Regulations amending the Proceeds of Crime (money laundering) Regulations
- News release 97-060 - Regulatory Impact Analysis Statement - 

JUS-96-847-01

(CG-1/GC-1)

Notice is hereby given, pursuant to subsection 5(2) of the Proceeds of Crime (money laundering) Act ^a, that the Governor in Council proposes, pursuant to subsection 5(1) of that Act, to make the annexed Regulations Amending the Proceeds of Crime (Money Laundering) Regulations.

Interested persons may make representations with respect to the proposed Regulations to the Minister of Finance within 90 days after the date of publication of this notice. All such representations must cite the Canada Gazette, Part I, and the date of publication of this notice and be sent to:

Richard Lalonde
Senior Project Leader
Financial Sector Division
Department of Finance
20th Floor, East Tower
L'Esplanade Laurier
140 O'Connor Street
Ottawa, Ontario
K1A 0G5

__________________________________

MICHEL GARNEAU
Assistant Clerk of the Privy Council

JUS-96-847-01

(DORS/SOR)

___________________________________

His Excellency the Governor General in Council, on recommendation of the Minister of Finance, pursuant to subsection 5(1) of the Proceeds of Crime (money laundering) Act^a, hereby makes the annexed Regulations Amending the Proceeds of Crime (Money Laundering) Regulations.

JUS-96-847-01

(DORS/SOR)

REGULATIONS AMENDING THE PROCEEDS OF CRIME (MONEY LAUNDERING) REGULATIONS

Amendments

1. (1) The definition "transaction ticket" in section 2 of the Proceeds of Crime (Money Laundering) Regulations¹ is replaced by the following:

"transaction ticket" means the record referred to in paragraph 6(1)(a). (fiche d'opération)

(2) Section 2 of the Regulations is amended by adding the following in alphabetical order:

"casino" means a person who is licensed to do business as a casino; (casino)

"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)

"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)

2. Section 3 of the Regulations is replaced by the following:

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.

3. The portion of subsection 4(3) of the Regulations before paragraph (a) is replaced by the following:

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

4. Paragraph 5(d) of the Regulations is replaced by the following:

(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;

5. (1) Section 6 of the Regulations is renumbered as subsection 6(1).

(2) Paragraph 6(1)(a) of the Regulations is replaced by the following:

(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;

(3) Section 6 of the Regulations is amended by adding the following after subsection (1):

(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.

6. Section 8 of the Regulations is replaced by the following:

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.

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;

(c) safekeeping 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;

(c) safekeeping 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;

(c) the person's address and the nature of the principal business or occupation in which the person is engaged; and

(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.

7. Paragraph 9(b) of the Regulations is replaced by the following:

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

8. The portion of section 10 of the Regulations before paragraph (a) is replaced by the following:

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

9. (1) Paragraph 11(1)(a) of the Regulations is replaced by the following:

(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;

(2) Paragraph 11(1)(c) of the Regulations is replaced by the following:

(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;

(3) Subsection 11(1) of the Regulations is amended by deleting the word "and" at the end of paragraph (c), by adding the word "and" at the end of paragraph (d) and by adding the following after paragraph (d):

(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.

(4) Subsection 11(2) of the Regulations is replaced by the following:

(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 has been cleared, or

(iii) confirming that the individual holds an account with an institution referred to paragraphs 3(a), (b) or (d) to (e.1) of the Act in the name of the individual, and

(c) in any other case, without delay by 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.

(3) Every person who is required to ascertain the identity of individuals in accordance with subsection (1) shall indicate on the signature card, client application form, transaction ticket, record or large cash transaction record, disbursement record, extension of credit record or account operating agreement, or account application form, as the case may be,

(a) the type and reference number of the document that is relied on to verify the identity of the individual, where the document is a birth certificate, driver's licence, provincial health insurance card or passport or to any similar document;

(b) the bank and account number of the account on which the cheque was drawn, where the clearing of a cheque from an institution referred to in paragraph 3(a), (b) or (d) to (e.1) of the Act is relied on to ascertain the identity of an individual; and

(c) the bank at which an account is held and the number of the account, where the identity of the individual is verified by confirming that the individual holds an account with an institution referred to in paragraph 3(a), (b) or (d) to (e.1) of the Act.

10. Section 12 of the Regulations is replaced by the following:

12. (1) Paragraph 11(1)(c) does not apply with respect to the following transactions:

(a) the purchase of an immediate or deferred annuity that is paid for entirely with funds that are directly transferred from a registered pension plan within the meaning of the Income Tax Act or from a pension plan that is required to be registered under the Pension Benefits Standards Act, 1985, or a similar law of a province of Canada;

(b) the purchase of a registered annuity policy or a registered retirement income fund for the purposes of the Income Tax Act;

(c) the purchase of an immediate or deferred annuity that is paid for entirely with the proceeds of a group life insurance policy; or

(d) a transaction in respect of which a life insurance company would otherwise be required to ascertain the identity of an individual where the life insurance company has reasonable grounds to believe the transaction is carried out as part of a reverse mortgage or of a structured settlement.

(2) A person is not required to ascertain the identity of an individual pursuant to paragraph 11(1)(a) or (f) where

(a) the account holder already holds an account with that person;

(b) the person has reasonable grounds to believe that the account holder is the government of Canada or of a province, a Canadian educational institution or a Canadian hospital, a Canadian municipality or a public body performing a function of government in Canada, or an agency thereof; or

(c) the person has reasonable grounds to believe that the account holder is a corporation with a minimum net worth of $75 million on its last audited balance sheet and whose shares are traded on a Canadian stock exchange.

(3) For greater certainty, where a person who is an individual has ascertained the identity of another individual in accordance with subsection 11(2), the person is not required to subsequently ascertain that identity if the person recognizes the other individual.

COMING INTO FORCE

11. These Regulations come into force on .

Footnotes

a. S.C. 1991, c.26.

1. SOR/93-75.

- News release 97-060 - Regulatory Impact Analysis Statement -