Proceedscrimem.L.Reg.Actca

CANADA

Proceeds of Crime (Money Laundering) Regulations

Registration 11 February, 1993

PROCEEDS OF CRIME (MONEY LAUNDERING) ACT

Proceeds of Crime (Money Laundering) Regulations

P.C. 1993-263 11 February, 1993

Whereas, pursuant to subsection 5(2) of the Proceeds of Crime (money laundering) Act*, a copy of the proposed Regulations to combat the laundering of proceeds of crime, substantially in the form set out in the schedule hereto, was published in the Canada Gazette Part I on June 13, 1992 and a reasonable opportunity was thereby afforded to interested persons to make representations to the Minister of Finance with respect thereto;

Therefore, His Excellency the Governor General in Council, on the recommendation of the Minister of Finance, pursuant to subsection 5(1) of the Proceeds of Crime (money laundering) Act*, is pleased hereby to make the annexed Regulations to combat the laundering of proceeds of crime.

* S.C. 1991, c. 26

REGULATIONS TO COMBAT THE LAUNDERING OF PROCEEDS OF CRIME

SHORT TITLE

1. These Regulations may be cited as the Proceeds of Crime (Money Laundering) Regulations.

INTERPRETATION

2. In these Regulations,

"Act" means the Proceeds of Crime (money laundering) Act; (Loi)

"cash" means coins referred to in section 7 of the Currency Act, notes issued by the Bank of Canada pursuant to the Bank of Canada Act that are intended for circulation in Canada and coins or bank notes in the currency of other countries; (espèces)

"casino" means a person who is licensed, registered, permitted or otherwise authorized, pursuant to section 207 of the Criminal Code to do business as a casino; (casino)

"client application form" means a record that sets out the name and address of a client and the nature of the principal business or occupation in which the client is engaged; (formule de demande)

"cooperative credit association" means an association within the meaning of section 2 of the Cooperative Credit Associations Act; (association coopérative de crédit)

"customer credit file" means documents that relate to a credit arrangement and that establish the identity and financial capacity of a client and the terms of the credit arrangement, or copies of such documents; (dossier de crédit)

"deposit slip" means a record that indicates the date of a deposit, the name of the depositor, the number of the account to which the deposit is made, the amount of the deposit and any part of the deposit that is made in cash; (bordereau de dépôt)

"extension of credit record" means the record referred to in paragraph 8.1(5)(b); (relevé de crédit)

"large cash disbursement record" means the record referred to in subsection 8.1(2); (relevé de déboursement important en espèces)

"large cash transaction record" means a record required to be kept and retained under section 4; (relevé d'opération importante en espèces)

"signature card" with respect to an account, includes any document that bears the signature of the individual who is authorized to give instructions in respect of the account; (fiche de spécimen de signature)

"transaction ticket" means the record referred to in paragraph 6(1)(a). (fiche d'opération) SOR/98-439, s. 1.

TRANSFERS TO THIRD PARTIES

3. For the purposes of paragraph 3(h) of the Act, the Act applies to

(a) every person who is engaged in a business, profession or activity in the course of which cash is received for payment or transfer to a third party; and

(b) casinos. SOR/98-439, s. 2.

RECORDS TO BE KEPT AND RETAINED

4. (1) Subject to subsections (3) and (4), every person referred to in section 3 of the Act who in the course of a transaction receives cash in the amount of $10,000 or more shall keep and retain a large cash transaction record that indicates

(a) either

(i) where the cash is received for deposit by a recipient referred to in any of paragraphs 3(a), (b) and (d) to (e.1) of the Act, the name of the person in whose account the amount is deposited, or

(ii) in any other case, the name of the individual from whom the cash is received and, if the information is not readily obtainable from other records kept and retained by the recipient pursuant to these Regulations, the individual's address and the nature of the principal business or occupation in which the individual is engaged;

(b) the date and the nature of the transaction;

