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Vol. 137, No. 24 — November 19, 2003 Registration PROCEEDS OF CRIME (MONEY LAUNDERING) AND TERRORIST FINANCING ACT Regulations Amending Certain Regulations Made under the Proceeds of Crime (Money Laundering) and Terrorist Financing ActP.C. 2003-1778 6 November, 2003 Her Excellency the Governor General in Council, on the recommendation of the Minister of Finance, pursuant to section 73 (see footnote a) of the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (see footnote b) , hereby makes the annexed Regulations Amending Certain Regulations Made under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act. REGULATIONS AMENDING CERTAIN REGULATIONS MADE UNDER THE PROCEEDS OF CRIME (MONEY LAUNDERING) AND TERRORIST FINANCING ACT PROCEEDS OF CRIME (MONEY LAUNDERING) AND TERRORIST FINANCING SUSPICIOUS TRANSACTION REPORTING REGULATIONS 1. Subsection 1(1) of the Proceeds of Crime (Money Laundering) and Terrorist Financing Suspicious Transaction Reporting Regulations (see footnote 1) is replaced by the following: 1. (1) For the purposes of the Act and in these Regulations, "casino" means a person or entity that is licensed, registered, permitted or otherwise authorized to do business under any of paragraphs 207(1)(a) to (g) of the Criminal Code and that conducts its business activities in a permanent establishment (a) that the person or entity holds out to be a casino and in which roulette or card games are carried on; or (b) where there is a slot machine, which, for the purposes of this definition, does not include a video lottery terminal. It does not include a person or entity that is a registered charity as defined in subsection 248(1) of the Income Tax Act and is licensed, registered, permitted or otherwise authorized to carry on business temporarily for charitable purposes, if the business is carried out in the establishment of the casino for not more than two consecutive days at a time under the supervision of the casino. 2. The Regulations are amended by adding the following after section 1: 1.1 For the purposes of paragraph 5(i) of the Act, any business, temporarily conducted for charitable purposes in the establishment of a casino by a registered charity carried on for not more than two consecutive days at a time under the supervision of the casino, is considered to be an activity conducted by the supervising casino. 3. Subparagraph 13(a)(vi) of the Regulations is replaced by the following: (vi) if the client, importer or exporter is a corporation, the date and jurisdiction of its incorporation and its incorporation number, and PROCEEDS OF CRIME (MONEY LAUNDERING) AND TERRORIST FINANCING REGULATIONS 4. (1) Subsection 1(1) of the Proceeds of Crime (Money Laundering) and Terrorist Financing Regulations (see footnote 2) is replaced by the following: 1. (1) For the purposes of the Act and in these Regulations, "casino" means a person or entity that is licensed, registered, permitted or otherwise authorized to do business under any of paragraphs 207(1)(a) to (g) of the Criminal Code and that conducts its business activities in a permanent establishment (a) that the person or entity holds out to be a casino and in which roulette or card games are carried on; or (b) where there is a slot machine, which, for the purposes of this definition, does not include a video lottery terminal. It does not include a person or entity that is a registered charity as defined in subsection 248(1) of the Income Tax Act and is licensed, registered, permitted or otherwise authorized to carry on business temporarily for charitable purposes, if the business is carried out in the establishment of the casino for not more than two consecutive days at a time under the supervision of the casino. (2) The definition "electronic funds transfer" in subsection 1(2) of the Regulations is replaced by the following: "electronic funds transfer" means the transmission — through any electronic, magnetic or optical device, telephone instrument or computer — of instructions for the transfer of funds, other than the transfer of funds within Canada. In the case of SWIFT messages, only SWIFT MT 100 and SWIFT MT 103 messages are included. (télévirement) (3) Paragraph (b) of the definition "large cash transaction record" in subsection 1(2) of the Regulations is replaced by the following: (b) the date of the transaction; (4) The definition "securities dealer" in subsection 1(2) of the English version of the Regulations is replaced by the following: "securities dealer" means a person or entity that is authorized under provincial legislation to engage in the business of dealing in securities or to provide portfolio management