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Amended AML Regulations June 10, 2020 – Redlined Versions

The following red-lined versions have been created to reflect final amendments to Canadian anti-money laundering (AML) regulations published in the Canada Gazette on June 10, 2020.  Amendments to the Cross-border Currency and Monetary Instruments Reporting Regulations will come into force on June 1, 2020. All other amendments will come into force on June 1, 2021. We have created industry specific blogs to make understanding the changes easier, which are located here.

Redlined versions of all the Proceeds of Crime (Money Laundering) and Terrorist Financing Regulations are listed below for download.

These documents are not official versions of the regulations. Official versions can be found on the Government of Canada’s Justice Laws Website.

Regulations Amending the Regulations Amending Certain Regulations Made Under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act

Please click the link below for downloadable PDF file.

Regulations Amending the Regulations Amending Certain Regulations Made Under the Proceeds of Crime July 2019 – Redlined_June 2020

Proceeds of Crime (Money Laundering) and Terrorist Financing Regulations

Please click the links below for downloadable pdf files.
PCMLTF_July_2019_Redlined_Full_July_2019 – Redlined_June 2020

Proceeds of Crime (Money Laundering) and Terrorist Financing Suspicious Transaction Reporting Regulations

Please click the links below for downloadable pdf files.
PCMLTF_Suspicious_Transaction_Reporting_Regulations_July_2019 – Redlined_June 2020

Proceeds of Crime (Money Laundering) and Terrorist Financing Registration Regulations

Please click the link below for a downloadable PDF file.
PCMLTF_Registration_Regulations_July_2019 – Redlined_June 2020

Proceeds of Crime (Money Laundering) and Terrorist Financing Administrative Monetary Penalties Regulations

Please click the link below for a downloadable pdf file.
PCMLTF_Administrative_Monetary_Penalties_Regulations_July_2019 – Redlined_June 2020

Proceeds of Crime (Money Laundering) and Terrorist Financing Cross-Border Currency and Monetary Instruments Reporting Regulations

Please click the link below for a downloadable pdf file.
PCMLTF_Cross-Border_Currency_and_Monetary_Instruments_Reporting_Regulations_July_2019 – Redlined_June 2020

Need a Hand?

Whether you need to figure out if you’re a dealer in virtual currency, to put a compliance program in place, or to evaluate your existing compliance program, we can help. You can get in touch using our online form, by emailing info@outliercanada.com, or by calling us toll-free at 1-844-919-1623.

Are You a Foreign Money Services Business?

Background

On July 10, 2019 amendments to the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA) and its enacted regulations were released in the Canada Gazette. The amendments require entities that conduct MSB activities from outside of Canada, directed towards Canadians, to be considered Foreign Money Services Businesses (FMSBs) and therefore comply with Canadian AML obligations.  Foreign MSBs must register with the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) and become compliant by June 1, 2020. Check out our blog post to see what your full requirements are.

What Is A Money Services Business?

You are considered an MSB in Canada if your business offers any of the following services:

  • Foreign exchange dealing;
  • Remitting or transmitting funds;
  • Issuing or redeeming money orders, traveller’s cheques and other negotiable instruments; or
  • Dealing in virtual currencies.

What Is A Foreign Money Services Business?

You are considered an FMSB if all of the following criteria applies to your business:

  • The person or entity is engaged in the business of providing at least one money services business (MSB) service;
  • The person or entity does not have a place of business in Canada;
  • The person or entity directs its MSB services at persons or entities in Canada; and
  • They provide these services to clients in Canada. 

For further clarity, you must direct services at persons or entities located in Canada. FINTRAC clarifies that directing services means that the services offered takes into consideration a Canadian audience. For example, if marketing or advertising materials are used with the intent to promote services and to acquire business from persons or entities in Canada. Where a business advertises online, but may not specifically exclude Canadian IP addresses, this fact on its own would not constitute directing services at persons or entities in Canada.

A business would be seen as 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.

Note that additional criteria may be considered when determining whether you are directing services at persons or entities in Canada. Examples of the additional criteria that may be considered is outlined in FINTRAC’s FMSB Annex 1.

We’re Here To Help

If you are, or think you may be, a foreign MSB and have any questions related to your compliance obligations in Canada, please get in touch!

