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FINTRAC interpretation notices

The Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) issues FINTRAC interpretation notices (FINs) to provide technical interpretations and positions regarding certain provisions contained in the Proceeds of Crime (Money Laundering) and Terrorist Financing Act and associated Regulations.

For those readers who prefer a less technical explanation of the law, FINTRAC's guidance is designed to provide a plain language explanation of the Act and associated Regulations.

FINs do not have the force of law.

FINTRAC interpretation notices

While FINs may make reference to provisions of the law in force at the time they were written, they are not a substitute for the law.

  1. Criteria for "Engaged in a Money Services Business"

    See FINTRAC guidance for the money services business sector

  2. Accountants - Giving Instructions Versus Providing Advice

    The purpose of this notice is to clarify the difference between providing advice to a client as opposed to giving instructions on behalf of a client, within the context of accountants' activities.

    Accountants' activities

    If you are an accountant or an accounting firm, you are subject to certain requirements under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA) and its regulations. This applies only when you engage in any of the following activities on behalf of any individual or entity (other than your employer), or give instructions in respect of those activities on behalf of any individual or entity (other than your employer):

    • receiving or paying funds (for example you receive funds in trust to pay bills on behalf of your client);
    • purchasing or selling securities, real estate property, business assets or entities; or
    • transferring funds or securities by any means.

    You are subject to the requirements when you engage in those activities, regardless of whether or not you receive any fees or have a formal letter of engagement to do so. In other words, even if you carry out these activities on a volunteer basis, you are subject to the PCMLTFA's requirements. Effective June 23, 2008, the receipt of professional fees themselves for the above‑mentioned activities does not trigger your requirements under the PCMLTFA.

    Note: Activities of accountants or accounting firms other than those listed above, such as audit, review or compilation engagements carried out according to the recommendations in the Canadian Institute of Chartered Accountants (CICA) Handbook, are not subject to the PCMLTFA or its regulations.

    Giving instructions versus providing advice

    When you give instructions for any of the above‑mentioned activities, it means that you actually direct the movement of funds. By contrast, when you provide advice to your clients, it means that you make recommendations or suggestions to them. Providing advice is not considered to be giving instructions.

    Example of giving instructions: "Based on my client's instructions,
    I request that you transfer $15,000 from my client's account, account number XXX, to account number YYY at Bank X in Country Z."

    Example of providing advice: "For tax purposes, we recommend that you transfer your money into a certain investment vehicle."

    For more information about the requirements applicable to accountants and accounting firms, see the series of guidelines prepared by FINTRAC.

  3. Opening an Account for a Person or Entity Engaged in the Business of Dealing in Securities Only Outside of Canada

    See FINTRAC guidance for the securities sector.

  4. The 24-Hour Rule

    Subsection 9(1) of the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA). Sections 3, 17, 21, 33.1, 35, 38, 39.2, 39.6, 40, 42 and 47; and subsections 12(1), and 28(1) of the Proceeds of Crime (Money Laundering) and Terrorist Financing Regulations.

    The purpose of this notice is to help clarify for reporting entities the measures they must undertake with respect to reporting two or more cash transactions, electronic funds transfers or casino disbursements in a 24-hour period. Any references to dollar amounts (such as $10,000) refer to the amount in Canadian dollars or its equivalent in foreign currency.

    LCTR

    If you are a reporting entity, you have to submit a large cash transaction report (LCTR) to FINTRAC when you receive an amount of $10,000 or more in cash from a client in the course of a single transaction, unless the cash is received from a financial entity or a public body. In this context, cash means Canadian currency or foreign currency. Cash includes money in circulation in any country (bank notes or coins) but excludes cheques, money orders or other similar negotiable instruments.

    You also have to submit an LCTR if you conduct two or more cash transactions of less than $10,000 each within 24 consecutive hours of one another, that were made by or on behalf of the same individual or entity, and that add up to $10,000 or more, unless the cash is received from a financial entity or a public body.