or investment counselling services. (courtier en valeurs mobilières) (5) Subsection 1(2) of the Regulations is amended by adding the following in alphabetical order: "annuity" has the same meaning as in subsection 248(1) of the Income Tax Act. (rente) "deferred profit sharing plan" has the same meaning as in subsection 248(1) of the Income Tax Act. (régime de participation différée aux bénéfices) "employees profit sharing plan" has the same meaning as in subsection 248(1) of the Income Tax Act. (régime de participation des employés aux bénéfices) "registered pension plan" has the same meaning as in subsection 248(1) of the Income Tax Act. (régime de pension agréé) "registered retirement income fund" has the same meaning as in subsection 248(1) of the Income Tax Act. (fonds enregistré de revenu de retraite) 5. (1) Subsection 12(3) of the Regulations is replaced by the following: (3) Paragraph (1)(b) applies in respect of a financial entity that orders a person or entity to which subsection (1), 24(1) or 28(1) applies to send an electronic funds transfer out of Canada, at the request of a client, unless it provides that person or entity with the name and address of that client. (2) Subsection 12(5) of the Regulations is repealed. 6. Subparagraph 23(1)(a)(ii) of the Regulations is replaced by the following: (ii) sets out the account number, where that person's identity was ascertained pursuant to subparagraph 64(1)(c)(ii); 7. (1) Paragraphs 24(1)(b) and (c) of the Regulations are replaced by the following: (b) the sending out of Canada, at the request of a client, of an electronic funds transfer of $10,000 or more in the course of a single transaction, together with the information referred to in Schedule 2 or 5, as the case may be; and (c) the receipt from outside Canada of an electronic funds transfer, sent at the request of a client, of $10,000 or more in the course of a single transaction, together with the information referred to in Schedule 3 or 6, as the case may be. (2) Subsection 24(3) of the Regulations is replaced by the following: (3) Paragraph (1)(b) applies in respect of a person or entity engaged in the business of foreign exchange dealing that orders a person or entity to which subsection (1), 12(1) or 28(1) applies to send an electronic funds transfer out of Canada, at the request of a client, unless it provides that person or entity with the name and address of that client. 8. (1) Paragraphs 28(1)(b) and (c) of the Regulations are replaced by the following: (b) the sending out of Canada, at the request of a client, of an electronic funds transfer of $10,000 or more in the course of a single transaction, together with the information referred to in Schedule 2 or 5, as the case may be; and (c) the receipt from outside Canada of an electronic funds transfer, sent at the request of a client, of $10,000 or more in the course of a single transaction, together with the information referred to in Schedule 3 or 6, as the case may be. (2) Subsection 28(3) of the Regulations is replaced by the following: (3) Paragraph (1)(b) applies in respect of a money services business that orders a person or entity to which subsection (1), 12(1) or 24(1) applies to send an electronic funds transfer out of Canada, at the request of a client, unless it provides that person or entity with the name and address of that client. 9. The Regulations are amended by adding the following after section 42: 42.1 Any transaction described in section 40, 41 or 42 that occurs in the course of the business, temporarily conducted for charitable purposes in the establishment of a casino by a registered charity carried on for not more than two consecutive days at a time under the supervision of the casino, shall be reported by the supervising casino. 10. (1) Paragraphs 50(1)(a) and (b) of the Regulations are replaced by the following: (a) subject to subsection (2), the client is a corporation that carries on that business as an establishment described in sector 22, 44 (excluding codes 4411, 4412 and 44831) or 45 (excluding code 45392), or code 481, 482, 485 (excluding code 4853), 51322, 51331, 61121 or 61131 of the North American Industry Classification System as that sector or code read on January 31, 2003; (b) the client has had