Amending the Amendments!

Background

Back on July 10, 2019, the highly anticipated final version of the amendments to the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA) and its enacted regulations were published. However, on February 15, 2020, further proposed amendments to those amended regulations was published in the Canada Gazette. To make reading these changes a little easier, we have created a redlined version of the regulations, with new content showing as tracked changes, which can be found here.

The Regulatory Impact Statement for this round of proposed changes states the following: “The proposed amendments to the regulations would strengthen Canada’s AML/ATF Regime, align measures with international standards and level the playing field across reporting entities by applying stronger customer due diligence requirements and beneficial ownership requirements to designated non-financial businesses and professions (DNFBPs); modifying the definition of business relationship for the real estate sector; aligning customer due diligence measures for casinos with international standards; aligning virtual currency record-keeping obligations with international standards; clarifying the cross-border currency reporting program; clarifying a number of existing requirements; and making minor technical amendments”. The proposed amendments are expected to come into force on June 1, 2021.

As with all proposed changes, there is a comment period. This comment period is much shorter than the last one, at only 30 days. For anyone interested in commenting on the proposed changes, comments are to be addressed to Lynn Hemmings, Director General, Financial Crimes and Security Division, Financial Sector Policy Branch, Department of Finance, 90 Elgin Street, Ottawa, Ontario K1A 0G5 or email: fin.fc-cf.fin@canada.ca.

While these are proposed changes, guidance from FINTRAC related to the amendments to regulation would hopefully be seen ahead of the coming into force dates of the final version.

We have summarized what this could mean for your business below.

Money Services Businesses

PEP

The most significant proposed change for Money Services Businesses (MSB)s is related to Politically exposed persons (PEP) determinations. Currently, a PEP determination must be made for international EFTs of CAD 100,000 or more. The proposed regulations will require MSBs to make a PEP determination when the MSB enters into a business relationship with a person.

If you currently conduct list screening, PEP screening could easily be added to that process.

Dealers in Virtual Currency

Travel Rule

For dealers in virtual currency, there is an additional proposed requirement on top of the requirements that were published in the last round of AML changes.  The proposed amendments add the requirement for records to be kept for virtual currency transfers of CAD 1,000 or more.

The record must contain the following:

  1. include with the transfer, the name, address and, if any, the account number or other reference number of both the person or entity that requested the transfer and the beneficiary; and
  2. take reasonable measures to ensure that any transfer received includes the information referred to in paragraph (a) above.

If the information required is not obtained, a determination of whether the transaction should be suspended or rejected will need to be made.

Given the nature of virtual currency transfers, it will be interesting to see how this requirement plays out, as currently, there are no technology solutions (that we are aware of) that would solve for this.

A reminder that dealers in virtual currency will be considered MSBs as of June 1, 2020. Check out our blog post for a full list of regulatory requirements related to dealers in virtual currency.

Real Estate

Business Relationship

One of the most significant proposed changes for real estate developers, brokers and sale representatives is related to the definition of a business relationship. Currently, a business relationship is defined as:

If a person or entity does not have an account with you, a business relationship is formed once you have conducted two transactions or activities for which you have to:

  • verify the identity of the individual; or
  • confirm the existence of the entity.

The proposed amendments will change that definition for real estate developers, brokers and sale representatives to only one transaction.

For business relationships, a reporting entity must:

  • keep a record of the purpose and intended nature of the business relationship;
  • conduct ongoing monitoring of your business relationship with your client to:
    • detect any transactions that need to be reported as suspicious;
    • keep client identification and beneficial ownership information, as well as the purpose and intended nature records, up-to-date;
    • reassess your clients risk level based on their transactions and activities; and
    • determine if the transactions and activities are consistent with what you know about your client;
  • keep a record of the measures you take to monitor your business relationships and the information you obtain as a result.

We will have to wait for guidance to see how ongoing monitoring obligations applies to the real estate sector if this change takes effect.

PEP

The proposed amendments will require real estate developers, brokers and sale representatives to make a Politically exposed persons (PEP) determination when they enter into a business relationship (as defined above) with a client. In addition, they will also be required to take reasonable measures to determine whether a client from whom they receive an amount of CAD 100,000 or more is a PEP.

