A jeweller who accepts cryptocurrency for a diamond sits in exactly the same regulatory position as one who accepts a stack of banknotes. Virtual currency transaction reporting is how that gets written down.
Reporting entities (REs) dealing in virtual currency (VC) have large virtual currency transaction reporting obligations coming into force on June 1, 2021. REs can begin developing the Large Virtual Currency Transaction Report (LVCTR) Upload (a means to submit the reports to FINTRAC electronically), and test it from March 15, 2021, to May 28, 2021. The following documentation is available upon request:
- Reporting Large Virtual Currency Transaction to FINTRAC guidance;
- Validation rules; and
- JSON Schema.
Please contact guidelines-
Who this applies to
A dealer in precious metals and stones becomes a reporting entity under the Proceeds of Crime, Money Laundering and Terrorist Financing Act once it buys or sells ten thousand dollars or more in a single transaction. That captures a large share of Canadian retailers and effectively every wholesaler, and it does not require the business to think of itself as anything resembling a financial institution.
The reports a dealer has to file
A large cash transaction report is required when a dealer receives ten thousand dollars or more in cash from or on behalf of the same person or entity, and that includes two or more smaller amounts adding up to ten thousand or more within twenty four consecutive hours. A suspicious transaction report is required whenever there are reasonable grounds to suspect a transaction, or an attempted transaction, relates to money laundering or terrorist financing, with no dollar threshold at all. A terrorist property report is required where the dealer knows it holds property owned or controlled by a terrorist or terrorist group. Virtual currency transaction reporting sits alongside these rather than replacing any of them.
What this means on the shop floor
The twenty four hour aggregation rule is the one that catches people out. Three payments of four thousand dollars across a single day from the same buyer is a reportable event, and a staff member who has never been told that will not flag it. The wording about attempted transactions matters just as much. A sale that never completes can still require a report, which is counterintuitive to anyone who thinks of reporting as something that follows money changing hands.
What to have in place
A written compliance policy, a named compliance officer, a documented risk assessment, a training record for staff and a two yearly effectiveness review are the baseline. Keep identification records with the transaction file rather than in a separate binder, because the two are only useful together. Guidance is published by FINTRAC and is worth reading directly rather than secondhand.
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