    The 24-hour rule applies if you as the reporting entity know, or your employee or your senior officer knows, that the transactions were made within 24 consecutive hours of each other, by or on behalf of the same individual or entity. It applies only to transactions that are under $10,000. If a transaction is for $10,000 or more, it is reportable as a single transaction.

    Other requirements and exceptions apply. For more information, see Guideline 7: Submitting Large Cash Transaction Reports to FINTRAC.

    EFTR

    Also, if you are a financial entity, a money services business or a casino, you have to submit an electronic funds transfer report (EFTR) to FINTRAC if you send or receive, in the course of a single transaction, international electronic funds transfer (EFT) of $10,000 or more, made at the request of a client.

    You also have to submit an EFTR if you conduct two or more EFTs of less than $10,000 each within 24 consecutive hours of one another, that were made by or on behalf of the same individual or entity, and that add up to $10,000 or more.

    The 24-hour rule applies if you as the reporting entity know, or your employee or your senior officer knows, that the EFTs were made within 24 consecutive hours of each other, by or on behalf of the same individual or entity. It applies only to EFTs that are under $10,000. If an EFT is for $10,000 or more, it is reportable as a single transaction. For more information, see Guideline 8: Submitting Electronic Funds Transfer Reports to FINTRAC.

    Exceptions for EFTs

    The 24‑hour rule does not apply for an EFT sent to two or more beneficiaries if it was requested by the administrator of a pension fund federally or provincially regulated, a public body or a very large corporation.

    Other requirements and exceptions apply. For more information, see Guideline 8: Submitting Electronic Funds Transfer Reports to FINTRAC.

    CDR

    Effective September 28, 2009, if you are a casino, you have to submit a casino disbursement report (CDR) to FINTRAC when you make a disbursement of $10,000 or more in the course of a single transaction.

    You also have to submit a CDR if you make two or more disbursements of less than $10,000 each within 24 consecutive hours of one another, that were received by or on behalf of the same individual or entity, and that add up to $10,000 or more.

    The 24-hour rule applies if your employee or your senior officer knows, that the disbursements were received within 24 consecutive hours of each other, by or on behalf of the same individual or entity. It applies only to disbursements that are under $10,000. If a disbursement is for $10,000 or more, it is reportable as a single transaction.

    Other requirements and exceptions apply. For more information, see Guideline 10: Submitting Casino Disbursement Reports to FINTRAC.

    Rolling or Static 24-Hour

    The 24-hour period is a rolling time frame. In other words, the 24-hour period begins with each new cash transaction or EFT of less than $10,000, if you know they were made by or on behalf of the same individual or entity. In the case of a casino disbursement, the 24-hour period begins with each new disbursement of less than $10,000, if you know they were received by or on behalf of the same individual or entity.

    However, if your system permits you to know of multiple cash transactions, EFTs or casino disbursements only within a static 24-hour period (e.g. from 9:00 a.m. to 9:00 a.m. the next day) you are required to report the multiple transactions that you know of in that 24-hour period.

    Examples

    Example 1:

    John Doe makes the following four cash transactions with a reporting entity called ABC on the same day. One of ABC's employees knows that these four cash transactions are all by the same individual. John Doe's cash deposits are as follows:

    A transaction at 9 a.m. of $10,000 CDN constitutes LCTR 1. Transactions at 10 a.m., 2 p.m. and 4 p.m. of $4,000 CDN each constitutes LCTR 2

    ABC would submit an LCTR (1) for the first cash deposit of $10,000 as it was received in the course of a single transaction. The other three smaller cash deposits of $4,000 would also have to be submitted in an LCTR (2) as they combine to an amount over $10,000 and they were conducted by the same individual within 24 hours.

    Example 2:

    Jane Doe requests a money services business called XYZ to send three EFTs on the same day. One of XYZ's employees knows that these three EFT transactions are all done at the request of the same individual. Jane Doe's EFT requests are as follows:

    EFTs at 9:00 a.m. of $2,000 CDN, 10:00 a.m. of $10,000 CDN, and 4:00 p.m. of $2,000 CDN. The second EFT consitutes EFTR 1.

