In July 2019, we reported that the Canadian Government had finalized amendments (Amendments) to regulations made under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA Regulations). The Amendments provided for implementation in phases. The burden-relieving amendments (such as those permitting the use of electronic means to verify identity) came into effect in July 2019. A second set of amendments is scheduled to come into effect on June 1. These include, among other things, amendments that tighten up the deadline for submitting suspicious transaction reports (STRs) to FINTRAC.
- Out with the Old: Currently, a reporting entity has 30 days to file an STR, measured from the day it detects a fact about a financial transaction or attempted financial transaction that constitutes reasonable grounds for suspicion (RGS) that the transaction is related to the commission or attempted commission of a money laundering or terrorist financing offence.
- In with the New: Effective June 1, a reporting entity will have to file the STR as soon as practicable after it has taken measures enabling it to establish that it has reached the RGS threshold.
FINTRAC has revised its guidance What is a Suspicious Transaction Report? and Reporting Suspicious Transactions to FINTRAC (collectively, the New Guidance). Set to take effect on June 1, the New Guidance states that:
“As soon as practicable should be interpreted to mean that you have completed the measures that have allowed you to determine that you reached the RGS threshold and as such the development and submission of that STR must be treated as a priority report. FINTRAC expects that you are not giving unreasonable priority to other transaction monitoring tasks and may question delayed reports. The greater the delay, the greater the need for a suitable explanation.”
Other changes in the New Guidance are primarily stylistic or provide more detailed explanations of such matters as the importance of STRs to FINTRAC’s mandate (and why they need to be detailed and timely), examples of how context affects an assessment of potentially suspicious transactions, and the factors that FINTRAC is likely to consider if it reviews a reporting entity’s practices to determine whether it submitted an STR or STRs as soon as practicable.
AUM Law can help you implement the new requirements by, for example, updating your compliance manual to reflect the new requirements and providing training to your employees. Please do not hesitate to contact us.
April 30, 2020