FINTRAC Interpretation Notice no. 4

August 31, 2009

The "24-Hour Rule"

Subsection 9(1) of the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA). Sections 3, 17, 21, 33.1, 35, 38, 39.2, 39.6, 40, 42 and 47; and subsections 12(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, electronic funds transfers or casino disbursements in a 24-hour period. Any references to dollar amounts (such as $10,000) refer to the amount in Canadian dollars or its equivalent in foreign currency.

LCTR

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 cash from a client in the course of a single transaction, unless the cash is received from a financial entity or a public body. In this context, cash means Canadian currency or foreign currency. Cash includes money in circulation in any country (bank notes or coins) but excludes cheques, money orders or other similar negotiable instruments.

You also have to submit an LCTR if you conduct two or more cash transactions 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, unless the cash is received from a financial entity or a public body.

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

Other requirements and exceptions apply. For more information, see Guideline 7: Submitting Large Cash Transaction Reports to FINTRAC.

EFTR

Also, if you are a financial entity, a money services business or a casino, you have to submit an electronic funds transfer report (EFTR) to FINTRAC if you send or receive, in the course of a single transaction, international electronic funds transfer (EFT) of $10,000 or more, made at the request of a client.

You also have to submit an EFTR if you conduct two or more 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.

The 24-hour rule applies if you as the reporting entity know, or your employee or your senior officer knows, that the EFTs were made within 24 consecutive hours of each other, by or on behalf of the same individual or entity. It applies only to EFTs that are under $10,000. If an EFT is for $10,000 or more, it is reportable as a single transaction. For more information, see Guideline 8: Submitting Electronic Funds Transfer Reports to FINTRAC.

Exceptions for EFTs

The 24‑hour rule does not apply for an EFT sent to two or more beneficiaries if it was requested by the administrator of a pension fund federally or provincially regulated, a public body or a very large corporation.

Other requirements and exceptions apply. For more information, see Guideline 8: Submitting Electronic Funds Transfer Reports to FINTRAC.

CDR

Effective September 28, 2009, if you are a casino, you have to submit a casino disbursement report (CDR) to FINTRAC when you make a disbursement of $10,000 or more in the course of a single transaction.

You also have to submit a CDR if you make two or more disbursements of less than $10,000 each within 24 consecutive hours of one another, that were received by or on behalf of the same individual or entity, and that add up to $10,000 or more.

The 24-hour rule applies if your employee or your senior officer knows, that the disbursements were received within 24 consecutive hours of each other, by or on behalf of the same individual or entity. It applies only to disbursements that are under $10,000. If a disbursement is for $10,000 or more, it is reportable as a single transaction.

Other requirements and exceptions apply. For more information, see Guideline 10: Submitting Casino Disbursement Reports to FINTRAC.

Rolling or Static 24-Hour

The 24-hour period is a rolling time frame. In other words, the 24-hour period begins with each new cash transaction or EFT of less than $10,000, if you know they were made by or on behalf of the same individual or entity. In the case of a casino disbursement, the 24-hour period begins with each new disbursement of less than $10,000, if you know they were received by or on behalf of the same individual or entity.

However, if your system permits you to know of multiple cash transactions, EFTs or casino disbursements only within a static 24-hour period (e.g. from 9:00 a.m. to 9:00 a.m. the next day) you are required to report the multiple transactions that you know 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 individual. John Doe's cash deposits are as follows:

A transaction at 9 a.m. of $10,000 CDN constitutes LCTR 1. Transactions at 10 a.m., 2 p.m. and 4 p.m. of $4,000 CDN each constitutes LCTR 2

ABC would submit an LCTR (1) for the first cash deposit of $10,000 as it was received in the course of a single transaction. The other three smaller cash deposits of $4,000 would also have to be submitted in an LCTR (2) as they combine to an amount over $10,000 and they were conducted by the same individual within 24 hours.

