Proceeds of Crime (Money Laundering) and Terrorist Financing Regulations (SOR/2002-184)

• 112 (1) A person or entity that is required to verify the identity of an entity other than a corporation shall do so by referring to a partnership agreement, to articles of association or to the most recent version of any other record that confirms its existence and contains its name and address.

• (2) A record that is used to verify identity under subsection (1) must be authentic, valid and current.

• (3) The entity’s identity shall be verified

  • (a) in the cases referred to in section 84, subparagraph 88(c)(ii) and paragraph 95(4)(d), at the time of the transaction;

  • (b) in the case referred to in section 85, before the transaction or attempted transaction is reported under section 7 of the Act;

  • (c) in the cases referred to in paragraphs 86(c) and 103(c), before the first transaction, other than the initial deposit, is carried out on the account;

  • (d) in the case referred to in paragraph 87(c), before any credit card issued on the account is activated;

  • (e) in the case referred to in subparagraph 88(c)(i), before the prepaid payment product account is activated;

  • (f) in the cases referred to in paragraph 89(c) and subparagraph 89(e)(ii), within 15 days after the day on which the trust company becomes the trustee;

  • (g) in the cases referred to in paragraphs 92(c), 95(4)(b) and 104(c), within 30 days after the day on which the information record is created;

  • (g.1) in the cases referred to in paragraphs 93.1(1)(c) and 93.2(1)(c) , at the time the record is created;

  • (h) in the case referred to in paragraph 94(c), within 30 days after the day on which the account is opened;

  • (h.01) in the case referred to in paragraph 95(4)(a), before the first transport of cash, virtual currency or negotiable instruments is carried out;

  • (h.02) in the cases referred to in paragraphs 95(4)(a.01) to (a.03), before the acquirer services are provided;

  • (h.1) in the case referred to in paragraph 95(4)(a.1), at the time the information record is created;

  • (h.2) in the case referred to in paragraph 95(4)(c), at the time of the donation;

  • (i) in the cases referred to in paragraphs 96(c), 97(1)(c), 100(c), 101(1)(c), 102(c) and 102.1(c), within 30 days after the day on which the transaction is conducted; and

  • (j) in the case referred to in paragraph 102.2(c), at the time the title insurance policy is provided.

• (4) If the person or entity that is required to verify an entity’s identity does so by referring to an electronic version of a record that is contained in a database that is accessible to the public, they shall keep a record that sets out the entity’s registration number, the type of record referred to and the source of the electronic version of the record. In any other case, they shall keep the record or a copy of it.

• 112.1 (1) A person or entity that is required to verify an entity’s identity in accordance with subsection 112(1) may rely on an agent or mandatary to take the measures to do so.

• (2) The person or entity may rely on measures that were previously taken by an agent or mandatary to verify the entity’s identity if the agent or mandatary was, at the time they took the measures,

  • (a) acting in their own capacity, whether or not they were required to take the measures under these Regulations; or

  • (b) acting as an agent or mandatary under a written agreement or arrangement that was entered into, with another person or entity that is required to verify an entity’s identity, for the purposes of verifying identity in accordance with subsection 112(1).

• (3) In order to rely, under subsection (1) or (2), on measures taken by an agent or mandatary, the person or entity must

  • (a) have entered into a written agreement or arrangement with the agent or mandatary for the purposes of verifying an entity’s identity in accordance with subsection 112(1);

  • (b) as soon as feasible, obtain from the agent or mandatary the information that the agent or mandatary referred to in order to verify the entity’s identity and the information that the agent or mandatary confirmed as being that of the entity; and

  • (c) be satisfied that the information that the agent or mandatary confirmed as being that of the entity is valid and current and that the agent or mandatary verified the entity’s identity in the manner described in subsection 112(1).

• 113 (1) A person or entity that is required to verify an entity’s identity in accordance with subsection 112(1) may rely on measures that were previously taken by another person or entity if

  • (a) the other person or entity is referred to in section 5 of the Act; or

  • (b) the other entity is affiliated with the one that is required to verify the entity’s identity or with another entity referred to in section 5 of the Act and carries out activities outside Canada that are similar to those of a person or entity that is referred to in any of paragraphs 5(a) to (g) of the Act.

• (2) The person or entity that is required to verify an entity’s identity shall not rely on measures that were previously taken by an entity referred to in paragraph (1)(b) unless they are satisfied, after taking into account the risk of money laundering or terrorist activity financing offences in the foreign state in which that entity carries out the activities, that

  • (a) the entity applies policies that establish requirements similar to those in sections 6, 6.1 and 9.6 of the Act; and

  • (b) the entity’s compliance with those policies is subject to the supervision of a competent authority under the legislation of that foreign state.