Beneficial Ownership

The proposed amendments will require real estate developers, brokers and sale representatives to comply with existing beneficial ownership requirements that apply to other reporting entities.

This means when identifying an entity, a reporting entity needs to collect the following for all Directors and individuals who own or control, directly or indirectly, 25% or more of the organization:

  • Their full legal name;
  • Their full home address; and
  • Their role and/or ownership stake in the organization.

Given the obligation is to obtain, rather than verify, such information, we do not expect this requirement to be overly burdensome for the real estate sector.

Dealers in Precious Metals and Stones

PEP

Dealers in Precious Metals and Stones (DPMS)s will be required to make a PEP determination when they enter into a business relationship with a client. In addition, a DPMS will be required to take reasonable measures to determine whether a person from whom they receive an amount of CAD 100,000 or more is a PEP.

A reminder that a business relationship is defined as:

If a person or entity does not have an account with you, a business relationship is formed once you have conducted two transactions or activities for which you have to:

  • verify the identity of the individual; or
  • confirm the existence of the entity.

Given the definition of a business relationship, we do not expect this requirement to be overly burdensome. If you currently conduct list screening, PEP screening could easily be added to that process.

Beneficial Ownership

The proposed amendments will required DPMSs to comply with existing beneficial ownership requirements that apply to other reporting entities.

This means when identifying an entity, a reporting entity needs to collect the following for all Directors and individuals who own or control, directly or indirectly, 25% or more of the organization:

  • Their full legal name;
  • Their full home address; and
  • Their role and/or ownership stake in the organization.

Given the obligation is to obtain, rather than verify, such information, we do not expect this requirement to be overly burdensome for the DPMS sector.

We’re Here To Help

If you would like assistance in updating your compliance program and processes, or have any questions related to the changes, please get in touch!

Regulations Amending the Regulations February 15, 2020- Redlined Versions

The following red-lined versions have been created to reflect the amendments to Canadian anti-money laundering (AML) regulations published in the Canada Gazette on February 15, 2020. You can also read our article “Amending the Amendments!” for a summary of the proposed changes by industry.

Redlined versions of all the Proceeds of Crime (Money Laundering) and Terrorist Financing Regulations are listed below for download.

These documents are not official versions of the regulations. Official versions can be found on the Government of Canada’s Justice Laws Website.

Regulations Amending the Regulations Amending Certain Regulations Made Under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act

Please click the link below for downloadable PDF file.
Amending_the_Regulations_Amending_Certain_Regulations_Made_Under_the_Proceeds_of_Crime_July_2019 – Redlined_Feb_2020

Proceeds of Crime (Money Laundering) and Terrorist Financing Regulations

Please click the links below for downloadable pdf files.
PCMLTF_July_2019_Redlined_Full_July_2019 – Redlined_Feb_2020

Proceeds of Crime (Money Laundering) and Terrorist Financing Suspicious Transaction Reporting Regulations

Please click the links below for downloadable pdf files.
PCMLTF_Suspicious_Transaction_Reporting_Regulations_July_2019 – Redlined_Feb_2020

Proceeds of Crime (Money Laundering) and Terrorist Financing Registration Regulations

Please click the link below for a downloadable PDF file.
PCMLTF_Registration_Regulations_July_2019 – Redlined_Feb_2020

Proceeds of Crime (Money Laundering) and Terrorist Financing Administrative Monetary Penalties Regulations

Please click the link below for a downloadable pdf file.
PCMLTF_Administrative_Monetary_Penalties_Regulations_July_2019 – Redlined_Feb_2020

Proceeds of Crime (Money Laundering) and Terrorist Financing Cross-Border Currency and Monetary Instruments Reporting Regulations

Please click the link below for a downloadable pdf file.
PCMLTF_Cross-Border_Currency_and_Monetary_Instruments_Reporting_Regulations_July_2019 – Redlined_Feb_2020

Need a Hand?

Whether you need to figure out if you’re a dealer in virtual currency, to put a compliance program in place, or to evaluate your existing compliance program, we can help. You can get in touch using our online form, by emailing info@outliercanada.com, or by calling us toll-free at 1-844-919-1623.