Example 2:

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

EFTs at 9:00 a.m. of $2,000 CDN, 10:00 a.m. of $10,000 CDN, and 4:00 p.m. of $2,000 CDN. The second EFT consitutes EFTR 1.

XYZ would submit an EFTR (1) to FINTRAC for the second EFT of $10,000 as it is sent in the course of a single transaction. The other two smaller EFTs do not have to be reported because they do not fall under the 24-hour rule (i.e., they combine to an amount under $10,000).

Example 3:

Entity A has a system that detects multiple cash transactions of less than $10,000 over a static 24‑hour period (starting at 8:00 am each morning). Entity B has a system that detects this based on a rolling 24‑hour period.

Three identical cash deposits occur at each entity as follows:

Deposits of $5,500 CDN each occur at 8:00 a.m. Monday, 4:00 p.m. Monday, and 10:00 a.m. Tuesday. The first and second deposits constitute LCTR 1 (for either static or rolling 24hrs). The second and third deposits constitute LCTR 2 (for rolling 24 hrs).

Both Entity A and Entity B would submit an LCTR (1) for the first two transactions as they would be detected by both systems. The second and third transactions would only be detected by Entity B's system as it is outside of the static 24-hour period for Entity A's system. Entity B would therefore submit another LCTR (2).

Example 4:

Casino 123 has a system that detects multiple disbursements of less than $10,000 over a static 24‑hour period (starting at 10:00 am each morning). Casino ZZZ has a system that detects this based on a rolling 24‑hour period.

Three different disbursements are made at each casino as follows:

Disbursements of $6,000 CDN at 10:00 a.m. on Wednesday, $7,000 CDN at 6:00 p.m. on Wednesday, and $5,500 CDN at 12:00 a.m. on Thursday are made. The first and second disbursements constitute CDR 1 (for either static or rolling 24hrs). The second and third disbursements constitute CDR 2 (for rolling 24 hrs.)

Both Casino 123 and Casino ZZZ would submit a CDR (1) for the first two disbursements as they would be detected by both systems. The second and third disbursement would only be detected by Casino ZZZ's system as it is outside of the static 24-hour period for Casino 123's system. Casino ZZZ would therefore submit another CDR (2).

Weekends

The 24-hour period cannot cover more than 24 consecutive hours. For instance, if the transactions in Example 3 above for Entity B occurred over a weekend period, (i.e., the first two transactions were made on a Friday, and the third made on a Sunday morning), the first two transactions would be reportable, but not the third.

Definitions

Administrative monetary penalties (AMPs)

Civil penalties that may be issued to reporting entities by FINTRAC for non-compliance with the PCMLTFA and related regulations. (pénalité administrative pécuniaire [PAP])

Affiliate

An entity is affiliated with another entity if one of them is wholly owned by the other, if both are wholly owned by the same entity or if their financial statements are consolidated. (entité du même groupe)

Branch

A branch is a part of your own business at a distinct location other than your main office. (succursale)

Clarification Request

A clarification request is a method used to communicate with you when we need more information about your registration form. This request is usually sent to you by email. If you do not reply to a clarification request, your registration can be denied or revoked. (demande de precisions)

Compliance officer

The individual you appoint to be responsible for the implementation of your compliance regime. Your compliance officer should have the authority and the resources necessary to discharge his or her responsibilities effectively. Depending on your type of business, your compliance officer should report, on a regular basis, to the board of directors or senior management, or to the owner or chief operator. (agent de conformité)

Credit card acquiring business

A credit card acquiring business is a financial entity that has an agreement with a merchant to provide the following services:

  • enabling a merchant to accept credit card payments by cardholders for goods and services and to receive payment for credit card purchases;
  • processing services, payment settlements and providing point-of-sale equipment (such as computer terminals); and
  • providing other ancillary services to the merchant. (entreprise d’acquisition de cartes de crédit)
Current

A document or information that is up to date (the most recent) and is not expired. (document ou renseignement à jour)

Electronic Funds Transfer (EFT)