    XYZ would submit an EFTR (1) to FINTRAC for the second EFT of $10,000 as it is sent in the course of a single transaction. The other two smaller EFTs do not have to be reported because they do not fall under the 24-hour rule (i.e., they combine to an amount under $10,000).

    Example 3:

    Entity A has a system that detects multiple cash transactions of less than $10,000 over a static 24‑hour period (starting at 8:00 am each morning). Entity B has a system that detects this based on a rolling 24‑hour period.

    Three identical cash deposits occur at each entity as follows:

    Deposits of $5,500 CDN each occur at 8:00 a.m. Monday, 4:00 p.m. Monday, and 10:00 a.m. Tuesday. The first and second deposits constitute LCTR 1 (for either static or rolling 24hrs). The second and third deposits constitute LCTR 2 (for rolling 24 hrs).

    Both Entity A and Entity B would submit an LCTR (1) for the first two transactions as they would be detected by both systems. The second and third transactions would only be detected by Entity B's system as it is outside of the static 24-hour period for Entity A's system. Entity B would therefore submit another LCTR (2).

    Example 4:

    Casino 123 has a system that detects multiple disbursements of less than $10,000 over a static 24‑hour period (starting at 10:00 am each morning). Casino ZZZ has a system that detects this based on a rolling 24‑hour period.

    Three different disbursements are made at each casino as follows:

    Disbursements of $6,000 CDN at 10:00 a.m. on Wednesday, $7,000 CDN at 6:00 p.m. on Wednesday, and $5,500 CDN at 12:00 a.m. on Thursday are made. The first and second disbursements constitute CDR 1 (for either static or rolling 24hrs). The second and third disbursements constitute CDR 2 (for rolling 24 hrs.)

    Both Casino 123 and Casino ZZZ would submit a CDR (1) for the first two disbursements as they would be detected by both systems. The second and third disbursement would only be detected by Casino ZZZ's system as it is outside of the static 24-hour period for Casino 123's system. Casino ZZZ would therefore submit another CDR (2).

    Weekends

    The 24-hour period cannot cover more than 24 consecutive hours. For instance, if the transactions in Example 3 above for Entity B occurred over a weekend period, (i.e., the first two transactions were made on a Friday, and the third made on a Sunday morning), the first two transactions would be reportable, but not the third.

  5. Large Cash Transactions through Automated Banking Machines

    The purpose of this interpretation notice is to clarify the requirements for financial entities when large cash transactions are conducted through an automated banking machine (ABM).

    Relevant Provisions of the Regulations

    The Proceeds of Crime (Money Laundering) and Terrorist Financing Regulations (PCMLTFR) subsection 1(2) definition of "large cash transaction record"; section 3, paragraph 12(1)(a); section 13, and section 53.

    Keeping a Record

    If a cash transaction in the amount of $10,000 or more is conducted at an ABM, a large cash transaction record is required to capture the information on the receipt of the cash. A record is also required when a series of cash transactions are considered to be a large cash transaction under the 24-hour rule. (For more information about the 24-hour rule, see FINTRAC Interpretation Notice No. 4.)

    The large cash transaction record has to include the name of each individual or entity in whose account the amount was deposited. However, there is no requirement for the large cash transaction record to include the name of the individual who made the deposit.

    For more information about what is required in a large cash transaction record, see FINTRAC record keeping guidance.

    Reporting the Transaction

    If a cash transaction in the amount of $10,000 or more is conducted at an ABM or if a series of cash transactions at an ABM, or multiple ABMs, are considered to be a large cash transaction based on the 24-hour rule, a large cash transaction report is required.

    Individual Conducting the Transaction

    For a transaction using an ABM, it is reasonable to assume that the cardholder whose ABM card was used to access the ABM is the conductor of the transaction, unless other information is provided.

    Identifying the Conductor

    When cash is deposited through an ABM, financial entities are not required to identify the individual making the deposit.

    Information about Where the Transaction Occurred

    If a large cash transaction is conducted through an ABM, the complete address of the location of the ABM where the transaction occurred is required in Part A (Information about where the transaction took place) of the large cash transaction report.