FINTRAC Identification Guidance

Background

On July 10th, 2019, the final amendments to Canada’s anti-money laundering (AML) regulations were published in the Canada Gazette.  One of the welcomed changes that came into force immediately upon publication was related to identification. On November 14th, 2019, FINTRAC published guidance related to “Methods to verify the identity of an individual and confirm the existence of a corporation or an entity other than a corporation.” This is good news considering the range of identification methods has been broadened, and a step forward in digital identification methods. The updated methods are designed to make it easier to identify customers that are not physically present.

As defined under the Proceeds of Crime (Money Laundering) and Terrorist Financing Regulations (PCMLTFR), reporting entities have to identify their customers in certain situations (specific information on when customers need to be identified is outlined in FINTRAC’s guidance on “When to identify individuals and confirm the existence of entities”). The identification guidance outlines ways to verify the identity of an individual, and how to identify corporations or entities other than corporations (such as a partnership).

Identification Methods For Individuals

There are three ways in which an individual can be identified:

  • Government-issued photo identification method;
  • Credit file method; and
  • Dual-process method.

Government-Issued Photo Identification Method

Under this method, an organization can use an authenticvalid and current government-issued photo identification document, issued by either a federal, provincial or territorial government in order to be used to verify the identity of an individual. Foreign government-issued photo identification can be accepted if it’s equivalent to a Canadian document such as those listed in the guidance.

The photo identification document used to verify identity must:

  • indicate the individual’s name;
  • include a photo of the individual;
  • include a unique identifying number; and
  • match the name and appearance of the individual being identified.

If a customer is physically present, an organization can authenticate an identification document by looking at the characteristics on the physical document such as security features.

If the customer is not physically present, the authentication of the identification document must be determined by using technology capable of assessing the document’s authenticity. The guidance makes it clear that it is not sufficient to view a person and an identification document through video conference or similar. Meaning, a selfie while holding your driver’s license is not sufficient for identification purposes.

Whatever method is selected by an organization, the process to authenticate a photo identification document, and how the organization will confirm that it is authentic, valid and current, must be documented.

Credit File Method

Under this method, an organization can use valid and current information from a Canadian credit file to identify an individual.

The Credit File must:

  • be from a Canadian credit bureau (credit files from foreign credit bureaus are not acceptable);
  • have been in existence for at least three years; and
  • match the name, address and date of birth that the individual provided.

To rely on a credit file, the search must be completed at the time an organization is verifying the individual’s identity, and can be completed via an automated system or the use of a third party vendor.

When using the Credit File method, organizations must keep a record of the following information:

  • the individual’s name;
  • the date they consulted or searched the credit file;
  • the name of the Canadian credit bureau or third party vendor holding the credit file; and
  • the individual’s credit file number.

The guidance clarifies that sometimes information found within the credit file may contain variations of the name or address provided by a customer. In these cases, it’s up to the organization to determine whether the information in the credit file is a match to the information collected from the individual.

Dual-Process Method

Under this method, an organization can use valid and current information from two reliable sources. Under the dual-process method, an organization can verify an individual’s identity by referring to any two of the following options:

  • information from a reliable source that includes the individual’s name and address;
  • information from a reliable source that includes the individual’s name and date of birth; or
  • information that includes the individual’s name and confirms that they have a deposit account, credit card or other loan account with a financial entity.

In order to qualify as reliable, the sources should be well-known and considered reputable. There must be two sources providing the information, and the information cannot come from the individual whose identity is being verified, nor can it come from the organization doing the verification. For example, reliable and independent sources can be the federal, provincial, territorial and municipal levels of government, crown corporations, financial entities or utility providers.

A Canadian credit file can be used as one of the two sources required to verify the identity of an individual. so long as the credit file has been in existence for at least six months.

The organization must keep a record of the following:

  • the individual’s name;
  • the date they verified the information;
  • the name of the two different sources that were used to verify the identity of the individual;
  • the type of information consulted (for example, utility statement, bank statement, marriage licence); and
  • the number associated with the information (for example, account number or if there is no account number, a number that is associated with the information, which could be a reference number or certificate number, etc.).

