What You Need to Know About the Proceeds of Crime (Money Laundering) and Terrorist Financing Act

On May 26, 2014 we gave a free lecture at the People’s Law School in Vancouver on What You Need to Know About the Proceeds of Crime (Money Laundering) and Terrorist Financing Act. It was well attended with financial services professionals, accountants and interested members of the general public. For those who were unable to attend, this article will give you a brief overview of the lecture on the Proceeds of Crime (Money Laundering) and Terrorist Financing Act.

The Proceeds of Crime (Money Laundering) and Terrorist Financing Act came into force in 2000. It is designed to:

“Facilitate combatting the laundering of proceeds of crime and combatting the financing of terrorist activities, to establish the Financial Transactions and Reports Analysis Centre of Canada.”

The objective of the Proceeds of Crime (Money Laundering) and Terrorist Financing Act is:

  • To implement specific measures to detect and deter money laundering and the financing of terrorist activities
  • To facilitate the investigation and prosecution of money laundering offences and terrorist activity financing offences
  • To respond to the threat posed by organized crime by providing law enforcement officials with the information they need to deprive criminals of the proceeds of their criminal activities
  • To assist in fulfilling Canada’s international commitments to participate in the fight against transnational crime

It is important to note that “Proceeds of Crime” and “Money Laundering” are defined in subsection 462.31 of the Criminal Code of Canada. “Terrorism” and “terrorist financing” are defined in section 83 of the Criminal Code of Canada.

Some of the ways that The Proceeds of Crime (Money Laundering) and Terrorist Financing Act accomplishes its purpose in combatting money laundering and terrorist financing is by requiring financial services providers to:

  • Report certain transactions
  • Follow client identification requirements
  • Keep certain records
  • Create a compliance regime

Some of the types of reports that financial services providers may be required to file, include:

  • Suspicious transactions related to money laundering or terrorist financing
  • Cash transactions of $10,000 or more
  • International electronic funds transfers of $10,000 or more
  • Terrorist property in possession
  • Disbursements of $10,000 or more made by casinos

Some of the records that financial services providers may be required to keep, include:

  • Large cash transaction records
  • Foreign currency transaction tickets
  • Client information records
  • Copies of official corporate records (binding provisions)
  • Copies of suspicious transaction reports
  • Account operating agreements
  • Records on beneficial ownership, control and structure
  • Signature cards
  • Records of the purpose, intended nature, and monitoring of your business relationships

In certain circumstances, financial services providers are required to identify their clients, in particular they may identify their clients when they:

  • Suspect that any transaction or attempted transaction is related to money laundering or terrorist financing
  • Receive $10,000 or more in cash
  • Sell or cash traveller’s cheques, money orders, etc. of $3,000 or more
  • Send money transfers of $1,000 or more
  • Receive payment for an annuity or life insurance policy from an individual in the amount of $10,000 or more

The Proceeds of Crime (Money Laundering) and Terrorist Financing Act of is a complex piece of legislation. Should you require further information or explanation, please Contact Us.

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