    Cash Transactions through the ABM of Another Financial Entity

    Generally, ABM deposits are only possible within the ABM network of the same financial entity. However, some financial entities have entered into agreements to enable their clients/members to make deposits at another financial entity's ABMs.

    In these situations, the financial entity that holds the client/member's account has the reporting obligation and record keeping requirements associated with large cash transactions conducted for those accounts through the ABM of another financial entity. The financial entity holding the client's/member's account must ensure that arrangements are in place in order to be informed by the financial entity whose ABM received the deposit that their client/member conducted a large cash transaction. The financial entity holding the client's/member's account also needs to obtain the required information from the other financial entity, such as the time, date and exact amount of the cash transaction, as well as the complete address of the ABM.

    The financial entity holding the client/member's account must ensure that its locations in F2R are updated to include the address information for the other financial entity's ABM that was used in the transaction, in order for the information to be included in the large cash transaction report.

    Cash Transactions into a Business Account through an ABM that is (Other than a Night Deposit or a Quick Drop)

    Some financial entities provide business clients with the opportunity to make cash deposits using the night deposit box and then immediately update their account using an ABM.

    To make this type of deposit, business clients must use an ABM (using their ABM card and PIN). The transaction is typically recorded as an ABM transaction by the financial entity's system, and commercial clients are immediately credited their deposits, which are verified the following day.

    Although the cash was deposited in the night deposit box, the operation was carried out using an ABM. Therefore, this type of transaction is not considered to be a night deposit and should not be treated as such.

    Since the transaction is carried out at an ABM in a business account (other than a night deposit or quick drop), Part E of the Large Cash Transaction Report (Information on the person conducting the transaction that is a deposit into a business account other than a night deposit or a quick drop) becomes mandatory and the name of the person who deposited the money must be entered in Part E.

    The cardholder whose ABM card was used to access the ABM is the conductor of this transaction. If the name on the ABM card is the business's name, one of the three signing authorities for the business account may be designated as the person who deposited the money. The name of the business should not be entered as the conductor on the large cash transaction report.

    For more information about reporting large cash transactions, see Guideline 7: Submitting Large Cash Transaction Reports to FINTRAC.

    This interpretation notice clarifies how FINTRAC administers and interprets provisions of the existing legislation, regulations or guidelines. It is not based on specific circumstances and may be subject to change in the event of additional or different considerations.

  6. Financial Transaction Reporting to FINTRAC by Reporting Entities that are Part of a Multiple-Entity Organizational Structure

    Sections 5, 7, 7.1 and 9 of the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA)

    Reporting entities have obligations under Part I of the PCMLTFA, including reporting, client identification, record keeping and implementing a compliance regime. Each distinct entity operating in Canada that has these obligations under the PCMLTFA is responsible for ensuring that all of their obligations are met.

    The purpose of this notice is to clarify reporting obligations when there is more than one reporting entity in a multiple-entity organization.

    Multiple-entity organization means an entity with one or more subsidiaries or any organizational structure with two or more distinct legal entities. This can be a holding company or a conglomerate financial institution, as in the following examples:

    • A banking conglomerate with a retail banking subsidiary, an insurance company, a trust company, a loan company and a securities/investment firm that are each a distinct legal entity and each is a reporting entity
    • A securities firm made up of one reporting entity registered with the Investment Industry Regulatory Organization of Canada and another reporting entity registered with the Mutual Fund Dealers Association of Canada
    • A securities firm that has a subsidiary offering deposit taking, trust services or life insurance products and each is a reporting entity
    • A life insurance company that has a subsidiary that is a trust company and another subsidiary that is a securities broker and each is a reporting entity

    Reporting transactions

    Reporting entities are required to report to FINTRAC electronically if they have the technical capability to do so. For more information about technical capability and reporting obligations, see FINTRAC's guidelines about each report type.

    Reporting entities have to enrol with FINTRAC for electronic reporting. For a multiple-entity organization, this means that each distinct entity that is a reporting entity is required to be enrolled with FINTRAC separately. However, if each distinct entity that is a reporting entity is already enrolled separately with FINTRAC, no further or additional enrolment is required.