Identification Methods For Organizations

The guidance details how to confirm the existence of a corporation, or an organization that is not a corporation. This can be done by referring to a paper or electronic record that was obtained from a source that is accessible to the public such as:

  • For corporations:
    • its certificate of incorporation;
    • a certificate of active corporate status;
    • a record that has to be filed annually under provincial securities legislation; or
    • any other record that confirms the corporation’s existence, such as the corporation’s published annual report.
  • For organizations that are not corporations:
    • a partnership agreement;
    • articles of association; or
    • any other record that confirms its existence as a legal entity.

If an organization refers to a publicly accessible electronic record to confirm the existence of a corporation or of an entity other than a corporation, a record must be retained including the corporation/entity’s registration number and the source of the electronic version of the record. If a paper record is used, a copy should be retained. At a minimum, for all organization types, an organization must collect and keep a record of the following:

  • their full legal name;
  • the organization’s structure;
  • the organization’s principal business;
  • the organization’s physical address; and
  • information about the organization’s directors and beneficial owners.

Other Identification Considerations

The guidance details how a domestic or foreign affiliate, an agent or a mandatary can be used to verify the identify of a customer. If this method is used, it is important for organizations to remember that, legally, they are responsible for verifying a customer’s identity, even though they are relying on someone else to do it. Organizations should obtain the identification information from the other entity and have a written agreement in place requiring the entity doing the identification to provide the identification verification as soon as feasible.

The guidance details how to identify children under 12 years of age (organizations must verify the identity of a parent, guardian, or tutor) and how to identify children between the ages of 12 and 15. For this age range, organizations can verify identity by using one of the prescribed methods to verify an individual’s identity and where not possible, relying on certain  information from the child’s parent, guardian, or tutor, and information that includes the child’s name and date of birth.

The guidance also reminds organizations that while the personal information that they are collecting is protected by the Personal Information Protection and Electronic Documents Act (PIPEDA), personal information that is required to be included in reporting to FINTRAC does not have to be disclosed to the Office of the Privacy Commissioner of Canada. It is important that organizations remember that safeguarding is a key consideration for all personal information collected in the normal course of business.

Conclusion

The most significant change for identification standards is related to the Government-Issued Photo Identification Method. A wording change from “original” to “authentic”, that was found in the prior version of the regulations, now allows for scanned copies of documentation, so long as it can be authenticated. It is noteworthy that the guidance gives clarity to all methods that can be used. Where further clarity is warranted, organizations can contact FINTRAC for a policy position related to the identification guidance. This can be done free of charge by emailing guidelines-lignesdirectrices@fintrac-canafe.gc.ca. This can also be done on a no-names basis by a lawyer or consultant on your behalf.

We’re Here To Help

If you have questions related to the identification changes, or need help updating your identification processes, you can get in touch using the online form on our website, by emailing us at info@outliercanada.com, or by calling us toll-free at 1-844-919-1623.

Information Should Be Free!

Outlier has produced an open-source AML and CTF, and Privacy repositories of definitions, acronyms, and terminology that is free for whoever wants it.

Please feel free to provide contributions and/or feedback, as it would be greatly appreciated. We have already had three contributors!

Discombobulated

About a year ago, we had a client who was interacting with the world of Anti-Money Laundering (AML) and Counter Terrorist Financing (CTF) for the first time. They were aggravated by the amount of jargon, acronyms, and uncommon uses of certain commonly understood terms. An example is, a business relationship. Those of you that are relatively familiar with the AML space know a business relationship doesn’t mean what the rest of the world thinks it means. In Canada, in the AML context, it means something very different.

A Helping Hand

At the time, they wished for a simple reference point where they could easily find the meaning for different terms. Unfortunately, this entails combing multiple locations, including FINTRAC’s website, plus the Act and Regulations themselves. To make a long story short, there is no easy way. Fed up, they (not so) gently suggested that we (Outlier) fix this. Their idea was creating a GitHub repository.

For those unfamiliar with GitHub, it is a web-based hosting service for version control. It is mostly used for computer code, but has also been used to write and edit books. It offers access control and several collaboration features. A GitHub repository is where the code and/or information is maintained for a specific project. This process is fairly simple to someone who is a coder with years of experience working with GitHub. For myself, this was not so simple. A year later, almost to the day, the repository is created, open and available to the public. There is no need to be scared, you are able to comment and make suggestions without knowing how to code at all. If you can’t figure out how to provide commentary in GitHub, send it to use via email at info@outliercanada.com with the subject line “GitHub Feedback.”