(ii) an account in respect of that business with a financial entity other than the one referred to in subparagraph (i), for a continuous period of 24 months ending immediately before the client opened an account with that financial entity; (2) Paragraph 50(3)(c) of the Regulations is replaced by the following: (c) the client's incorporation number. 11. Section 52 of the Regulations is amended by adding the following after subsection (2): (3) Despite subsection (1), for the application of section 3, the requirement to report information set out in Schedules 1 to 6 does not apply to a person or entity in respect of information set out in an item of any of those Schedules that is marked with an asterisk if, after taking reasonable measures to do so, the person or entity is unable to obtain the information. (4) For greater certainty, Schedules 2 and 3 apply only to SWIFT members sending or receiving SWIFT messages. 12. Section 53 of the Regulations is replaced by the following: 53. Subject to subsection 63(1), every person or entity that is required to keep and retain a large cash transaction record under these Regulations shall ascertain, in accordance with paragraph 64(1)(d), the identity of every individual with whom the person or entity conducts a transaction in respect of which that record must be kept, other than a deposit to a business account or by means of an automated banking machine. 13. Paragraphs 54(1)(a) and (b) of the Regulations are replaced by the following: (a) in accordance with paragraph 64(1)(a), ascertain the identity of every person who signs a signature card in respect of an account that the financial entity opens, except in the case of a business account the signature card of which is signed by more than three persons authorized to act with respect to the account, if the financial entity has ascertained the identity of at least three of those persons; (b) in accordance with paragraph 64(1)(a), ascertain the identity of every person who requests an electronic funds transfer of $3,000 or more, unless the person has signed a signature card in respect of an account held with the financial entity or is authorized to act with respect to such an account; 14. (1) Paragraph 57(2)(a) of the Regulations is replaced by the following: (a) to business accounts in respect of which the securities dealer has already ascertained the identity of at least three persons who are authorized to give instructions in respect of the account; (2) Subsection 57(2) of the Regulations is amended by striking out the word "or" at the end of paragraph (c) and by replacing paragraph (d) with the following: (d) to employees profit sharing plan accounts and deferred profit sharing plan accounts, unless the accounts are funded in whole or in part by contributions by a person or entity other than the employer; (e) to dividend reinvestment plan accounts sponsored by a corporation for its investors, unless the accounts are funded in whole or in part by a source other than the corporation; or (f) to accounts in the name of foreign affiliates of a financial entity. 15. Paragraph 60(a) of the Regulations is replaced by the following: (a) in accordance with paragraph 64(1)(a), ascertain the identity of every person who signs a signature card in respect of an account that the casino opens, except in the case of a business account whose signature card is signed by more than three persons authorized to act with respect to the account, if the casino has ascertained the identity of at least three of those persons; 16. (1) Subsection 62(1) of the Regulations is amended by striking out the word "or" at the end of paragraph (d) and by replacing paragraph (e) with the following: (e) the opening of a registered plan account, including a locked-in retirement plan account, a registered retirement savings plan account and a group registered retirement savings plan account; (f) the opening of an employees profit sharing plan account or a deferred profit sharing plan account, unless the account is funded in whole or in part by contributions by a person or entity other than the employer; or (g) the opening of a dividend reinvestment plan account sponsored by a corporation for its investors, unless the account is funded in whole or in part by a source other than the corporation. (2) Subsection 62(5) of the Regulations is replaced by the following: (5) Subsection 54(1) does not apply in respect of (a) employees profit sharing plan accounts and deferred profit sharing plan accounts, unless the accounts are funded in whole or in part by contributions by a person or entity other than the employer; or (b) dividend reinvestment plan accounts sponsored by a corporation for its investors, unless the accounts are funded in whole or in part by a source other than the corporation. 17. Section 63 of the Regulations is amended by adding the following after subsection (3): (4) Despite paragraphs 54(1)(d) and 55(b), subsections 56(3), 57(3) and 58(3) and paragraphs 59(c), 60(e) and 61(c), the name of a corporation's director need not be ascertained when the corporation is a securities dealer. 