    Centralized electronic reporting for multiple-entity organizations

    If a multiple-entity organization chooses to centralize electronic reporting for part or all of the organization, each distinct reporting entity within the organization must still be separately enrolled with FINTRAC, as explained above.

    The entity within the organization that is chosen to send reports to FINTRAC for any other reporting entity in the organization will also have to be registered as a service provider. Each reporting entity involved in the centralized reporting will need to designate that entity as their service provider and delegate the appropriate reports. In such situations, the legal obligation to report remains with each distinct reporting entity that conducts the reportable transactions.

    Learn more about entering into service provider arrangements. It should be noted that there are no legislative or operational requirements for reporting entities to use a service provider, and that the use of a service provider is at the reporting entity's discretion.

    Transactions involving more than one reporting entity

    When two or more entities within a multiple-entity organization each undertake a reportable transaction that is part of larger transaction, because of their respective specialties, a distinct report is required for each reportable transaction. One aggregate report on behalf of the entire organization is not acceptable; an aggregate report would result in the reporting entity being in non-compliance with the PCMLTFA, which could lead to civil or criminal penalties.

    However, if the entities involved are financial entities, money services businesses or casinos and the reportable transaction is an electronic funds transfer (EFT), more than one EFT report may not be required. Please see Guideline 8: Submitting Electronic Funds Transfer Reports to FINTRAC for more information about this.

  7. Insolvency Practitioners Providing Trustee in Bankruptcy Services

    Paragraph 5(j) of the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA) and subsections 34(1), sections 35 and 36 of the Proceeds of Crime (Money Laundering) and Terrorist Financing Regulations.

    The purpose of this notice is to clarify the application of the PCMLTFA relating to insolvency practitioners offering bankruptcy services.

    Insolvency practitioners provide trustee in bankruptcy services. These services are not triggering activities for any obligations under the PCMLTFA. Trustee in bankruptcy services or insolvency practitioners are not covered as services or as an entity under our legislation. However, if you are an insolvency practitioner and you are an accountant or an accounting firm, you may have obligations relating to other activities.

    Insolvency practitioners who are accountants:

    If you are an individual accountant or an accounting firm offering trustee in bankruptcy services or acting as an insolvency practitioner, you may have obligations under the PCMLTFA if you engage in certain triggering activities other than bankruptcy services. However, as explained above, bankruptcy services you provide as an insolvency practitioner, including acting as a trustee in bankruptcy, do not fall within the triggering activities under our legislation.

    Definition of accountants

    An accountant means a chartered accountant, a certified general accountant or a certified management accountant. An accounting firm means an entity that provides accounting services to the public that has at least one partner, employee or administrator that is an accountant.

    In this context, if you are an insolvency practitioner, whether a chartered insolvency and restructuring professional or otherwise, you would not be considered to be “providing accounting services to the public” if you only provide such services as follows:

    • As receiver, pursuant to the provisions of a Court order or by-way of a private letter appointment pursuant to the terms of a security interest
    • As trustee in bankruptcy
    • As monitor under the provisions of the Companies' Creditors Arrangement Act or any other proceeding that results in the dissolution or restructuring of an enterprise or individual and to which the firm, individual or insolvency practitioner serves as an officer of the Court or agent to a creditor(s) or the debtor.

    Triggering activities for accountants

    If you are an accountant or an accounting firm, as explained above, you have obligations under the PCMLTFA if you engage in any of the following activities on behalf of any individual or entity (other than your employer) or give instructions in respect of those activities on behalf of any individual or entity (other than your employer):

    • receiving or paying funds;
    • purchasing or selling securities, real property or business assets or entities; or
    • transferring funds or securities by any means.

    In this context, an accountant or an accounting firm appointed by a Court, or acting as a trustee in bankruptcy, is not considered to be acting on behalf of any other individual or entity.

    Obligations under the PCMLTFA, as referred to throughout this interpretation notice, include reporting, client identification, record keeping, and implementing a compliance regime. For more information about these, see FINTRAC's guidelines.

Date Modified: