Compliance

Rules & Regulations – subject to change without notice*
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This information is for dealers in precious metals and stones in Canada. It explains their legal obligations under Canada's Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA).

You are a dealer in precious metals and stones if you buy or sell precious metals, precious stones or jewelry as part of your business activities.

  • Precious metals include gold, silver, palladium or platinum sold or bought as coins, bars, ingots, granules or other similar forms.
  • Precious stones include diamonds, sapphires, emeralds, tanzanite, rubies or alexandrite.
  • Jewelry means objects made of precious metals, precious stones or pearls made for people to wear.

If you are a dealer in precious metals and stones, the following legal requirements apply to you only if you ever buy, including for inventory purposes, or sell precious metals, precious stones or jewelry that total $10,000 or more in a single transaction regardless of how it is paid. Once you have conducted this transaction, you are subject to the obligations set out in the PCMLTFA going forward.

If you are an employee of a dealer in precious metals or stones, your employer is responsible for meeting these requirements. However, if you find any transaction suspicious, or if you know (not just suspect) that a transaction is related to terrorist property, you and your employer are both responsible for reporting these transactions to the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC).

The following requirements do not apply to you if you only buy and sell precious metals, precious stones or jewelry for purposes related to:

  • Making jewelry;
  • Mining precious metals or precious stones; or
  • Cutting and polishing stones.

Your obligations and responsibilities

As a dealer in precious metals and stones in Canada, you have legal obligations under Canada’s Proceeds of Crime (Money Laundering) and Terrorist Financing Act. At FINTRAC we make sure that businesses are in compliance with this law.

The information below offers a short summary of your obligations and responsibilities. All of these are described in more detail in FINTRAC’S Guidelines. It is important that you understand these obligations and meet them to be in full compliance with this law.

Develop a compliance regime

Businesses required to report to FINTRAC must develop a set of practices that ensures they meet their requirements under the PCMLTFA. This is called a compliance regime.

For your compliance regime, you must:

  • Appoint a compliance officer (a person who will make sure the business meets their requirements under the PCMLTFA)
  • Write down and apply compliance policies and procedures
  • Assess and write down the risks of your business being used for money laundering or terrorist financing
  • Train your employees in your compliance measures, using a written training program
  • Review and document the success of all of these practices.

File reports

Suspicious transaction reports (STRs)

You must report to FINTRAC when you suspect that a completed or attempted transaction is related to money laundering or terrorist financing. Some suspicious behaviors in a transaction may include:

  • A client asking whether he can return his purchase and get his refund as a cheque (especially if the client asks for a cheque to be written to someone other than himself)
  • A client purchasing goods that, based on her job or income, she would normally be unable to afford
  • A client trying to pay using another person’s cheque or credit card (especially if that other person is not there with the client)

Based on your own business and experience, you may also notice other kinds of suspicious behavior.
Terrorist property reports (TPRs)

You must report to FINTRAC when you know (not just suspect) that goods in your possession or control are property owned or controlled by a terrorist or a terrorist group.

Large cash transaction reports (LCTRs)

You must report to FINTRAC when you receive a payment of $10,000 or more in cash. For FINTRAC, cash means bank notes or coins used in any country. If, in a 24-hour period, you receive two or more cash payments from, or on behalf of, the same client that total $10,000 or more, you must report these payments as a single large cash transaction. For more information, please refer to our notice about the 24-hour rule.

Identify your clients

You must identify any client who:

  • Pays you $10,000 or more in cash in a single transaction; or
  • Has given you reason to file a suspicious transaction report. There are certain exceptions to this requirement.

Keep records

You must keep the following records:

  • Large cash transaction records
  • Copies of suspicious transaction reports
  • Keep client identification information

Protect personal information

Under Canada’s Personal Information Protection and Electronic Documents Act (PIPEDA), or under similar provincial laws in some provinces, businesses in Canada must protect the personal information of their clients. If you are doing business with clients as an employee of the Government of Canada, the federal Privacy Act also requires you to protect your clients’ personal information. In all cases, you have to inform your clients if you are collecting personal information about them. There is an exception to this obligation when it comes to reporting transactions to FINTRAC: you do not have to inform your clients when you include personal information about them in any of the reports that you are required to make to FINTRAC.

To learn more about collecting and protecting your clients’ personal information, please refer to the “Privacy for Business” section of the Industry Canada website (http://www.ic.gc.ca) or the Office of the Privacy Commissioner of Canada website (http://www.priv.gc.ca). The website of the Privacy Commissioner of Canada has a question-and-answer page and a short guide (“Privacy and PCMLTFA”) about how to protect personal information while meeting your requirements under the PCMLTFA.

Confirm a third party

When you receive a payment of $10,000 or more in cash, you must make an effort to confirm whether the person who gave you the cash is acting for someone else (a third party).

In cases where a third party is involved, you must obtain certain information about the third party and their relationship with the person who gave you the cash.

Compliance Assessment Reports (CARs)

FINTRAC is required to ensure that businesses subject to the PCMLTFA are complying with the law. One of the ways FINTRAC does this is by examining your business and its records, including those relating to your compliance program.

The Compliance Assessment Report is one of the ways that FINTRAC can examine your business. FINTRAC will advise you in writing when you are required to complete it. If you have received such a request from FINTRAC or would like more information about this report, please see the Guide for Submitting the Compliance Assessment Report. It explains how to complete the compliance assessment report and how to submit it.

If you have received a request from FINTRAC, you need the access code provided in that request to be able to log on to the secure Compliance Assessment Report System (CARS).

If you have questions about this, please contact us by e-mail at
 CARS-SREC@fintrac-canafe.gc.ca. If you do so, be sure to name your business and inform us that you are a dealer in precious metals or stones.

Penalties for non-compliance

If you do not meet your legal obligations under the PCMLTFA, you may receive penalties. These can include warnings, fines or (in serious cases) prison time.

What is FINTRAC?

The Financial Transactions and Reports Analysis Centre of Canada, known as FINTRAC, is Canada’s financial intelligence unit (FIU).

We contribute to the public safety of Canadians and help protect the integrity of Canada’s financial system through the detection and deterrence of money laundering and terrorist activity financing.

To achieve this, we are mandated by the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA) to provide support to domestic and international law enforcement and intelligence agencies and to give strategic advice to the Government of Canada.

What does FINTRAC do?

Every year, reporting entities send FINTRAC tens of millions of reports on financial transactions. These are stored in FINTRAC’s secure database, where they are subjected to extensive analysis to detect transactions and patterns that are suspected of relating to money laundering, terrorist activity financing or other threats to the security of Canada. We help make investigative links by connecting the money to the crime.

Our findings are disclosed as tactical financial intelligence (typically referred to as “disclosures”) to appropriate law enforcement and intelligence agencies at the federal, provincial and municipal levels. Such organizations include any police service in Canada, the Canadian Security Intelligence Service (CSIS), the Canada Border Services Agency (CBSA), and the Canada Revenue Agency (CRA), among others. In turn, these organizations decide whether to open an investigation relating to the information received.

Contact us

For more information about any of the requirements described here, or if you have any questions about your requirements under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act, please contact FINTRAC using any of the methods listed below. You may also contact your FINTRAC compliance officer, if you have one.

Website


http://www.fintrac-canafe.gc.ca
 


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