An electronic funds transfer (money transfer) means the transmission of instructions for the money transfer of funds to or from Canada. An electronic funds transfer does not include the instructions for the money transfer of funds from one place in Canada to another in Canada. (télévirement)

Entity

Can be a corporation, trust, partnership, fund, or an unincorporated association or organization. (entité)

Financial account

Refers to deposit, credit card or other loan accounts held by a financial entity. This does not include investment accounts such as Registered Retirement Savings Plans (RRSPs). (compte financier)

Financial entity

Means a bank that is regulated by the Bank Act, an authorized foreign bank, as defined in section 2 of that Act, in respect of its business in Canada, 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 financial services cooperative, a credit union central, a company that is regulated by the Trust and Loan Companies Act and a trust company or loan company that is regulated by a provincial Act. It includes a department or an entity that is an agent or mandatary of Her Majesty in right of Canada or of a province when it is carrying out an activity referred to in section 45 of the Proceeds of Crime (Money Laundering) and Terrorist Financing Regulations. (entité financière)

Guarantor

A guarantor can be:

  • a medical doctor, chiropractor, or dentist;
  • a judge, a magistrate or lawyer;
  • a notary (in Quebec) or a notary public;
  • an optometrist or a pharmacist;
  • an accredited public accountant or Chartered Professional Accountant;
  • a professional engineer (P. Eng., in a province other than Quebec) or engineer (Eng. in Quebec); or,
  • a veterinarian. (répondant)
Independent

For the purposes of ascertaining client identity, the term “independent” means that the sources must be different; the information cannot be from the same issuer. (source indépendante)

Individual or person

A human being. (individu ou personne)

Institutional trust

An institutional trust is a trust that is established by a corporation, partnership or other entity for a particular business purpose and includes pension plan trusts, pension master trusts, supplemental pension plan trusts, mutual fund trusts, pooled fund trusts, registered retirement savings plan trusts, registered retirement income fund trusts, registered education savings plan trusts, group registered retirement savings plan trusts, deferred profit sharing plan trusts, employee profit sharing plan trusts, retirement compensation arrangement trusts, employee savings plan trusts, health and welfare trusts, unemployment benefit plan trusts, foreign insurance company trusts, foreign reinsurance trusts, reinsurance trusts, real estate investment trusts, environmental trusts and trusts established in respect of endowments, foundations and registered charities. (fiducie institutionnelle)

Inter vivos trust

A trust that is not created by will. This type of trust is established by a living individual for the benefit of another individual, such as a trust created by a parent for a child (also known as a living trust). Its assets can be distributed to the beneficiary during or after a settlor’s lifetime. (fiducie entre vifs)

Listed person

A listed person includes an individual, a corporation, a trust, a partnership or fund or an unincorporated association or organization that is believed to:

  • have carried out, attempted to carry out, participated in or facilitated a terrorist activity; or
  • be controlled directly or indirectly by, be acting on behalf of, at the direction of, or in association with any individual or entity conducting any of the above activities.

A listed person means anyone on a list published in the Regulations Implementing the United Nations Resolutions on the Suppression of Terrorism issued under the United Nations Act. You can consult that list of names on the Office of the Superintendent of Financial Institutions' Web site: http://www.osfi-bsif.gc.ca/Eng/fi-if/amlc-clrpc/atf-fat/Pages/default.aspx. (personne inscrite)

Money Laundering Offence

A money laundering offence involves various acts committed with the intention to hide or convert dirty money produced through criminal activity into clean money whose criminal origin is hard to trace. Criminals are always looking for ways to exchange, disguise or move money around to hide its origin. The dirty money can come from offences such as drug trafficking, bribery, fraud, forgery, murder, robbery, counterfeit money, stock manipulation, tax evasion, and copyright infringement. Dirty money can also come from illegal activities that took place outside of Canada. (infraction de recyclage des produits de la criminalité)

