Canadian Money Laundering Obligations for Dealers

If you are dealing foreign exchange, providing money transfer services, or if you cash cheques and sell money orders, you are considered a Money Services Business (MSB) in Canada. Below is an overview of the basic obligations that MSBs in Canada need to comply with. If you are a foreign exchange dealer who offers bitcoin and other digital currency services, you will also need to comply with the rules outlined below.

As a money services business (MSB) in Canada, you have legal obligations under Canada’s Proceeds of Crime (Money Laundering) and Terrorist Financing Act. The Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) makes sure that businesses are in compliance with this law. FINTRAC is an agency of the Government of Canada. It ensures compliance with the Proceeds of Crime (Money Laundering) and Terrorist Financing Act.

Registration

You have to register your MSB with FINTRAC before conducting any transactions. The registration of your business should be done online. Once you have registered, you have to:

• keep your registration information up to date;
• respond promptly to requests to clarify information;
• renew your registration before it expires; and
• let FINTRAC know if you stop offering MSB services to the public;

Reporting

You have to report certain transactions to FINTRAC including:

• large cash transactions of $10,000 or more in a single transaction;
• two or more transactions of less than $10,000 that total $10,000 or more in a 24-hour period (known as the 24-hour rule);
• electronic funds transfers ($10,000 or more);
• suspicious and attempted suspicious transactions; and
• transactions involving terrorist property;

Client Identification

As a MSB, You have to identify each of your clients when you:

• receive $10,000 or more in cash
• sell or cash traveller’s cheques, money orders, or anything similar of $3,000 or more
• exchange currency of $3,000 or more
• send money transfers of $1,000 or more
• suspect that any transaction or attempted transaction, of any amount, is related to money laundering or terrorist financing.

Business Relationship

You enter into a business relationship when you conduct two or more transactions in which you have to:

• Ascertain the identity of the individual; or
• Confirm the existence of a corporation or entity.

Record keeping

You have to keep records related to your clients and certain transactions. Some of the records you have to keep are:

• Large cash transaction records
• Foreign currency exchange transaction tickets
• Client credit files
• Records for money orders cashed in the amount of $3,000 or more
• Records for money transfers in or outside Canada of $1,000 or more
• Copies of suspicious transaction reports
• Records on beneficial ownership, control and structure
• Records of the purpose and intended nature your business relationships
• Records on the measures you take to monitor your business relationships and the information you obtain as a result of your monitoring

Compliance Regime

You have to develop a written set of practices to make sure you are complying with the law. These practices have to include:

• appointing a compliance officer;
• writing and applying compliance policies and procedures;
• assessing and writing down the risks of your business being used for money laundering or terrorist financing;
• ongoing training for employees in compliance measures, using a written training program; and
• reviewing and documenting the success of all of these practices.