• (3) In order to rely, under subsection (1), on measures taken by another person or entity, the person or entity that is required to verify an entity’s identity shall

  • (a) as soon as feasible, obtain from the other person or entity the information that was confirmed as being that of the entity and be satisfied that the information is valid and current and that the other person or entity verified the entity’s identity in the manner described in subsection 112(1) or, if the measures were taken before the coming into force of this section, that the other person or entity confirmed the entity’s existence in accordance with these Regulations, as they read at the time the measures were taken; and

  • (b) have a written agreement or arrangement with the other person or entity that requires the other person or entity to provide them on request, as soon as feasible, with all of the information that the other person or entity referred to in order to verify the entity’s identity.

• 114 (1) If a person or entity that is referred to in any of paragraphs 5(a) to (g) of the Act and that is required to verify an entity’s identity in accordance with subsection 112(1) considers, based on an assessment of the risk referred to in subsection 9.6(2) of the Act, that there is a low risk of a money laundering offence or terrorist activity financing offence, they are deemed to comply with subsection 112(1) if

  • (a) the entity whose identity is to be verified

    • (i) is an entity that is referred to in any of those paragraphs 5(a) to (g),

    • (ii) is a foreign entity that carries out activities that are similar to those of an entity that is referred to in any of those paragraphs,

    • (iii) administers a pension or investment fund that is regulated under the legislation of a foreign state and that either is created by a foreign government or is subject to the supervision of a competent authority under the legislation of that foreign state,

    • (iv) is one whose shares are traded on a Canadian stock exchange or a stock exchange designated under subsection 262(1) of the Income Tax Act,

    • (v) is a subsidiary of an entity that is referred to in any of subparagraphs (i) to (iv) or of a corporation that is referred to in any of subparagraphs 111(1)(a)(i) to (iv) and is one whose financial statements are consolidated with the financial statements of that entity or corporation,

    • (vi) is an institution or agency of the government of a foreign state, or

    • (vii) is a public service body, as defined in subsection 123(1) of the Excise Tax Act;

  • (b) within the applicable time referred to in one of paragraphs 112(3)(a) to (i), they are satisfied that the entity exists and that every person who deals with them on behalf of the entity is authorized by it to do so; and

  • (c) they keep a record that sets out the grounds for considering that there is a low risk of a money laundering offence or terrorist activity financing offence and the information obtained about the entity and the persons referred to in paragraph (b).

• (2) If the person or entity subsequently considers, based on an assessment of the risk referred to in subsection 9.6(2) of the Act, that the risk of a money laundering offence or terrorist activity financing offence has increased and is no longer low, they shall verify the entity’s identity in accordance with subsection 112(1) as soon as feasible.

PART 4Requirements with Respect to Persons Referred to in Subsection 9.3(1) of the Act

Application of Parts 5 and 6

115 The provisions of this Part are subject to the provisions of Parts 5 and 6.

Financial Entities

• 116 (1) A financial entity shall take reasonable measures to determine whether

  • (a) either of the following persons is a politically exposed foreign person, a politically exposed domestic person, a head of an international organization, a family member — referred to in subsection 2(1) — of one of those persons or a person who is closely associated with a politically exposed foreign person:

    • (i) a person for whom it opens an account,

    • (ii) a person who is identified as an authorized user; and

  • (b) any of the following persons is a politically exposed foreign person, a politically exposed domestic person or a head of an international organization, or a family member — referred to in subsection 2(1) — of, or a person who is closely associated with, one of those persons:

    • (i) a person who requests that it initiate an international electronic funds transfer of $100,000 or more,

    • (ii) a beneficiary for whom it finally receives an international electronic funds transfer of $100,000 or more,

    • (iii) a person who makes a payment of $100,000 or more to a prepaid payment product account,

    • (iv) a person who requests that it transfer virtual currency in an amount of $100,000 or more,

    • (v) a beneficiary for whom it receives virtual currency in an amount of $100,000 or more.

• (2) A financial entity shall periodically take reasonable measures to determine whether either of the following persons is a politically exposed foreign person, a politically exposed domestic person, a head of an international organization, a family member — referred to in subsection 2(1) — of one of those persons or a person who is closely associated with a politically exposed foreign person:

  • (a) a holder of an account;

  • (b) an authorized user.

• (3) If a financial entity or any of its employees or officers detects a fact that constitutes reasonable grounds to suspect that a person referred to in paragraph (2)(a) or (b) is a politically exposed foreign person, a politically exposed domestic person or a head of an international organization, or a family member — referred to in subsection 2(1) — of, or a person who is closely associated with, one of those persons, the financial entity shall take reasonable measures to determine whether they are such a person.

