Large Cash Transaction and Electronic Funds Transfer Reporting Requirements: Two Or More Transactions In A 24-Hour Period (The "24-Hour Rule")

Subsection 9(1) of the Proceeds of Crime (Money Laundering) and Terrorist Financing Act. Sections 3, 5, 17, 21, 35, 38, 40 and 47; and subsections 12(1), 24 (1) and 28(1) of the Proceeds of Crime (Money Laundering) and Terrorist Financing Regulations.

The purpose of this notice is to help clarify for reporting entities the measures they must undertake with respect to reporting two or more cash transactions or electronic funds transfers in a 24-hour period.

Reporting

Under the Proceeds of Crime (Money Laundering) and Terrorist Financing Regulations, if you are a reporting entity, you have to submit a large cash transaction report (LCTR) to FINTRAC, when you receive an amount of $10,000 or more in cash¹, from a client, in the course of a single transaction. Also, if you are a financial entity², a money services business or a foreign exchange dealer, you have to submit an electronic funds transfer report (EFTR) to FINTRAC if you send or receive international electronic funds transfer (EFT) of $10,000 or more, made at the request of a client. An LCTR must be submitted within 15 calendar days of the transaction(s), while an EFTR must be submitted within 5 business days from the time the EFT is sent or received.

"24-Hour Rule"

You also have to make an LCTR or EFTR if you conduct two or more cash transactions or EFTs of less than $10,000 each within 24 consecutive hours of one another, that were made by or on behalf of the same individual or entity, and that add up to $10,000 or more. This is called the 24-hour rule.

The 24-hour rule applies if you as the reporting entity, your employee or senior officer know the transactions were made within 24 consecutive hours of each other, by or on behalf of the same individual or entity. It also applies only to transactions that are under $10,000. Where the amount of a single transaction is $10,000 or more, it is reportable as described above in the first paragraph.

Rolling or Static 24-Hour

The 24-hour period is a rolling 24-hour concept - in other words, the 24-hour period begins with each new transaction if you know the transactions were made by or on behalf of the same person or entity.

If because of your system limitations you only know of multiple transactions within a static 24-hour period (i.e. from 9:00 a.m. to 9:00 a.m. the next day) you are required to report the multiple transaction you are aware of in that 24-hour period.

Examples

Example 1:

John Doe makes the following four cash transactions with a reporting entity called ABC on the same day. One of ABC's employees knows that these four cash transactions are all by the same person. John Doe's cash deposits are as follows:

ABC would submit an LCTR (1) for the first cash deposit of $10,000 as it is a single transaction. The other three smaller cash deposits of $4,000 would also have to be reported (2) as they combine to an amount over $10,000 and they were conducted by, or on behalf of, the same person within 24 hours.

Example 2:

Jane Doe requests that three EFTs carried out with a money services business called XYZ on the same day. One of XYZ's employees knows that these three EFT transactions are all done at the request of the same person. Jane Doe's EFT requests are as follows:

XYZ would submit an EFT report (1) to FINTRAC for the second EFT of $10,000 as it is a single transaction. The other two smaller EFTs do not have to be reported because they combine to an amount under $10,000.

Example 3:

Three cash deposits occur as follows:

Under this scenario we assume either a rolling 24-hours or static 24-hours for the period between 9:00 a.m. to 9:00 a.m. the next day. The first two transactions would be combined into a single LCTR (1) using either a static or rolling 24-hours. The second and third transactions could also be combined into another LCTR (2), if you or the entity's employee or senior officer know they occurred within a rolling 24 consecutive hours, as noted earlier. This allows capturing the third transaction, which would otherwise become an "orphan", if you were using a static 24-hour period.

If the transactions occurred over a weekend period, (i.e., the first two transactions were made on a Friday, and the third made on a Monday morning), the first two transactions would be reportable, but not the third.

It should be noted that the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA), and its accompanying regulations, do not require reporting persons or entities to implement a system, whether automated or manual, for detecting multiple cash deposits or Electronic Funds Transfers (EFTs) occurring within a 24-hour period. This does not preclude regulators in your industry sectors from imposing more robust measures under their powers.

However, if such a system exists and as a result, an officer or employee detects multiple cash deposits or multiple EFTs that add up to $10 000 or more in a 24-hour period, those transactions must be treated as a single transaction and reported as prescribed by the Proceeds of Crime (Money Laundering) and Terrorist Financing Regulations. Therefore, depending on what your system allows you to know, reports should be made relative to a static or rolling 24-hour period.

¹In Canadian currency or foreign equivalent. Back

²'financial entity' means an authorized foreign bank within the meaning of section 2 of the Bank Act in respect of its business in Canada or a bank to which that Act applies, a cooperative credit society, savings and credit union or caisse populaire that is regulated by a provincial Act, an association that is regulated by the Cooperative Credit Associations Act, a company to which the Trust and Loan Companies Act applies and a trust company and loan company regulated by a provincial Act. Back