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AML Update: Not So Fast - Implementation of New Identity Verification Requirements Extended

June 13, 2017

As many professionals who follow Canadian anti-money laundering legislation are aware, on June 17 and June 30, 2017 respectively, new provisions of the Regulations under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act are to come into force that deal with, among other things, domestic politically exposed persons (PEP) requirements and new requirements for the verification of identity. In that regard, regulations have been published in the Canada Gazette on June 14, 2017, that extend the transitional period for the identity verification requirements from June 30, 2017 until January 23, 2018, providing reporting entities with an additional seven months to implement the new identity verification requirements.

The reason for the extension is likely as a result of the interpretation issues that the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) has had with the new identity verification requirements and what exactly is meant to be encompassed by the “credit file” method of identity verification. Specifically, there have been many questions by anti-money laundering professionals surrounding what information is required to be in the credit file and whether a credit file can, in and of itself, be used as a dual source of identity verification (based on the trade lines contained in the credit file).

Because this has proven more complex than originally anticipated, and given the industry outreach on this matter, the transitional period has been extended to allow regulated entities to implement procedures that are in keeping with FINTRAC’s expectations.

It is expected that FINTRAC will shortly be releasing further guidance on its interpretation of the “credit file” method of identity verification as well as on other verification methods allowed for under the revised Regulations.

For further information, please contact:

Jacqueline Shinfield                  416-863-3290

or any other member of our Financial Services Regulatory group.