Proceeds of Crime (Money Laundering) and Terrorist Financing Act - PCMLTFA
The Proceeds of Crime (Money Laundering) and Terrorist Financing Act has three key objectives to:
- detect and deter money laundering and terrorist financing
- provide law enforcement officials with the information they need to counter the threats of organized crime and terrorism
- help fulfill Canada's international commitments to fight transnational crime and terrorism.
See Canada's anti-money laundering and anti-terrorist financing legislation for more details.
- How to comply with the PCMLTFA
The PCMLTFA and associated Regulations is designed to help detect and deter money laundering and the financing of terrorist activities. There are specific things we (Sun Life and you, the advisor,) need to do to comply with the Act/Regulations and for risk management purposes:
- Verification of all Client identity
- Verification of beneficiary and non-owner payee identity
- Beneficial Ownership determination
- Third party determination
- Politically exposed foreign persons determination
- Politically exposed domestic persons determination
- Collection of the source of wealth
- Collection of the source of payments or funding for the policy/contract
- Indication of the purpose and intended use of the account
- Record keeping
- Suspicious transaction reporting
- Creation of a compliance program
If we do not fulfill these obligations, we could face criminal or administrative penalties.
For additional information and processes to help you comply, see the sections below.
- Verification of identity
- Anti-money laundering/Anti-terrorist financing (AML/ATF) FAQs
What if I can't meet a Client face-to-face to verify their identity?
You can verify the Client’s identity via video conference using the Dual Process method. The Client may also meet with a 'qualified professional' (also referred to as an Agent or Mandatary) to complete the Non face-to-face identity verification by agent or mandatary, third party determination and politically exposed persons (PEP) (4355-E) if you are not able to verify identity via video conference.
Please call us at 1-800-800-4786 to discuss options.
Can I use the government-issued photo identification method if a person is not physically present?
No. Currently, Sun Life does not have the technology to authenticate government-issued photo identification documents for this method.
Note: It is not enough to only view a person and their government-issued photo identification document through a video conference or another type of virtual application.
I work with various licensed advisors and we sometimes will conduct transactions on behalf of one another. If I am conducting a transaction with another advisor's client, do I have to verify the identity of that client when their advisor of record has already established identity?
Yes, an advisor conducting a new transaction with a Client (whether their own Client or another advisor's Client) must verify the identity of that Client. If ownership of a contract changes on a policy/account, you must verify identity of the new owner. Lastly, you must collect verification of identity on Clients you don't recognize and/or have doubts about the original information collected by the other advisor.This may include Clients you are servicing on behalf of another advisor or Clients transferred to you from inventory.
Am I required to collect AML/ATF information on all new transactions?
Yes, a licensed advisor is required to collect AML/ATF information (including identity verification) on every new sale of:
- universal life insurance
- permanent life insurance
- non-registered guaranteed investment certificates (GICs)
- non-registered accumulation annuities
- non-registered payout annuities
- all non-registered individual variable annuity contracts (segregated funds)
- non-registered mutual funds.
If I collected AML/ATF information on a new client and they want to make a subsequent unscheduled deposit to their universal life or permanent life policy or non-registered wealth product, do I need to ask AML/ATF information again?
No, an advisor does not need to verify the identification of an existing client on subsequent transactions to an existing policy or account.
I hire staff to assist me in my business. Can my staff collect the AML/ATF information on the client?
Only licensed life insurance advisors contracted with Sun Life may verify client identity.
How do I set up my own compliance regime and appoint a compliance officer?
Refer to the Implementation of a Compliance Regime on the FINTRAC website. You can formally adopt the manual, appoint yourself as the compliance officer and set up procedures based on the guidelines in the manual.
What if clients refuse to answer the Politically exposed persons (PEP) / Head of an international organization (HIO) questions?
While you cannot control the information that your client is willing to provide, the legislation does require you to obtain an answer from your client, in order to satisfy your statutory obligation.
Is asking my client if they are a PEP/HIO violating privacy legislation in Canada?
We are collecting this information to comply with the Proceeds of Crime (Money Laundering) and Terrorist Financing Act for risk management purposes.
