Life insurance agents and companies are reporting entities under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA). FINTRAC -- the Financial Transactions and Reports Analysis Centre of Canada -- is the federal body that receives and analyzes the reports.
A reporting entity's obligations under the PCMLTFA include:
Client Identification
Before effecting a financial transaction above the prescribed threshold, the agent must verify the client's identity using government-issued photo identification (or an alternative verification method approved by FINTRAC). Acceptable identification for an individual includes federal, provincial, or territorial government-issued documents such as a driver's licence, passport, birth certificate, permanent resident card, or Certificate of Indian Status. A credit card or cheque is not acceptable government-issued identification.
Large Cash Transaction Reporting
An agent must submit a Large Cash Transaction Report (LCTR) to FINTRAC when receiving $10,000 or more in cash (including cryptocurrency treated as cash) in a single transaction or in two or more cash transactions totalling $10,000 or more made by or on behalf of the same person within a 24-hour period (the "24-hour rule").
The LCTR must be submitted within 24 hours of the transaction. Records associated with the LCTR must be retained for at least five years from the date the report was created.
Suspicious Transaction Reporting
A Suspicious Transaction Report (STR) must be submitted to FINTRAC "as soon as practicable" when the agent has reasonable grounds to suspect that a transaction or attempted transaction is related to money laundering or terrorist activity financing. There is no minimum dollar threshold for an STR: a suspicious $500 transaction must be reported just as a suspicious $100,000 transaction must be.
An STR and an LCTR may both be required for the same transaction.
Politically Exposed Persons and Heads of International Organizations
Agents must take reasonable steps to determine whether a client is a politically exposed person (PEP) (a senior official of a foreign or domestic government or their close associate) or the head of an international organization (HIO). If so, enhanced due-diligence measures and senior- management approval may be required before completing a transaction.
Beneficial Ownership
For corporate or entity clients, the agent must take reasonable steps to identify the beneficial owners (individuals who own or control 25% or more of the entity) and record that information.
Common mistake: believing the $10,000 cash threshold triggers LCTR reporting automatically without regard to suspicion. The LCTR threshold is objective. The STR obligation is independent and triggered by reasonable suspicion regardless of amount.
Recall: What is the LCTR threshold and the submission deadline? Name two forms of acceptable government-issued identification for client identification purposes. When is an STR required?