the documents referred to in paragraph 64(1)(a) of these Regulations. The attestation must be produced on a legible photocopy of the document (if such use of the document is not prohibited by the applicable provincial law) and must include (a) the name, profession and address of the person providing the attestation; (b) the signature of the person providing the attestation; and (c) the type and number of the identifying document provided by the person. (2) For the purpose of subsection (1), a guarantor is a person engaged in one of the following professions in Canada:

(a) dentist;

(b) medical doctor;

(c) chiropractor;

(d) judge;

(e) magistrate;

(f) lawyer;

(g) notary (in Quebec);

(h) notary public;

(i) optometrist;

(j) pharmacist;

(k) professional accountant (APA [Accredited Public Accountant], CA [Chartered Accountant], CGA [Certified General Accountant], CMA [Certified Management Accountant], PA [Public Accountant] or RPA [Registered Public Accountant]);

(l) professional engineer (P.Eng. [Professional Engineer, in a province other than Quebec] or Eng. [Engineer, in Quebec]); or

(m) veterinarian.

Description: You may ask yourself what the difference is between the attestation method and using a mandatary. The simple answer is that with a mandatary, you have a written agreement in place in advance (and the mandatary does not need to be a designated professional). In the case of an attestation, your customer must be identified in person by a designated professional. This method can be useful when an individual has less than six months of Canadian credit history.

Records Required: You must keep a copy of the attestation, including information about the person providing the attestation and their signature.

Vendors: Any designated professional may provide this service. Fees generally vary from $0 (free) to about $50.

Cleared Cheque

From the regulations: This method of ascertaining a person’s identity consists of confirming that a cheque drawn by the person on a deposit account of a financial entity, other than an account referred to in section 62 of these Regulations, has been cleared.

Description: In order to use the cleared cheque method, you must receive a preprinted cheque (in any amount) from your customer, drawn on a deposit (not credit) account from a Canadian financial institution, and that cheque must be processed. Some financial institutions that use this method request a cheque in the amount of $1 and credit the amount to the customer once the cheque has cleared.

Records Required: You must keep a record of name of the financial entity and the account number of the deposit account on which the cheque was drawn.

Vendors: Outside vendors are not required to use this method. You will want to check to be certain that the name on the cheque matches your customer’s name, and you’ll need to have a bank account in order to clear the cheque.

Confirmation of a Deposit Account

From the regulations: This method of ascertaining a person’s identity consists of confirming that the person has a deposit account with a financial entity, other than an account referred to in section 62 of these Regulations.

Description: This method involves confirming that your customer has a deposit (not credit) account with a Canadian financial institution. This can be done by looking at a bank statement that contains the account type and your customer’s name (the balances and other financial information are not required), or by getting a letter from your customer’s bank confirming that they have a chequing or savings account.

FINTRAC has indicated that microdeposits and/or microwithdrawals could be used if the payment processor is able to return information about the account type and customer’s name as part of the process. The onus is placed on the reporting entity to ensure that all requirements are met.

Records Required: You must keep a record of the date on which you made the confirmation as well as the name of the financial entity where the account is held and the number of the account.

Vendors: Outside vendors are not required to use this method.

Mandataries

From the regulations: (1) A person or entity that is required to take measures to ascertain identity under subsection 64(1) or (1.1) may rely on an agent or mandatary to take the identification measures described in that subsection only if that person or entity has entered into an agreement or arrangement, in writing, with that agent or mandatary for the purposes of ascertaining identity. (2) A person or entity that enters into an agreement or arrangement referred to in subsection (1) must obtain from the agent or mandatary the customer information obtained by the agent or mandatary under that agreement or arrangement.

Description: A mandatary can identify a customer on your behalf, provided that you have a written agreement in place with the mandatary. The mandatary does not need to be a designated professional.

Records Required: You must keep a copy of your agreement with the mandatary, as well as the customer information that they collect on your behalf and the date on which the customer was identified.

Vendors:  Vendors are listed in alphabetical order.

Canada Post offers a Digital Proof of Identity (dPOI) service that includes online integration with your website experience.  It can be used as a standalone, or combined with other online identification methods.  The customer enters their information, and the dPOI tool generates a form that can be printed or saved.  The form has a special barcode that can be scanned at any Canada Post location, where a Canada Post employee will check the customer’s identification in person.  The system automatically notifies you when the customer has been identified.  For more information, contact Petr Komarek ([email protected]).

Sterling BackCheck offers a service in conjunction with Canada Post that allows customers to be identified at any Canada Post location after downloading a form from a website. The implementation cost is $99 and there is an additional cost per verification (ranging from $25-35 depending on the volume). For more information contact Karina Widyani ([email protected]).

Looking Ahead

Draft regulations that would change NF2F identification were published in the Canada Gazette on July 4th, 2015.  If and when these amendments are finalized, we expect that NF2F identification (in particular in the online space) will be much more streamlined.

Need a Hand?

If you’re not certain whether your current identification processes are meeting Canadian regulatory standards, Outlier can assess compliance and recommend process changes. Please contact us for more information.

 

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