The Power of Collaboration

The (not so) gentle nudge meshed well with one of Outlier’s core beliefs: that information should be free. By collecting the information, housing it in GitHub, and making it available to anyone, we are able to provide free information to everyone who wants it. By making information free and public, it gives others the opportunity to make suggestions, add content, and improve the quality of the information.

What Happens When We Work Together?

By sharing this open-source project with the world, we are looking to empower anyone willing to be empowered. From the client who is interacting with the world of AML for the first time. To the seasoned-veteran who is looking for helpful resources. To the person who wants to provide their customer with a helpful resource. Take the information and do what you wish with it. If you would like to attribute Outlier, awesome! If not, that’s ok too. Our only request is this should never be provided for a fee.

Have a Question?

If you looked at the resource and are curious about how to make a contribution, please feel free to contact us anytime. Contributions can include anything from corrections and suggestions, to the addition of different jurisdictional definitions, specifically the European perspective.

This is not a solicitation (but we do get this request often), should you want to provide a tip in BTC or ETH, our addresses are listed below.

To open a channel with our Lightning Node, our address is: 03acb418d5b88c0009cf07d31ec53d0486814bc77917c352bd7e952520edf7bf3c@99.236.76.38:9735

or you can use Tippin.Me.

bitcoin ethereum
33CdqJTw6jMWVBAveT9Ue3rPym8HPKKPow 0x03CDF23a2Eb070F2c79De5B2E6FB90671D3c70fE

FINTRAC Alert – Laundering the Proceeds of a Romance Scam

Quick Overview

On April 11th, 2019, FINTRAC published an Operational Alert issued in part with the Canadian Anti-Fraud Centre.  The information provided related to laundering the proceeds of romance scams and mass marketing fraud. The publication provided an explanation of what constitutes a romance scam, some common indicators that may be present and transaction patterns or flow of funds that may suggest fraud.

What Does it Mean?

The suspicious indicators provided by FINTRAC list circumstances or activities that might signal potential cases of individuals caught in a romance scam or the subject of a mass marketing fraud.  This does not mean that if one or more of the indicators are present that the transaction is definitely suspicious and must be reported to FINTRAC. It is meant to ensure that you are aware of the potential that suspicious activity may be taking place.  In that context, if you are involved in customer’s transactions, whether on the front lines or in back office, you must be aware of the indicators in the alert.  If you do encounter a transaction that may be considered unusual, you should attempt to collect additional information that will aid in the Compliance Officer’s decision to report it or clearly document why it was not considered suspicious. Where the Compliance Officer makes the decision to report the transaction to FINTRAC as suspicious, be sure to include “Project CHAMELEON” or “#CHAMELEON” in Part G—Description of suspicious activity in the STR. This will help to facilitate FINTRAC’s disclosure process.

What Now?

In order to ensure familiarity for anyone who interacts with customers and their transactions, the list of FINTRAC’s indicators should be included in your ongoing AML compliance training program.  Furthermore, the indicators should also be included in your procedure manuals, allowing easy access to the information.  Finally, the indicators should be incorporated into your Risk Assessment documentation.  Specifically, when determining customer risk and the controls used to effectively mitigate potential risks.

We’ve made it easier for you to integrate this content into your program by putting the indicators in a Word document for you.

Need a Hand?

Outlier has taken the list of indicators provided by FINTRAC and formatted them into an easy to use Microsoft Word document, which can be found here.  This should allow companies to easily update their documentation and ensure they are sufficiently monitoring for potential instances of romance scams or mass marketing fraud. If you aren’t sure what to do with this information and would like some assistance, please feel free to contact us.

Are On Demand Products Right For You?

For certain industries, including dealers in precious metals and stones (DPMSs) and real estate, Outlier’s on-demand products are anti-money laundering (AML) and counter terrorist financing (CTF) programs that you can buy, customize online using our set up wizard, and download in fully customizable formats.

These can be purchased as single elements (Policies & Procedures, Risk Assessments, Training, Compliance Effectiveness Reviews) or bundled to save you money.

