An Act to amend the Proceeds of Crime (Money Laundering) and Terrorist Financing Act and the Income Tax Act and to make a consequential amendment to another Act (S.C. 2006, c. 12)
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Assented to 2006-12-14
An Act to amend the Proceeds of Crime (Money Laundering) and Terrorist Financing Act and the Income Tax Act and to make a consequential amendment to another Act
S.C. 2006, c. 12
Assented to 2006-12-14
An Act to amend the Proceeds of Crime (Money Laundering) and Terrorist Financing Act and the Income Tax Act and to make a consequential amendment to another Act
SUMMARY
This enactment amends the Proceeds of Crime (Money Laundering) and Terrorist Financing Act to enhance the client identification, record-keeping and reporting measures applicable to financial institutions and intermediaries. It establishes a registration regime for money services businesses and foreign exchange dealers and creates a new offence for not registering.
It allows the Financial Transactions and Reports Analysis Centre of Canada to disclose additional information to law enforcement and intelligence agencies, and to make disclosures to additional agencies.
It permits the Centre to exchange compliance-related information with its foreign counterparts and permits the Canada Border Services Agency to share information about the application of the cross-border currency reporting regime with its foreign counterparts. It also includes a consequential amendment to the Canada Border Services Agency Act.
It creates an administrative monetary penalty regime.
It amends the Income Tax Act to allow the Canada Revenue Agency to disclose to the Centre, the Royal Canadian Mounted Police and the Canadian Security Intelligence Service information about charities suspected of being involved in terrorist financing activities.
Her Majesty, by and with the advice and consent of the Senate and House of Commons of Canada, enacts as follows:
2000, c. 17; 2001, c. 41, s. 48AMENDMENTS TO THE PROCEEDS OF CRIME (MONEY LAUNDERING) AND TERRORIST FINANCING ACT
Marginal note:2005, c. 38, s. 124(2) and par. 145(2)(h)
1. (1) The definition “Minister” in section 2 of the Proceeds of Crime (Money Laundering) and Terrorist Financing Act is replaced by the following:
“Minister”
« ministre »
“Minister” means, in relation to sections 24.1 to 39, the Minister of Public Safety and Emergency Preparedness and, in relation to any other provision of this Act, the Minister of Finance.
(2) Section 2 of the Act is amended by adding the following in alphabetical order:
“violation”
« violation »
“violation” means a contravention of this Act or the regulations that is designated as a violation by regulations made under subsection 73.1(1).
2. The heading of Part 1 of the Act is replaced by the following:
RECORD KEEPING, VERIFYING IDENTITY, REPORTING OF SUSPICIOUS TRANSACTIONS AND REGISTRATION
Marginal note:2001, c. 41, s. 51(1)
3. (1) Paragraphs 5(g) and (h) of the Act are replaced by the following:
(g) persons and entities authorized under provincial legislation to engage in the business of dealing in securities or any other financial instruments, or to provide portfolio management or investment advising services;
(h) persons and entities engaged in the business of foreign exchange dealing, of remitting funds or transmitting funds by any means or through any person, entity or electronic funds transfer network, or of issuing or redeeming money orders, traveller’s cheques or other similar negotiable instruments except for cheques payable to a named person or entity;
(2) Paragraph 5(l) of the Act is replaced by the following:
(l) departments and agents of Her Majesty in right of Canada or of a province that are engaged in the business of accepting deposit liabilities, that sell money orders to the public or that sell prescribed precious metals, while carrying out the activities described in regulations made under paragraph 73(1)(c); and
4. Section 6 of the Act and the heading before it are replaced by the following:
Record Keeping and Verifying Identity
Marginal note:Record keeping
6. Every person or entity referred to in section 5 shall keep and retain prescribed records in accordance with the regulations.
Marginal note:Verifying identity
6.1 Every person or entity referred to in section 5 shall verify, in the prescribed circumstances and in accordance with the regulations, the identity of any person or entity.
Marginal note:2001, c. 41, s. 52
5. Section 7 of the Act and the heading before it are replaced by the following:
Reporting and Other Requirements
Marginal note:Transactions if reasonable grounds to suspect
7. Subject to section 10.1, every person or entity referred to in section 5 shall report to the Centre, in the prescribed form and manner, every financial transaction that occurs or that is attempted in the course of their activities and in respect of which there are reasonable grounds to suspect that
(a) the transaction is related to the commission or the attempted commission of a money laundering offence; or
(b) the transaction is related to the commission or the attempted commission of a terrorist activity financing offence.
Marginal note:2001, c. 41, s. 52
6. Subsection 7.1(1) of the Act is replaced by the following:
Marginal note:Disclosure
7.1 (1) Every person or entity referred to in section 5 that is required to make a disclosure under section 83.1 of the Criminal Code or under section 8 of the Regulations Implementing the United Nations Resolutions on the Suppression of Terrorism shall also make a report on it to the Centre, in the prescribed form and manner.
7. (1) Subsection 9(1) of the Act is replaced by the following:
Marginal note:Prescribed financial transactions
9. (1) Subject to section 10.1, every person or entity referred to in section 5 shall report to the Centre, in the prescribed form and manner, every prescribed financial transaction that occurs in the course of their activities.