(c) where the cash is received by a recipient referred to in any of paragraphs 3(a), (b) and (d) to (f) of the Act, the number of any client account that is affected by the transaction;

(d) the amount of the cash received and the currency in which it is received; and

(e) where, in the case of a recipient who is a natural person, the recipient or an employee of the recipient who conducts the transaction on behalf of the recipient or, in the case of a recipient who is a corporation, an employee or director of the recipient who conducts the transaction on behalf of the recipient, has reason to believe that the individual from whom the cash is received is acting on behalf of a third party, whether, according to that individual, the transaction is conducted on behalf of a third party and, if so,

(i) the name of the third party and, if the information is not readily obtainable from other records kept and retained by the recipient pursuant to these Regulations, the third party's address and the nature of the principal business or occupation in which the third party is engaged, or

(ii) that that individual purports to be keeping and retaining a large cash transaction record pursuant to these Regulations in respect of the receipt of the cash from the third party.

(2) For the purposes of subsection (1), two or more transactions entered into on the same day and resulting in a total amount of cash received of $10,000 or more shall be treated as a single transaction if

(a) where the person who receives the cash is a natural person, the person knows that the transactions are conducted by, or on behalf of, the same person; and

(b) where the person who receives the cash is a corporation, an employee or a director of the corporation who conducts any of the transactions on behalf of the corporation knows that the transactions are conducted by, or on behalf of, the same person.

(3) Subsection (1) does not apply to a person referred to in paragraph 3(a) who receives cash

(a) as payment for, or on account of, professional fees or services;

(b) to be paid as bail; or

(4) Subsection (1) does not apply to a person who in the course of a transaction receives cash in the amount of $10,000 or more if the information referred to in paragraphs (1)(a) to (e) is readily obtainable from other records kept and retained by that person pursuant to these Regulations. SOR/98-439, s. 3.

5. Every bank, cooperative credit association, cooperative credit society, credit union, caisse populaire, loan company and trust company shall keep and retain the following records:

(a) a signature card in respect of each account holder;

(b) every account operating agreement that is received or created in the normal course of business;

(d) every debit and credit memo that is received or created in the normal course of business, except debit memos that relate to an account at the same branch of a financial institution that created the debit memo;

(e) a copy of every account statement that is sent to a client, if the information therein is not readily obtainable from other records that are kept and retained pursuant to these Regulations;

(f) every cleared cheque that is drawn on, and a copy of every cleared cheque that is deposited to, an account, unless

(i) the account on which the cheque is drawn and the account to which it is deposited are at the same branch of the financial institution, or

(ii) the following conditions are met, namely,

(A) an image of the cheque has been recorded on microfilm or on an electronic medium,

(B) an image of the cheque can be readily reproduced from the microfilm or electronic medium,

(D) the microfilm or electronic medium is retained for a period of at least five years; and

(g) every customer credit file that is created in the normal course of business. SOR/98-439, s. 4.

6. (1) Every person, other than a person referred to in paragraphs 3(a), (b) and (d) to (e.1) of the Act, who is engaged in the business of foreign exchange dealing shall keep and retain the following records:

(a) a transaction ticket in respect of every currency exchange transaction, that may take the form of an entry in a transaction register, and that indicates

(i) the date, the amount and the type of currency of the purchase or sale,

(ii) the method, amount and currency of payment made or received, as the case may be, and

(iii) in the case of a transaction in excess of $1,000, or its equivalent in a foreign currency, that is carried out by an individual, the name of that individual;

(b) every customer credit file that is created in the normal course of business; and

(c) every internal memorandum that is received or created in the normal course of business and that concerns account operations.

(2) Every casino shall be deemed to be engaged in the business of foreign exchange dealing with respect to every currency exchange transaction it carries out. SOR/98-439, s. 5.

