Your Money’s Worth: FINTRAC Compliance




Since late 2008, dealers in precious metals and stones have had obligations under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA) to report certain transactions to FINTRAC, Canada’s financial intelligence unit. Under the Act, banks, real estate entities, money services businesses, and many other corporations across Canada have had to develop and implement a compliance regime, verify their clients’ identity, keep records, and report certain transactions to FINTRAC.

That being said, it’s been a number of years since the Act was extended to include precious metals and stones dealers (DPMS). Regardless, there is still much misunderstanding of AML/ATF compliance that has left the industry unsure about their true obligations.
The act itself is not strictly directed towards DPMS. Part of the act is to ensure that taxes are being paid by international and Canadian parties. Businesses who pay their due diligence should not worry about the Act affecting their business.
“By complying with their obligations, reporting entities reduce the likelihood of Canada’s financial system being used by criminals and increase the likelihood that criminals will be caught,” says a FINTRAC representative. “The actionable financial intelligence that FINTRAC is able to generate begins with the efforts of Canadian businesses subject to the PCMLTFA to put in place sound compliance regimes. These businesses are on the front lines of Canada’s legitimate economy and are indispensable to the Centre’s work and ability to support its partners’ money laundering and terrorism financing investigations.”
Recently, FINTRAC has updated its risk assessment to identify the dealers in precious metals and stones sector as high-risk. The Centre will be applying more intensive compliance measures to this sector in the future, including more onsite examinations. They will also work closely with industry associations, continuing their relationship with Jewellers Vigilance Canada (JVC) and the Canadian Jewellers Association (CJA), in order to provide policy interpretations, manuals and guidance, and support via face-to-face meetings to discuss requirements or activities that have an impact on the industry.

“Both industry associations continue to work towards assisting jewellers gain more information on their Anti-Money Laundering and Anti-Money Terrorist Financing obligations within the industry sector by providing the jewellers with an online compliance tool to help develop their AML/ATF compliance program, which is required by law,” says Phyllis Richard, executive director for JVC.

In May of this year, a risk-based approach workbook was published to provide guidance for dealers to develop and implement effective measures to monitor money laundering and terrorist financing risks they may encounter as part of their business relationships.
Over the past five years, the demand for FINTRAC’s financial intelligence has grown significantly. “This speaks to the strong partnerships the Centre has established with Canada’s police, law enforcement and national security agencies, and the valuable contribution FINTRAC has made to their priority investigations,” continues the representative. “It also speaks to the extensive efforts undertaken by the Centre and reporting entities across the country to increase the quantity and quality of the transaction reporting that FINTRAC receives under the PCMLTFA. The 20 million financial transaction reports the Centre receives from Canadian businesses every year are the lifeblood of its analysis and make it possible for FINTRAC to support its partners’ money laundering and terrorist financing investigations.”
With all the associated risks of being part of this incredible industry, it is essential that we remain aware of our obligations to protect our businesses. For more information, visit the FINTRAC website.