Money service business agent

An MSB services agent is an individual or organization authorized to act on an MSB's behalf. Do not mistake an MSB agent with a branch. If you are an MSB, an agent is a separate individual or organization that you authorize to deliver your services. If you use one or more agents to deliver your MSB services on your behalf, you need to give information about all of them in your registration form. It is your responsibility to keep your agent information up to date in your registration information. If you are an agent of an MSB, you do not have to register with us for the services you deliver for that MSB. (mandataire d’une entreprise de services monétaires)

Organization

An organization is an entity such as a corporation, a trust, a partnership, or an association. It does not include an individual. (organisation)

Original

Original refers to any paper or electronic document as it is sent from the issuer directly to the client. (version originale d’un document)

Public body
  1. any department or agent or mandatary of Her Majesty in right of Canada or of a province;
  2. an incorporated city or town, village, metropolitan authority, township, district, county, rural municipality or other incorporated municipal body in Canada or an agent or mandatary in Canada of any of them; and
  3. an organization that operates a public hospital and that is designated by the Minister of National Revenue as a hospital authority under the Excise Tax Act, or an agent or mandatary of such an organization (organisme public).
Reliable

In reference to a source, reliable means that the source is well known, reputable, and is considered one that you trust to verify the identity of the client. (source fiable)

Senior officer

A senior officer of an organization can be:

  • a director who is also a full time employee;
  • a chief executive officer, chief operating officer, president, secretary treasurer, controller, chief financial officer, chief accountant, chief auditor or chief actuary, or any individual who performs these similar duties; or,
  • any other officer who reports directly to the board of directors, chief executive officer or chief operating officer. (cadre dirigeant)
Service agreement

A service agreement is an agreement between you and another organization for you to provide any of the following MSB services:

  • money transfers;
  • foreign currency exchange; or
  • money orders, traveller's cheques or anything similar. (accord de relation commerciale)
Settlor

A settlor is an individual or entity that creates a trust with a written trust declaration. The settlor ensures that legal responsibility for the trust is then given to a trustee and that the trustee is provided with a trust instrument document that explains how the trust is to be used for the beneficiaries. A settlor includes any individual or entity that contributes financially to that trust, either directly or indirectly. (constituent)

Source

The issuer or provider of information or documents for verifying identification. (source)

SWIFT

The Society for Worldwide Interbank Financial Telecommunication (SWIFT) network is a global member-owned cooperative and an international provider of secure financial messaging services. (SWIFT)

Terrorist activity financing offence

A terrorist financing offence is knowingly collecting or giving property (such as money) to carry out terrorist activities. This includes the use and possession of any property to help carry out the terrorist activities. The money earned for terrorist financing can be from legal sources, such as personal donations and profits from a business or charitable organization. The money can also come from criminal sources, such as the drug trade, the smuggling of weapons and other goods, fraud, kidnapping and extortion. (infraction de financement des activités terroristes)

Trust

A right of property held by one individual or entity (a trustee) for the benefit of another individual or entity (a beneficiary). (fiducie)

Trustee

A trustee is the individual or entity authorized to hold or administer the assets of a trust in the best interests of the beneficiary. (fiduciaire)

Valid

Refers to a document or information that appears legitimate or authentic and does not appear to have been altered or had any information redacted. The information must also be valid according to the issuer, for example if a passport is invalid because of a name change, it is not valid for FINTRAC purposes. (document ou renseignement valide)

Verify client identity

To refer to certain information or documentation to identify a client and ensure that their information matches what you know about them. (vérifier l’identité d’un client)

Very Large Corporation

A large corporation is one that has minimum net assets of $75 million CAD on its last audited balance sheet. The corporation's shares have to be traded on a Canadian stock exchange or on a stock exchange outside Canada that is designated by the Minister of Finance. The corporation also has to operate in a country that is a member of the Financial Action Task Force (FATF). (personne morale dont l’actif est très important)

Working Days

A working day is a day between and including Monday to Friday. It excludes Saturday, Sunday, or a public holiday. (jour ouvrable)

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