How long do I have to submit outstanding AML/ATF documentation?
AML/ATF documentation timelines will be indicated in any communication you receive requesting the outstanding information.
What if my client refuses to complete the AML/ATF section?
You may not do business with this client and should report the incident as a possible attempted suspicious transaction to the email address Money Laundering. Sun Life will investigate and may report this to FINTRAC.
Where can I get help to correctly complete form 4830-E or 4831-E?
- Instruction page for completion of Identity verification, third party determination and politically exposed persons (PEP) for individual owners (4830-I-E)
- Instruction page for completion of Identity verification and third party determination for entity owners (4831-I-E)
What should I do if I suspect my client has a third party involved in the contract/application but answered "No" to the third party determination question?
If you suspect that a third party may be involved in the transaction, but your customer has answered 'no' to the third party determination question, send an email to Money Laundering and include the following details:
- your full name and advisor number
- your business address and telephone number
- the name and address of the individual suspect to have third party involvement in the policy/contract
- the policy or account number
- the reasonable grounds you have to suspect a third party has involvement in the policy/contract
- Advisor compliance regime
The Proceeds of Crime and Terrorist Financing Act (PCMLTFA) makes it mandatory that all financial entities, including life insurance agents and brokers, have in place a compliance regime or program, with formally-adopted policies and procedures.
It is important to note that you have an obligation to:
- verify the identity of all Clients
- determine if third parties are involved
- not accept cash (bills)
- submit complete paperwork to Sun Life for file retention on your behalf and ours
- report any known or suspected terrorist property you become aware of
- report suspicious transactions
- keep your Client records up to date
- monitor high-risk Clients
- be trained
- ensure your staff are trained annually
- appoint a compliance officer, which may be yourself
- adopt policies and procedures to document your compliance program.
There are liabilities for advisors that fail to follow the PCMLTFA law. Not complying with this law can be deemed a criminal offense, punishable by fines of up to $2 million and imprisonment of up to five years. The losses affiliated with this charge can include loss of your licence or contracting to sell or provide advice. Your E&O insurance will not cover you in this situation.
- Development of a compliance regime - a mandatory requirement
Each life insurance agent is required to have a compliance regime.
The regulatory support for the requirement to have a compliance regime is the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA) and Regulations.
You, as an advisor, are directly responsible for establishing and maintaining your compliance regime.
The five elements of a compliance regime are:
- appointment of a compliance officer - can be you, the advisor - need to have documentation as to who is responsible
- development of written compliance policies and procedures - soft copy or in a binder
- assessment and documentation of risks of money laundering and terrorist financing (specific to your client base, products sold, etc.), along with how those risks are being mitigated
- implementation and documentation of an ongoing compliance training program - soft copy or in a binder but ready to be supplied if requested
- documented review of the effectiveness of policies and procedures, training and risk management
FINTRAC undertakes examinations to monitor compliance with the guidelines, and you may only have a 30-day notice period of an upcoming on-site examination. Possible outcomes include administrative and criminal penalties. For more information on penalties, you can also consult the Penalties for non-compliance section of FINTRAC's website.
More detailed information about the requirements can be found on FINTRACs website: https://www.fintrac-canafe.gc.ca/guidance-directives/1-eng
- Advisor compliance program risk assessment resource
In order to comply with the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA) it is necessary for you to conduct a risk assessment of your business activities and relationships as part of your compliance regime.
This information below is a sample checklist of items that may be encountered in your business and is only intended to be an example of how to assess risk for clients' geographic locations and relationships. If you answer yes to any of the questions below, you should consider the client as higher risk for money laundering or terrorist financing. We aren't able to provide you with specifics because the information is constantly being updated by international/governmental sources. We want to ensure you have the most up-to-date information, so we suggest you go to the FINTRAC website below when you're completing your assessment.
Compliance program FINTRAC guidance:
Please note that the following indicators, when encountered, will place clients in the overall high-risk category, regardless of other factors:
- If you file a Terrorist Property Report, the client automatically becomes high-risk;
- An individual with foreign government connections (Politically Exposed Foreign Persons);
- An entity that has a complex business structure which conceals the identity of its beneficial owners.