Life Insurance Companies and Life Insurance Brokers or Agents

117 A life insurance company or life insurance broker or agent shall take reasonable measures to determine whether either of the following persons is a politically exposed foreign person, a politically exposed domestic person or a head of an international organization, or a family member — referred to in subsection 2(1) — of, or a person who is closely associated with, one of those persons:

• (a) a person who makes a lump-sum payment of $100,000 or more in respect of an immediate or deferred annuity or a life insurance policy;

• (b) a beneficiary to whom they are to remit an amount of $100,000 or more over the duration of an immediate or deferred annuity or a life insurance policy.

118 Section 117 does not apply to a life insurance company or a life insurance broker or agent when they are dealing in reinsurance.

Securities Dealers

• 119 (1) A securities dealer shall take reasonable measures to determine whether a person for whom they open an account is a politically exposed foreign person, a politically exposed domestic person, a head of an international organization, a family member — referred to in subsection 2(1) — of one of those persons or a person who is closely associated with a politically exposed foreign person.

• (2) A securities dealer shall periodically take reasonable measures to determine whether an account holder is a politically exposed foreign person, a politically exposed domestic person, a head of an international organization, a family member — referred to in subsection 2(1) — of one of those persons or a person who is closely associated with a politically exposed foreign person.

• (3) If a securities dealer or any of their employees or officers detects a fact that constitutes reasonable grounds to suspect that an account holder is a politically exposed foreign person, a politically exposed domestic person or a head of an international organization, or a family member — referred to in subsection 2(1) — of, or a person who is closely associated with, one of those persons, the securities dealer shall take reasonable measures to determine whether the account holder is such a person.

Money Services Businesses and Foreign Money Services Businesses

• 120 (1) A money services business shall take reasonable measures to determine whether any of the following persons is a politically exposed foreign person, a politically exposed domestic person or a head of an international organization, or a family member — referred to in subsection 2(1) — of, or a person who is closely associated with, one of those persons:

  • (a) a person who requests that the money services business initiate an international electronic funds transfer of $100,000 or more;

  • (b) a beneficiary for whom the money services business finally receives an international electronic funds transfer of $100,000 or more;

  • (b.1) a person who requests that the money services business transport an amount of $100,000 or more in cash, virtual currency within the meaning of paragraph (b) of the definition of that term in subsection 1(2) or money orders, traveller’s cheques or other similar negotiable instruments;

  • (c) a person who requests that the money services business transfer virtual currency in an amount of $100,000 or more;

  • (d) a beneficiary for whom the money services business receives virtual currency in an amount of $100,000 or more.

• (2) A foreign money services business shall take reasonable measures to determine whether any of the following persons is a politically exposed foreign person, a politically exposed domestic person or a head of an international organization, or a family member — referred to in subsection 2(1) — of, or a person who is closely associated with, one of those persons:

  • (a) a person who requests that the foreign money services business initiate an international electronic funds transfer of $100,000 or more in the course of providing services in Canada;

  • (b) a beneficiary for whom the foreign money services business finally receives an international electronic funds transfer of $100,000 or more in the course of providing services in Canada;

  • (b.1) a person who requests that the foreign money services business transport an amount of $100,000 or more in cash, virtual currency within the meaning of paragraph (b) of the definition of that term in subsection 1(2) or money orders, traveller’s cheques or other similar negotiable instruments;

  • (c) a person who requests that the foreign money services business transfer virtual currency in an amount of $100,000 or more in the course of providing services in Canada;

  • (d) a beneficiary for whom the foreign money services business receives virtual currency in an amount of $100,000 or more in the course of providing services in Canada.

• (3) A money services business or a foreign money services business shall take reasonable measures to determine whether a person with whom they enter into a business relationship is a politically exposed foreign person, a politically exposed domestic person, a head of an international organization, a family member — referred to in subsection 2(1) — of one of those persons or a person who is closely associated with a politically exposed foreign person.

• (4) A money services business or a foreign money services business shall periodically take reasonable measures to determine whether a person with whom they have a business relationship is a politically exposed foreign person, a politically exposed domestic person, a head of an international organization, a family member — referred to in subsection 2(1) — of one of those persons or a person who is closely associated with a politically exposed foreign person.

• (5) If a money services business or a foreign money services business — or any of their employees or officers — detects a fact that constitutes reasonable grounds to suspect that a person with whom they have a business relationship is a politically exposed foreign person, a politically exposed domestic person or a head of an international organization, or a family member — referred to in subsection 2(1) — of, or a person who is closely associated with, one of those persons, the money services business or foreign money services business shall take reasonable measures to determine whether they are such a person.