Why On Demand Products

Outlier’s Founder, Amber D. Scott, noticed two things that made her believe that on-demand products could help Canadian reporting entities. First, for many small and medium sized businesses, there are very similar business models and risk profiles. Second, many businesses don’t have the means to pay for consulting services but have the same obligations as larger reporting entities. She had a vision of creating a model that could level the playing field by making it easier for these businesses to create plain language documents in an affordable way.

Are On Demand Products Right For You?

While we’ve worked to keep the on demand products as plain language as possible, they will still require you to be able to read and understand the content and adjust them for your business model and compliance processes. You’ll also need to review and update them regularly (once a year – no matter what, and more often if Canadian laws and/or your business models change).

These program elements can save you money by providing a customizable framework for you to work with, but you’ll need to put in the time and effort to customize them and keep them up to date.

What If You Download A Product And Need Help?

If you’ve downloaded on demand products and you’re stuck, we can help. Please contact us and let us know what you need. In your request, include the product that you’ve purchased and describe the problem that you’re trying to solve. We’ll get back you within two business days. If you need help sooner, please mark your request as urgent, and we’ll do our best to get back to you sooner.

Is Outlier The Only Company That Can Help?

There are a number of professionals in Canada that can help you customize your program, including consultants, lawyers and Compliance Officers working in your field. Using Outlier’s on demand product doesn’t mean that we’re the only people that can work with you, in fact, we believe that competition makes us all better at what we do.

How Do I Buy On Demand Products?

You can buy our on demand products through this website using a credit card. Start by selecting the type of reporting entity that you are to view the products that are currently available.

If you’re looking for something that doesn’t seem to be on the list, please contact us.

Now We Wait… Canada’s Proposed AML Updates

As of last Friday (September 7, 2018) the comment period for Canada’s draft AML amendments has closed (if you have something to say, they’ll likely still accept submissions for a few more days).

TLDR?

Check out our summary here, or this panel digging into the details.

Want to read our submissions? Here they are!

2018Sep07_OutlierCanada Submission to Finance

2018Sep07_Apendix_SurveyResults

What Now?

The Department of Finance is going to head back to the Bat Cave to revise the policy. We expect that a final version will be published at some point in 2019, and that the content will include “dealing in virtual currency” (including businesses like bitcoin exchanges).

Once the final version is published, there will be a transition period (we expect a year or more) before everything is in force. In the meantime, if you’re expecting to be considered a money services business (MSB) when the final version is published, we recommend checking out some of the community events for MSBs, like the Canadian MSB Association (CMSBA)’s Fall Conference in Toronto.

We’re Here To Help

If you have questions about virtual currency and regulation in Canada, or regulation in Canada in general, please contact us.

AML Changes For The Real Estate Sector

Here We Go Again! Canada’s Proposed AML Changes for Real Estate Developers, Brokers and Sales Representatives

 

On June 9th, 2018, draft amendments to the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA) and its enacted regulations (there are five separate regulations that we’re going to collectively call regulations here for simplicity’s sake). This article is intended to give a high-level summary of the proposed amendments as they relate to the real estate industry.

This article should not be considered advice (legal, tax or otherwise). That said, any of the content shared here may be used and shared freely – you don’t need our permission. While we’d love for content that we’ve written to be attributed to us, we believe that it’s more important to get reliable information into the hands of community members (meaning that if you punk content that we wrote, we may think you’re a jerk but we’re not sending an army of lawyers).

Finally, we want to encourage the community to discuss the proposed changes and submit meaningful feedback for policy makers. The comment period for this draft is 90 days. After this, the Department of Finance takes the feedback to the bat cave and drafts a final version of the amendments. From the time that the final version is published, the draft indicates that there will be 12 months of transition to comply with the new requirements.

What does this mean for my business?

While there are quite a number of proposed changes (the draft is about 200 pages in length), some are likely to have more of an impact on for real estate developers, brokers and sales representatives than others. We’ve summarized the changes that we expect to have the most impact below. Remember these are just proposed changes so there is no need to update your compliance material just yet.

What’s New?

Virtual Currency:

While there are not many proposed amendments that will introduce new requirements for real estate developers, brokers and sales representatives the draft regulations introduce reporting requirements for the receipt of CAD 10,000 or more of virtual currency. These basically are the same as large cash reporting obligations and will require reporting entities to maintain a large virtual currency transaction record.

The requirements for reporting and recordkeeping for virtual currency will be very similar to cash reporting requirements.