18. The title of Part D of Schedule 1 to the Regulations is replaced by the following: PART D — Information on Person Conducting Transaction That Is not a Deposit Into a Business Account (if applicable) 19. The title of Part E of Schedule 1 to the Regulations is replaced by the following: PART E — Information on Person Conducting Transaction That Is a Deposit Into a Business Account Other Than a Night Deposit or a Quick Drop (if applicable) 20. Schedule 2 to the Regulations is amended by replacing the reference "(Paragraph 12(1)(b) and subsection 52(1))" after the heading "SCHEDULE 2" with the reference "(Paragraphs 12(1)(b), 24(1)(b) and 28(1)(b) and subsections 52(1), (3) and (4))". 21. Schedule 3 to the Regulations is amended by replacing the reference "(Paragraph 12(1)(c) and subsection 52(1))" after the heading "SCHEDULE 3" with the reference "(Paragraphs 12(1)(c), 24(1)(c) and 28(1)(c) and subsections 52(1), (3) and (4))". 22. Item 3 of Part B of Schedule 4 to the Regulations is replaced by the following: 3.* Incorporation number of client and date and jurisdiction of its incorporation 23. Item 8 of Part B of Schedule 5 to the Regulations is replaced by the following: 8. Client's Identifier Number 24. Item 8 of Part B of Schedule 6 to the Regulations is replaced by the following: 8. Client's Identifier Number CROSS-BORDER CURRENCY AND MONETARY INSTRUMENTS REPORTING REGULATIONS 25. (1) The definition "monetary instruments" in subsection 1(1) of the Cross-border Currency and Monetary Instruments Reporting Regulations (see footnote 3) is replaced by the following: "monetary instruments" means the following instruments in bearer form or in such other form as title to them passes on delivery, namely,
(b) negotiable instruments, including bank drafts, cheques, promissory notes, travellers' cheques and money orders, other than warehouse receipts or bills of lading. For greater certainty, this definition does not apply to securities or negotiable instruments that bear restrictive endorsements or a stamp for the purposes of clearing or are made payable to a named person and have not been endorsed. (effets) (2) Subsection 1(2) of the Regulations is amended by adding the following in alphabetical order: "cargo ship" means a commercial vessel that is engaged in international transportation of shipments of goods other than goods imported or exported as mail. (navire de charge) "cruise ship" means a commercial vessel that has sleeping facilities for over 70 persons who are not crew members but does not include a vessel engaged in passenger or cargo ferry service. (navire de croisière) "transfer agent" means a person or entity appointed by a corporation to maintain records of stock, debenture and bond owners, to cancel and issue certificates and to send out dividend cheques. (agent de transfert) 26. (1) The portion of subsection 9(1) of the Regulations before paragraph (a) is replaced by the following: 9. (1) Subject to subsections (2) and (3), currency or monetary instruments transported by a person arriving in Canada on board a commercial passenger conveyance who has as their destination a place outside Canada are not required to be reported under subsection 12(1) of the Act, on condition that (2) The portion of subsection 9(2) of the Regulations before paragraph (a) is replaced by the following: (2) Subject to subsection (3), currency or monetary instruments that are transported by courier into Canada on board a conveyance and that have as their destination a place outside Canada are not required to be reported under subsection 12(1) of the Act, on condition that (3) Section 9 of the Regulations is amended by adding the following after subsection (2): (3) Currency or monetary instruments that are transported into Canada on board a cruise ship or cargo ship and that have as their destination a place outside Canada are not required to be reported under subsection 12(1) of the Act, on condition that the currency or monetary instruments are not removed from the cruise ship or cargo ship while it is in Canada. 27. The Regulations are amended by adding the following after section 15: EXEMPTION APPLICABLE TO IMPORTED SHARES 15.1 A person or entity is not required to make a report under subsection 12(1) of the Act with respect to stocks, bonds and debentures imported into Canada by courier or as mail if the importer is a financial entity or a securities dealer as defined in subsection 1(2) of the Proceeds of Crime (Money Laundering) and Terrorist Financing Regulations or a transfer agent. 