7. Every person who is engaged in the business of dealing in securities shall keep and retain the following records:

(a) in respect of every account other than an account in the name of, or in respect of which instructions are authorized to be given by, a person referred to in any of paragraphs 3(a) to (e.1) of the Act or in the name of, or in respect of which instructions are authorized to be given by, a person referred to in paragraph 3(f) of the Act who is registered or licensed under the laws of a province to trade in securities, a signature card, account operating agreement or account application form, that bears the signature of the individual who is authorized to give instructions in respect of the account and that indicates the number of a bank, trust company, credit union or caisse populaire account in the name of that individual or in respect of which that individual is authorized to give instructions;

(b) every new account application form, confirmation of purchase or sale, guarantee, trade authorization, power of attorney and joint account agreement, and all correspondence that pertains to the operation of accounts, that is received or created in the normal course of business, or copies thereof; and

8. (1) Every life insurance company shall keep and retain a client application form for every purchase from it of an immediate or deferred annuity, or of an insurance policy, for which the client may pay $10,000 or more over the duration of the contract, irrespective of the means of payment, other than an exempt policy as defined in subsection 306(1) of the Income Tax Regulations as it read on May 1, 1992.

(2) In the case of a life insurance policy which is a group policy, the life insurance company shall obtain the client application form referred to in subsection (1) from the applicant for the policy. SOR/98-439, s. 6.

8.1 (1) Subject to subsection (7), and for greater certainty, the transactions in respect of which a casino is required to keep and retain large cash transaction records pursuant to subsection 4(1) include the following transactions involving cash in the amount of $10,000 or more:

(a) sale of chips, tokens or plaques;

(b) front money deposits;

(d) repayment of any form of credit, including markers and counter cheques;

(e) bets of currency; and

(f) sales of the casino's cheques.

(2) Subject to subsection (7), where the total amount of cash disbursed is $10,000 or more, a casino shall keep and retain a large cash disbursement record in respect of the following transactions:

(a) redemption of chips, tokens and plaques;

(b) front money withdrawals;

(d) advances on any form of credit, including markers and counter cheques;

(e) payments on bets, including slot jackpots;

(f) payments to a customer of funds received for credit to that customer or any other customer;

(g) cashing of cheques or other negotiable instruments; and

(h) reimbursement to customers of travel and entertainment expenses.

(3) A large cash disbursement record shall indicate

(a) the name of the person to whom the disbursement is made;

(b) the date and nature of the disbursement;

(d) where the employee or director making the disbursement on behalf of the casino has reason to believe that the person is receiving the cash on behalf of a third party, whether, according to that person, the cash is received on behalf of a third person and, if so,

(i) the name and address of the third party and the nature of the principal business or occupation in which the third party is engaged, or

(ii) that that person purports to be keeping and retaining a large cash transaction record pursuant to these Regulations in respect of the receipt of the cash.

(4) For the purposes of subsection (3), two or more transactions entered into on the same day and resulting in a total amount of cash disbursed of $10,000 or more shall be treated as a single transaction if an employee of the casino who conducts any of the operations on behalf of the casino knows that the disbursements are made to the same person or for the benefit of the same person.

(5) Subject to subsection (7), every casino shall keep and retain the following records:

(a) with respect to every customer account opened by the casino:

(i) a signature card in respect of each account holder,

(ii) every account operating agreement that is received or created in the normal course of business,

(iii) a deposit slip in respect of every deposit that is made to an account, and

(iv) every debit and credit memo that is received or created in the normal course of business; and

(b) with respect to every extension of credit to a customer in excess of $2,500, an extension of credit record that indicates

(i) the customer's name and address and the nature of the principal business or occupation in which the customer is engaged,

(ii) the terms and conditions of the extension of credit, and

(iii) the date and amount of the transaction.

(6) Subject to subsection (7), every casino shall keep and retain a record indicating the nature and reference number of the document referred to in subsection 11(2) that is used to verify the identity of a person who conducts a transaction in respect of which the casino is required to keep a large cash transaction record, a large cash disbursement record or an extension of credit record.

