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When to verify the identity of persons and entities—Dealers in precious metals and precious stones

From the Financial Transactions and Reports Analysis Centre

Overview

This guidance came into effect on June 1, 2021.

This guidance on client identification describes when dealers in precious metals and precious stones must verify the identity of persons and entities as required by the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA) and associated Regulations. Details on how to verify the identity of persons and entities are available in FINTRAC's Methods to verify the identity of persons and entities.

Who is this guidance for

  • Dealers in precious metals and precious stones

In this guidance

  1. When do I have to verify the identity of persons and entities?
  2. What is the difference between verifying identity and keeping client identification information up to date?
  3. What are the exceptions to client identification requirements?

**Note: Throughout this guidance, references to dollar amounts (such as $10,000) are in Canadian dollars.

1. When do I have to verify the identity of persons and entities?

As a dealer in precious metals and precious stones, you must verify the identity of clients for the following:

  1. Large cash transactions
  2. Large virtual currency (VC) transactions
  3. Suspicious transactions

a. Large cash transactions

You must verify the identity of every person or entity from which you receive $10,000 or more in cash when the transaction takes place. Footnote 1 This includes a situation where you are deemed to have received cash because you have authorized another person or entity to receive it on your behalf.Footnote 2

**Note: This obligation is subject to the 24-hour rule.Footnote 3

b. Large virtual currency (VC) transactions

You must verify the identity of every person or entity from which you receive VC in an amount equivalent to $10,000 or more when the transaction takes place.Footnote 4 This includes a situation where you are deemed to have received VC because you have authorized another person or entity to receive it on your behalf.Footnote 5

**Note: This obligation is subject to the 24-hour rule .Footnote 6

c. Suspicious transactions

You must take reasonable measures to verify the identity of every person or entity that conducts or attempts to conduct a suspicious transaction, regardless of the transaction amount, and including transactions that would normally be exempt from client identification requirements, before sending a Suspicious Transaction Report (STR).Footnote 7

2. What is the difference between verifying identity and keeping client identification information up to date?

As part of your ongoing monitoring requirements for business relationships, you must keep client identification information up to date, at a frequency that will vary based on your risk assessment, and as outlined in your policies and procedures.Footnote 8 This does not require you to re-identify clients in accordance with the methods to verify identity. As explained in the ongoing monitoring guidance, the requirement is only for you to keep client identification information up to date. This is understood to be information that you have about your client such as their name and address. In the case of a person, this would also include, but is not limited to, the nature of their principal business or their occupation; and in the case of an entity, the nature of its principal business.

3. What are the exceptions to client identification requirements?

You do not have to re-identify a person or an entity if you previously did so using the methods specified by the Regulations in place at the time, and kept the associated records, so long as you have no doubts about the information used.Footnote 9

Large cash transactions

You do not have to verify the identity of a person or entity that conducts a large cash transaction if the cash is received from a client that is a financial entity (FE) or public body, or from a person who is acting on behalf of a client that is an FE or a public body.Footnote 10

Large VC transactions

You do not have to verify the identity of a person or entity that conducts a large VC transaction if you receive the VC from a client that is an FE or a public body, or from a person acting on behalf of a client that is an FE or public body.Footnote 11

When you receive VC as compensation for the validation of a transaction that is recorded in a distributed ledger or receive a nominal amount of VC for the sole purpose of validating another transaction or a transfer of information — you do not need to keep a large VC transaction record and do not need to verify identity. Footnote 12

Suspicious transactions

You do not have to take reasonable measures to verify the identity of the person or entity that conducts or attempts to conduct a suspicious transaction if:

Details and history

Published: March 2021

For assistance

If you have questions about the Know your client requirements, please contact FINTRAC by email at guidelines-lignesdirectrices@fintrac-canafe.gc.ca.

Date Modified: