Know your client requirements

When to identify individuals and confirm the existence of entities

This guidance explains when you are required to identify individuals and confirm the existence of entities. The requirement to identify your clients (individual or entity) is determined by the type of transaction or activity they are undertaking.

Methods to identify individuals and confirm the existence of entities

This guidance describes the methods you can use to identify individuals and confirm the existence of entities; who can identify a client on your behalf; and related records that you must keep.

Methods to identify individuals and confirm the existence of entities

Business relationship requirements

A business relationship is a relationship that is established between a reporting entity and a client to conduct financial transactions or provide services related to those transactions. Business relationship obligations are applicable to reporting entities in all sectors.

Business relationship requirements

Ongoing monitoring requirements

Ongoing monitoring is the process of reviewing and keeping identification, business relationship and beneficial ownership information up-to-date. In addition, ongoing monitoring is a process for reassessing the level of risk associated with your client’s transactions and activities. Enhanced ongoing monitoring, as a prescribed special measure, is triggered when a business relationship is considered to pose a high risk. Ongoing monitoring obligations are applicable to reporting entities in all sectors.

Ongoing monitoring requirements

Beneficial ownership requirements

Financial entities, securities dealers, life insurance companies, brokers and agents, and money services businesses have obligations related to beneficial ownership when confirming the existence of an entity. Beneficial owners are the actual person(s) who directly or indirectly own or control 25% or more of a corporation or entity.

Beneficial ownership requirements

Third party determination requirements

A third party is a person or entity who instructs another person or entity to conduct an activity or financial transaction on their behalf. Third party obligations are applicable to reporting entities in all sectors.

Third party determination requirements

Politically exposed persons and heads of international organizations

Know your client requirements include determining whether a person is a foreign or domestic politically exposed person (PEP), head of an international organization (HIO), or a family member or close associate of a foreign PEP. The reporting entity sectors with this obligation include financial entities, securities dealers, money services businesses and life insurance companies.


FINTRAC provides guidance to help businesses understand their obligations under the PCMLTFA and its associated Regulations and how they may be assessed in an examination. However, this should not be considered to be legal advice. Please refer to the PCMLTFA and its associated Regulations for the full description of the obligations.

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