(7) A casino is not required to keep and retain a record described in subsections (1), (2), (5) and (6) or include information in the record if the information that would otherwise be required to be contained in the record is readily obtainable from other records kept and retained by the casino pursuant to these Regulations. SOR/98-439, s. 6.

MACHINE-READABLE COPIES

9. A machine-readable copy of a document referred to in any of the following provisions, of which a printed copy can be readily produced, may be kept in place of the document:

(a) section 4;

(b) paragraphs 5(a) to (e) and (g);

(d) paragraphs 7(b) and (c); and

(e) section 8. SOR/98-439, s. 7.

PERIOD OF RETENTION OF DOCUMENTS

10. A person who is required to keep and retain records pursuant to sections 4 to 8.1 shall retain those records for a period of at least five years following

(a) in respect of signature cards, account operating agreements, customer credit files, client application forms and account application forms, the day of the closing of the account to which they relate; and

(b) in respect of all other records, the day on which they were created. SOR/98-439, s. 8.

VERIFICATION OF IDENTITY

11. (1) Subject to section 12,

(a) every person referred to in any of paragraph 3(b) of these Regulations and paragraphs 3(a), (b) and (d) to (e.1) of the Act shall ascertain the identity of every individual who signs a signature card in respect of an account with that person, unless, in respect of a corporate account the signature card of which is signed by more than three individuals, the person has ascertained the identity of at least three individuals who signed the card after the coming into force of these Regulations and who remain authorized to act in respect of the account;

(a.1) for the purposes of paragraph (a), where the individual who signs a signature card is under 12 years of age, a person referred to in paragraph 3(a), (b) or (d) to (e.1) of the Act may deem the card to have been signed by a parent or guardian of the individual;

(b) every person who is engaged in the business of foreign exchange dealing, other than a person referred to in any of paragraphs 3(a), (b) and (d) to (e.1) of the Act, shall ascertain the identity of every individual who submits a client application form to that person and of every individual who conducts a transaction with that person in excess of $1,000, or its equivalent in a foreign currency, in respect of which no client application form has been submitted;

(c) every life insurance company shall ascertain the identity of every individual who conducts, on the individual's own behalf or on the behalf of a corporation or of another individual, a transaction with that life insurance company for which a record must be kept and retained pursuant to section 8;

(d) every person who is required to keep a large cash transaction record shall ascertain the identity of every individual who conducts a transaction referred to in subsection 4(1) with that person, other than a deposit to a corporate account or by means of an automated banking machine; and

(e) every casino shall verify the identity of every individual who conducts a transaction with that casino for which a large cash disbursement record must be kept and retained pursuant to subsection 8.1(2) and of every individual who conducts a transaction with the casino for which an extension of credit record must be kept and retained pursuant to paragraph 8.1(5)(b);

(f) every person engaged in dealing in securities shall, for every account which is opened for which a record must be kept and retained by that person pursuant to paragraph 7(a), verify the identity of an individual who is authorized to give instructions in respect of the account.

(2) For the purposes of subsection (1), the identity of an individual shall be ascertained

(a) in a case referred to in paragraph 11(1)(a), before any operations other than an initial deposit are carried out on the account, by

(i) verifying the identity of the individual by reference to the individual's birth certificate, driver's licence, provincial health insurance card, passport or to any similar document, or

(ii) confirming that a cheque drawn by the individual on an account of an institution referred to in paragraphs 3(a), (b) or (d) to (e.1) of the Act has been cleared,

(b) in a case referred to in paragraph 11(1)(f), within six months after the opening of the account, by

(i) verifying the identity of the individual by reference to the individual's birth certificate, driver's licence, provincial health insurance card or passport or to any similar document,

(ii) confirming that a cheque drawn by the individual on an account of an institution referred to in paragraphs 3(a), (b) or (d) to (e.1) of the Act and made out to the order of the person required to keep the record in respect of which the individual's identity is being ascertained has been cleared, or