FINTRAC Issues Anti-money Laundering Guidance on Verifying Clients
Published June 18, 2021
The Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) introduced a new guidance for life insurance companies, brokers and agents that came into effect on June 1, 2021. FINTRAC provides guidance to help individuals and entities understand their obligations under the Canadian legislation called the Proceeds of Crime (Money Laundering) and Terrorist Financing Act.
The guidance outlines when a client’s identity must be verified and reported to FINTRAC.
FINTRAC is a government financial intelligence unit that prevents money laundering, terrorism financing and threats to the security of Canada. FINTRAC has identified a channel to prevent money laundering through the insurance industry by enlisting life insurance agencies, brokers and agents to verify the identity of persons or entities. This guidance does not apply to life insurance brokers and agents when they are acting as managing general agents.
In order to deter money laundering activity, the guidance states that clients’ identities must be verified under five conditions.
- Large cash transactions of $10,000 or more.
- Large virtual currency transactions of $10,000 or more.
- Suspicious transactions regardless of the transaction amount.
- If an information record is kept in connection with the sale of an immediate or deferred annuity or a life insurance policy where you are to receive $10,000 or more or you are to remit $10,000 or more to a beneficiary over the duration of the annuity/policy.
- Group life insurance policies or annuities.
This measure serves to help protect consumers from criminal activities that can harm Canadians and the greater public.
It is part of Insurance Council of BC licence holders' role to comply with the guidance set out by FINTRAC in accordance with the Proceeds of Crime (Money Laundering) and Terrorist Financing Act. To maintain a high professional standard, it is the licensee's responsibility to familiarize themselves with the FINTRAC guidance. Failure to comply may result in administrative monetary and criminal penalties.
To learn more about the guidance, when and how to verify identities, visit FINTRAC’s website here.