Update to reporting entities on expectations as of December 1, 2021
This message provides an update to reporting entities (REs) on obligations with the amended Regulations and further clarification on FINTRAC's expectations as of December 1, 2021.
On June 1, 2021, amendments to certain Regulations made under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA) (the amended Regulations) came into force. As per FINTRAC's May 18, 2021 Notice on the assessment of amended Regulations, REs had until December 1, 2021 to update their compliance programs and systems.
On April 1, 2022, FINTRAC will begin assessing compliance with the amended Regulations. We understand that challenges related to some requirements remain, including technical and infrastructure impediments. Where the RE can demonstrate progress on implementation plans for resolving these technical and infrastructure impediments, FINTRAC will be reasonable in its assessment and enforcement approach. Where progress cannot be demonstrated, FINTRAC will undertake compliance assessment activities and REs may be subject to follow-up and enforcement measures.
Travel rule and payment rails
Relying on the domestic payment rails in order to meet the travel rule requirement for electronic funds transfers (EFTs) and large virtual currency transactions (LVCT) remains a challenge. While FINTRAC expects REs to make every effort to comply with their obligations, we are aware that the impacted reporting entity sectors are currently working on a solution; therefore, we will take the REs' implementation plans into consideration when assessing the travel rule requirement.
As of December 1, 2021, REs must submit a voluntary self-declaration of non-compliance (VSDONC) for over- or under-reporting by following the VSDONC process in instances where reporting systems are not aligned with the reporting requirements as per the amended Regulations.
As of April 1, 2022, FINTRAC may examine reports and records for a period beginning on June 1, 2021 in order to assess compliance with the amended Regulations. FINTRAC will remain flexible in its compliance assessment of reports and records dated between June 1, 2021 and November 30, 2021.
Since June 1, 2021, FINTRAC has been assessing REs' most up-to-date compliance programs to ensure that they reflect the amended Regulations. Non-compliance with the amended Regulations identified in compliance programs has been communicated to REs in the form of observations to inform REs of the areas that need improvement. This approach will remain in place for all examinations conducted until March 31, 2022.
As of April 1, 2022, FINTRAC will continue to assess REs' compliance programs, which may include a review of transactions and records for a period starting on June 1, 2021. This is to ensure that the amended Regulations are reflected in the RE's relevant documentation and that they are applied in practice. Any non-compliance found during an examination will be cited as a deficiency under the PCMLTFA and associated Regulations, and may be subject to follow-up or enforcement actions.
FINTRAC will continue to exercise flexibility and reasonability when assessing the requirement to obtain non-mandatory information for reporting until the reporting forms are updated and implemented. The expectation for the reporting and record keeping of non-mandatory information are described in the Notice on regulatory amendments and flexibility, updated on December 2, 2021. Furthermore, REs' written policies and procedures must clearly describe the reasonable measures they take to obtain non-mandatory information, including how to ask or retrieve information that is already available or held in non-digital formats.
REs are encouraged to include non-mandatory information in Suspicious Transaction Reports (STRs) when it is relevant to the determination of reasonable grounds to suspect money laundering and/or terrorist activity financing, as it relates to the facts, context, and indicators of suspicion in Part G of the STR report. FINTRAC also encourages REs to continue providing this information in Part B of the Terrorist Property Report (TPR). This information provides valuable intelligence for FINTRAC and its partner agencies.
FINTRAC will undertake compliance assessment activities as per the normal process and REs will be subject to follow-up and enforcement actions where deficiencies are identified, except when assessing those requirements listed above for which flexibility will be exercised.
December 1, 2021: Deadline for REs to complete the implementation of LVCT and EFT reporting systems and begin reporting transactions conducted as of this date, as well as to begin retroactively reporting transactions dated between June 1 and November 30, 2021.
March 31, 2022: Deadline for REs to complete the retroactive submission of all LVCT and EFT reports received between June 1, 2021 and November 30, 2021 that are not impacted by the travel rule impediments mentioned earlier in this Notice. Over-reported transactions must be deleted as soon as possible and no later than this date.
Up to March 31, 2022, FINTRAC is issuing observations for all non-compliance with the amended Regulations pertaining to the compliance program requirements.
April 1, 2022: FINTRAC will begin assessing compliance with the Regulations in force on June 1, 2021; any non-compliance observed will be cited as deficiencies, except in the specific circumstances noted above.
- Date Modified: