Canada’s financial watchdog, the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC), has published updated requirements for the identification of certain individuals or corporations or entities, Methods to Verify the Identity of an Individual and Confirm the Existence of a Corporation or an Entity other than a Corporation (the Updated Requirements).
The Updated Requirements for the Proceeds of Crime (Money Laundering) and Terrorist Financing Regulations (PCMLTFR) stipulate how and when reporting issuers and promoters must identify an individual or confirm the existence of a corporation or of an entity other than a corporation.
Individuals can be identified in one of three ways:
- Government-issued
photo identification method where the document must be:
- authentic, valid and current (this must indicate the individual’s name, have a photo of the individual, have a unique identifying number, and match the name and appearance of the individual in question) ;
- Credit
file method where the information must:
- be valid (from a Canadian credit bureau) and current (have the name and address that matches that of the individual in question, and be three years or less old); or
- Dual-process
method where the information must be:
- valid and current, and two different and reliable sources (information must include the individual’s name, address, date of birth, and confirm the individual in question has a deposit account, credit card, or other loan accounts with a financial entity.
Corporations can be identified by:
- a certificate of incorporation;
- a certificate of active corporate status;
- a record that has to be filed annually under provincial securities legislation; or,
- any other record that confirms the corporation’s existence, such as the corporation’s published annual report signed by an audit firm, or a letter or notice of assessment for the corporation from a municipal, provincial, territorial or federal government.
Entities other than corporations can be identified by:
- a partnership agreement;
- articles of association; or
- any other record that confirms its existence as a legal entity (for example, a trust agreement).
FINTRAC staff note that when conducting due diligence regarding the identity of corporations or entities, reporting issuers and promoters must keep a record of:
- the corporation’s or the entity’s registration number; and,
- the type
of record consulted:
- if a paper record is used, a copy of it must be kept; or,
- if an electronic record, the source of the version of the record.
The complete Methods to Verify the Identity of an Individual and Confirm the Existence of a Corporation or an Entity other than a Corporation can be found on the website of the Financial Transactions and Reports Analysis Centre of Canada.
For more information, please call Barbara Hendrickson at BAX Securities Law (416) 601 -1004.
This publication is not intended to constitute legal advice. No one should act on it or refrain from acting on it without consulting with a lawyer. BAX does not warrant or guarantee the accuracy or currency or completeness of the publication. No part of this publication may be reproduced without the prior written permission of BAX Securities Law.