What existing requirements are changing?

24-hour rule:

The draft regulations clarify that multiple transactions performed by or on behalf of the same customer or entity within a 24-hour period are considered a single transaction for reporting purposes when they total CAD 10,000 or more. Only one report would need to be submitted to capture all transactions that aggregate to CAD 10,000 or more. For real estate developers, brokers and sales representatives this would apply to recipient of cash deposits. Specifically, this will apply to large cash transactions or CAD 10,000 or more. 

Identification:

The draft regulations replace the word “original” with “authentic” and states that a document used for verification of identity must be “authentic, valid and current. This would allow for scanned copies of documentation and/or for software that can authenticate identification documents to be used for the dual process method for real estate developers, brokers and sales representatives that identify clients in a non-face-to-face manner. Another change, related to measures for verifying identity, is that the word “verify” has been replaced with “confirm” and “ascertain” has been replaced with confirm. What this will mean exactly is still unclear (FINTRAC will need to provide more guidance once the final amendments are released). We are hopeful that it will allow for easier customer identification – especially for customers outside of Canada.

Records:

There have been some changes to the details that must be recorded in records that real estate broker or sales representative must maintain. In particular, the draft regulations add the requirement that information records must contain details of every person or entity for which they act as an agent or mandatary in respect of the purchase or sale of real property. Under the existing regulations information related to the person or entity purchasing real estate only.

Risk Assessment:

Under current regulations, reporting entities are required to assess the risks associated with its business and develop a risk assessment specific to your situation. For real estate developers, brokers and sales representatives a risk assessment must address the following four areas:

  • Products, services, and delivery channels (to better reflect the reality of the real estate sector, this workbook will now only refer to services and delivery channels);
  • Geography;
  • Clients and business relationships; and
  • Other relevant factors

A proposed amendment would require all reporting entities to assess the risk related the use of new technologies, before they are implemented.  This has been a best practice since the requirement to conduct a risk assessment came into force, but this change would make this a formal requirement.

Suspicious Transaction Reporting:

Under current regulations if a reporting entity has reasonable grounds to suspect that a transaction or attempted transaction is related to money laundering or terrorist financing, a report must be submitted to FINTRAC within 30 days of the date that a fact was discovered that caused the suspicion. The revised regulations add to this requirement by stating:

The person or entity shall send the report to the Centre within three days after the day on which measures taken by them enable them to establish that there are reasonable grounds to suspect that the transaction or attempted transaction is related to the commission of a money laundering offence or a terrorist activity financing offence.

This would require reports to be submitted to FINTRAC within three days after the reporting entity conducts an analysis that established reasonable grounds for suspicion.

Schedules:

The draft regulations introduce changes to reporting schedules, requiring more detailed information to be filed with FINTRAC then previously was required. This is in addition to including information that is marked as optional, if a reporting entity has the information. As it relates real estate developers, brokers and sales representatives these changes will impact attempted suspicious and suspicious transaction reporting, terrorist property reporting and large cash reporting. Some of the additional proposed data fields are:

  • every reference number that is connected to the transaction,
  • every other known detail that identifies the receipt (of cash for large cash transactions),
  • type of device used by person who makes request online,
  • number that identifies device,
  • internet protocol address (IP address) used by device,
  • person’s user name, and
  • date and time of person’s online session in which request is made.

Such changes may be onerous for reporting entities, especially for transactions that are conducted online.

Training:

Under current regulation, if real estate developers, brokers and sales representatives use agents, mandataries or other persons to act on their behalf, they must develop and maintain a written, ongoing compliance training program for those agents, mandataries or other persons. The draft regulations introduces an additional requirement in which there must be a documented plan for the ongoing compliance training program and delivering of that the training.

What’s Next?

If you’ve read this far, congratulations and thank you!

We hope that you will contribute your thoughts and comments. You can do this by contacting the Department of Finance directly. Their representative on this file is:

Lynn Hemmings
Acting Director General
Financial Systems Division
Financial Sector Policy Branch
Department of Finance
90 Elgin Street
Ottawa, Ontario
K1A 0G5
Email: fin.fc-cf.fin@canada.ca

If you would like assistance drafting a submission, or have questions that you would like Outlier to answer, please get in touch!

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