New Regulations Effective July 1, 2024

The Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) is Canada’s financial intelligence unit and anti-money laundering and anti-terrorist financing supervisor. Its mandate is to facilitate the detection, prevention and deterrence of money laundering and the financing of terrorist activities, while ensuring the protection of personal information under its control.

Background:

As of July 1, 2024, persons or entities that are engaged in the business of transporting currency, money orders, traveler’s cheques or other similar negotiable instruments (except for cheques payable to a named person or entity) will be subject to the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (the Act) and have the obligations to comply with FITRAC regulations for MSBs applicable to products and services offered.

Definition:

Armored cars are businesses that engage in transporting: 

• Currency
• Money orders
• Traveler’s cheques or
• Other negotiable instruments

Armored car businesses are subject to the obligations under FINTRAC guidelines that apply to money services businesses and foreign money services businesses.

Summary of requirements for armored car business registered as MSBs:

• You must register as a money services business with FINTRAC.
• You must establish and implement a compliance program.
• You must submit the various reports (e.g., Suspicious Transaction Report, etc.) to FINTRAC.
• You must keep records of Suspicious Transaction Reports, Terrorist Property Reports, etc.
• You must follow Know your client regulations.
• You must apply Ministerial directive requirements to all reporting entity sectors unless otherwise specified in the directives.

Services requirements to be compliant with regulators:

• Risk Assessment for the institution. Review the latest AML Risk Assessment and update the AML Risk Assessment document. Add additional dimensions to the risk assessment based on industry standards and best practices, that are not included in the institution’s latest risk assessment document.
• Coverage Assessment and Target Operating Model – Perform a coverage assessment of the BSA/AML with Financial Institution’s products and services by evaluating the following: 
  • Detection rules (manual and automated)  
  • Operational procedures   
  • Compliance & Data governance 
  • Anti-Money Laundering (AML) processes and regulatory oversight   

This assessment will ultimately result in a roadmap defining the target state model and delivering leading AML practices that support Financial Institution’s products and services while driving compliance and regulatory control framework.

• Monitoring/Reporting/Case Management system implementation: 
  • Robust transaction monitoring / KYC and Sanction Screening solutions equipped to generate high quality alerts and configured to suit specific needs and products offered by the bank.
  • Streamlined investigation process and reduction in false positive and duplicative alerts.
  • User friendly interface to support increased control by business users over configuration changes and system settings.

• Initial Threshold Settings

• • Threshold setting to calibrate a bank’s Transaction Monitoring system to ensure it is correctly configured to monitor transactions and provides coverage in mitigating risks.

• Setup & Operationalize Financial Investigation Unit 
  • Customer Onboarding

• • • • Gather the required documents from the client.
      • Review the required documents.
      • Recommend the client onboarding decision.

• • KYC

• • • • Define procedures and best practices for the disposition of alerts and cases. 
      • Conduct Level 1 and Level 2 investigation.
        • Level 1 Investigation refers to alerts investigation.
        • Level 2 Investigation refers to case (escalated alerts) investigation. 
      • Quality Control on sampled alerts.
      • Present KPIs to Financial Institution leadership on weekly/monthly basis.
      • Review client relationships periodically based on their AML risk level and defined procedures.

• • Transaction Monitoring Investigation

• • • • Define procedures and best practices for the disposition of alerts and cases. 
      • Conduct Level 1 and Level 2 investigation. 
        • Level 1 Investigation refers to alert’s investigation.
        • Level 2 Investigation refers to case (escalated alerts) investigation. 
      • Quality Control on sampled alerts.
      • Present KPIs to Financial Institution leadership on weekly/monthly basis

• • Sanction Screening

• • • Define procedures and best practices for the disposition of alerts and cases. 
    • Conduct Level 1 and Level 2 investigation.
      • Level 1 Investigation refers to alerts investigation.
      • Level 2 Investigation refers to case (escalated alerts) investigation. 
    • Quality Control on sampled alerts.
    • Present KPIs to Financial Institution leadership on weekly/monthly basis

Non-compliance offences under the PCMLTFA

All reporting entities subject to the PCMLTFA and its Regulations must comply with all the obligations outlined therein, such as reporting financial transactions to FINTRAC, verifying client’s identity, keeping records, establishing a compliance program, and registering with FINTRAC (applicable to money services businesses). Failure to comply may result in an administrative monetary penalty (AMP) or criminal charges under the PCMLTFA. 

The offences and punishment pertaining to criminal charges under the PCMLTFA are set out in Part 5 of the PCMLTFA, and include: 

• General offences, including the failure to register as a money services business, to verify client’s identity, and to keep prescribed records.
• Reporting offences for suspicious transactions.
• Reporting offences for electronic funds transfers, large cash transactions, large virtual currency transactions, and casino disbursements; and
• Money services business registration information offences for providing false or misleading statements or information to FINTRAC. 

Every person or entity that is guilty of an offence is liable: 

• on summary conviction, to a fine of not more than $250,000 or $1,000,000 and/or to imprisonment for a term of not more than two years less a day, or
• on conviction on indictment, to a fine of not more than $500,000 or $2,000,000 and/or to imprisonment for a term of not more than five years.

Authored By

Matrix International Financial Services (Matrix-IFS) provides financial crime and compliance solutions & services for the financial sector, serving many of the world’s top tier institutions. We Advise customers on business and technology challenges in anti-money laundering, risk management, fraud prevention, business intelligence and trade-surveillance, enabling our clients to Plan, implement and maintain highly efficient and effective financial crime prevention systems and processes. Matrix-IFS is the only service provider that offers complete anti-financial crime solutions including advisory, system implementation/integration, automation, data quality, model tuning/validation, and Managed Services (FIU, RTB, and more).

We Deliver end-to-end, foolproof compliance programs.