Risk assessment factors to consider include but are not limited to:
Identify whether you deal with clients or provide products or services in the following geographical locations: Yes No N/A Is the client located in a known high crime rate area?
Do you or clients operate or undertake activities in any country known to be a tax haven or subject to sanctions, embargoes or similar measures issued by, for example, the United Nations (UN), the Organization for Economic Cooperation and Development (OECD) or International Monetary Fund (IMF)?View the Terrorist Lists and Sanctions document on the Office of the Superintendent of Financial Institutions website.
Client and business relationships
The following checklist is an example of how to assess risk for client relationships.
Identify whether any of the following applies to the client and if the response is yes you should consider that it as higher risk and consider risk mitigation.
Identify whether any of the following applies to the client: Yes No N/A Is the client in a cash-intensive business? Does the client's business generate large amounts of cash for certain transactions that are not normally cash-intensive? Is the client an intermediary or “gatekeeper” such as a professional that holds accounts for clients where the identity of the underlying client is not disclosed to you? Does the client use unsupervised intermediaries within the relationship who are not subject to adequate anti-money laundering or anti-terrorist financing obligations? Does the client identification take place other than face-to-face? Does the client reside or deal offshore? Is the client an unregistered charity or other unregulated “not for profit” organization (especially one operating on a “cross-border” basis? Does the client use wire transfers from another country as a payment method? Has the client been identified to have engaged in activity that is consistent with the indicators for your sector identified by FINTRAC? Does the comparison between clients with similar profiles and high levels of assets or large transactions seem unreasonable? Does the knowledge of local laws, regulations and rules seem excessive for clients? Do clients use intermediate vehicles (such as corporations, trusts, foundations, partnerships) or other structures that do not seem usual for their business or seem very complex and unnecessary? Does the client offer online gaming? Does the client's structure or nature of its business or relationship make it difficult to identify the true owners or controllers? Is there a significant and unexplained geographic distance between you and the location of the client? Is there frequent and unexplained movement of accounts or funds between institutions in various geographic locations or to different institutions? Is the client a politically exposed person or head of an international organization**?
** A politically exposed person (PEP) or the head of an international organization (HIO) is a person entrusted with a prominent position that typically comes with the opportunity to influence decisions and the ability to control resources. The influence and control a PEP or HIO has puts them in a position to impact policy decisions, institutions and rules of procedure in the allocation of resources and finances, which can make them vulnerable to corruption.
Risk level assessment matrix
You may use the following matrix, as appropriate, when assessing the level of money laundering and terrorist financing risks of your products, services and clients.
Low Moderate High Stable, known client base Client base increasing due to assignments, joining/working with another advisor. A large and growing client base in diverse geographic area Clients are not able to conduct electronic transactions. Clients have the ability to conduct some transactions electronically in regard to their products. Clients have access to a wide array of electronic transaction services (i.e., account transfers, or accounts opened via the Internet). There are few or no large currency transactions in the block of business you service. There is a moderate volume of large currency or structured transactions in the block of business you service. There is a significant volume of large currency or structured transactions in the block of business you service. Identified a few high-risk clients and businesses that you service Identified a moderate number of high-risk clients and businesses that you service Identified a large number of high-risk clients and businesses that you service You conduct a limited number of fund transfers for clients, non-clients, limited third-party transactions, and no foreign funds transfers. You conduct a moderate number of fund transfers, a few international fund transfers from personal or business accounts with typically low-risk countries. You conduct frequent transfers of funds from personal or business accounts to or from high-risk jurisdictions, and financial secrecy havens or jurisdictions. Your office and/or client base is located in an area known to have low crime rate. Your office and/or client base is located in an area known to have moderate crime rate. Your office and/or client base is located in an area known to have high crime rate. No transactions with high-risk geographic locations in the block of business you service. Minimal transactions with high-risk geographic locations in the block of business you service. Significant volume of transactions with high-risk geographic locations in the block of business you service.
Sun Life Financial has had a “no cash” policy since January 2003. This means that as an advisor, you cannot accept cash for deposit to any policy, or purchase a money order or bank draft for the client or write a cheque from your account for the client’s policy.