28. Part B of Schedule 1 to the Regulations is amended by adding the following before item 1: 0.1 Indication of whether it is an importation or exportation 29. Part C of Schedule 2 to the Regulations is amended by adding the following before item 1: 0.1 Indication of whether it is an importation or exportation 30. Part B of Schedule 3 to the Regulations is amended by adding the following before item 1: 0.1 Indication of whether it is an importation or exportation REGULATIONS AMENDING THE PROCEEDS OF CRIME (MONEY LAUNDERING) AND TERRORIST FINANCING REGULATIONS 31. Subsection 2(2) of the Regulations Amending the Proceeds of Crime (Money Laundering) and Terrorist Financing Regulations (see footnote 4) is repealed. 32. Subsection 4(2) of the Regulations is repealed. COMING INTO FORCE 33. These Regulations come into force on the day on which they are registered. REGULATORY IMPACT (This statement is not part of the Regulations.) Description The various provisions of the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA) are implemented by three sets of regulations, which were brought into force between November 2001 and March 2003. The first two sets of regulations implement the reporting, record-keeping, client identification and compliance requirements under Part I of the PCMLTFA. The third set implements the reporting requirements under Part II of the PCMLTFA. Following the coming into force of these Regulations, a number of financial institutions, financial intermediaries and other reporting entities made informal representations to the Department of Finance, the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) and the Canada Customs and Revenue Agency (CCRA) regarding the application of the Regulations. In response, the Regulations Amending Certain Regulations Made Under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act were pre-published in the Canada Gazette, Part I, on July 26, 2003 for a 30-day public comment period. These Regulations include a number of amendments to the three sets of regulations under the PCMLTFA to address concerns raised by stakeholders. The amendments streamline and clarify the regulatory requirements, and minimize the compliance burden in certain situations. The Regulation also includes a number of minor or technical amendments. Some amendments to the Regulations were made based on comments received during the consultation period. The Regulations come into force upon registration. Alternatives The majority of the regulatory amendments respond to concerns raised by stakeholders. These issues could not be fully addressed by providing clarifications or updating FINTRAC's and CCRA's guidelines. Leaving the Regulations unchanged would maintain an unnecessary burden on reporting entities in certain situations or may result in FINTRAC not receiving all information pertinent to its analysis. Benefits and Costs The amendments to the Regulations provide clarification or relief from the regulatory requirements. They assist reporting entities in complying with the requirements and accommodate their business practices. They also respond to the particular business needs of certain industries such as the financial and shipping sectors. The exemptions apply to situations that do not present a significant money laundering or terrorist financing risk. Consultation Following the pre-publication of the Regulations, the following stakeholders provided comments on the proposed Regulations: the Shipping Federation of Canada, Computershare, the Investment Dealers Association of Canada, the Canadian Bankers Association (CBA) and the Canadian Life and Health Insurance Association. The majority of these stakeholders were satisfied with the amendments. Some clarification on the wording of the amendments was provided in response to their concerns. Some stakeholders, namely the CBA and Computershare, requested broader exemptions from certain reporting, client identification, and record-keeping requirements. They were informed that there were insufficient grounds at this time to support such changes, but that some of the issues they raised warrant further investigation and consideration for amendments in the future. Compliance and Enforcement FINTRAC is responsible for ensuring compliance with the Regulations under Part I of the PCMLTFA. FINTRAC will make the necessary changes to its guidelines and other information products to reflect the regulatory amendments. CCRA is responsible for administering the cross-border currency reporting regime under Part II of the PCMLTFA, including monitoring compliance. CCRA will provide information and guidance on the application of the exemptions. Contact
Chief S.C. 2001, c. 41, s. 73 S.C. 2000, c. 17; 2001, c. 41, s. 48 SOR/2001-317; SOR/2002-185 SOR/2002-184 SOR/2002-412 SOR/2002-413 |
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