(2) Subsection 9(3) of the Act is replaced by the following:
Marginal note:List of persons
(3) Every person or entity referred to in section 5 shall establish and maintain a list, in the prescribed form and manner, of their clients in respect of whom a report would have been required under subsection (1) were it not for subsection (2). However, a person or an entity may choose to report a client’s transactions under subsection (1) instead of maintaining the list in respect of that client.
8. The Act is amended by adding the following after section 9.1:
Marginal note:Inability to establish identity
9.2 No person or entity referred to in section 5 shall open an account for a client, in the prescribed circumstances, if it cannot establish the identity of the client in accordance with the prescribed measures.
Marginal note:Politically exposed foreign persons
9.3 (1) Every person or entity that is referred to in section 5 and that is prescribed shall determine, in the prescribed circumstances and in accordance with the regulations, whether it is dealing with a politically exposed foreign person.
Marginal note:Measures
(2) If the person or entity determines that it is dealing with a politically exposed foreign person, the person or entity shall obtain the approval of senior management in the prescribed circumstances and take prescribed measures.
Definition of “politically exposed foreign person”
(3) For the purposes of this section, “politically exposed foreign person” means a person who holds or has held one of the following offices or positions in or on behalf of a foreign state:
(a) head of state or head of government;
(b) member of the executive council of government or member of a legislature;
(c) deputy minister or equivalent rank;
(d) ambassador or attaché or counsellor of an ambassador;
(e) military officer with a rank of general or above;
(f) president of a state-owned company or a state-owned bank;
(g) head of a government agency;
(h) judge;
(i) leader or president of a political party represented in a legislature; or
(j) holder of any prescribed office or position.
It includes any prescribed family member of such a person.
Marginal note:Correspondent banking
9.4 (1) Every entity referred to in any of paragraphs 5(a), (b), (d) and (e) and every other entity that is referred to in section 5 and that is prescribed shall take the following measures before entering into a correspondent banking relationship with a prescribed foreign entity:
(a) obtain prescribed information about the foreign entity and its activities;
(b) ensure that the foreign entity is not a shell bank as defined in the regulations;
(c) obtain the approval of senior management;
(d) set out in writing their obligations and those of the foreign entity in respect of the correspondent banking services; and
(e) any prescribed measures.
Marginal note:Prohibition — shell bank
(2) No person or entity shall enter into a correspondent banking relationship with a shell bank as defined in the regulations.
Definition of “correspondent banking relationship”
(3) For the purposes of this section, “correspondent banking relationship” means a relationship created by an agreement or arrangement under which an entity referred to in any of paragraphs 5(a), (b), (d) and (e) or an entity that is referred to in section 5 and that is prescribed undertakes to provide to a prescribed foreign entity services such as international electronic funds transfers, cash management, cheque clearing and any prescribed services.
Marginal note:Electronic funds transfer
9.5 Every person or entity that is referred to in section 5 and that is prescribed shall, in respect of a prescribed electronic funds transfer that occurs in the course of their financial activities,
(a) include with the transfer the name, address, and account number or other reference number, if any, of the client who requested it, and any prescribed information;
(b) take reasonable measures to ensure that any transfer that the person or entity receives includes that information; and
(c) take any prescribed measures.
Marginal note:Compliance program
9.6 (1) Every person or entity referred to in section 5 shall establish and implement, in accordance with the regulations, a program intended to ensure their compliance with this Part.
Marginal note:Risk assessment
(2) The program shall include the development and application of policies and procedures for the person or entity to assess, in the course of their activities, the risk of a money laundering offence or a terrorist activity financing offence.
Marginal note:Special measures
(3) If the person or entity considers that the risk referred to in subsection (2) is high, the person or entity shall take prescribed special measures for identifying clients, keeping records and monitoring financial transactions in respect of the activities that pose the high risk.
Marginal note:Foreign subsidiaries
9.7 (1) Every person or entity referred to in any of paragraphs 5(a) to (g), except for authorized foreign banks within the meaning of section 2 of the Bank Act and for authorized foreign companies within the meaning of section 2 of the Insurance Companies Act, shall ensure that their wholly owned subsidiaries, that are located in a country that is not a member of the Financial Action Task Force and that carry out activities similar to those of persons and entities referred to in those paragraphs, develop and apply policies and procedures that are consistent with the requirements of sections 6, 6.1 and 9.6 when the laws of the country permit it.
Marginal note:Record keeping
(2) If the development or application by a subsidiary of a policy or procedure referred to in subsection (1) would contravene the laws of the country in which the subsidiary is located, the person or entity shall keep and retain a record of that fact in accordance with section 6.
Definition of “Financial Action Task Force”
(3) For the purposes of this section, “Financial Action Task Force” means the Financial Action Task Force on Money Laundering established in 1989.
Marginal note:Foreign branches
9.8 Every entity referred to in paragraphs 5(a) to (g), except for authorized foreign banks within the meaning of section 2 of the Bank Act and for authorized foreign companies within the meaning of section 2 of the Insurance Companies Act, shall ensure that their branches, that are located in a country that is not a member of the Financial Action Task Force and that carry out activities similar to those of persons and entities referred to in those paragraphs, develop and apply policies and procedures that are consistent with the requirements of sections 6, 6.1 and 9.6 when the laws of the country permit it.
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