Money laundering watchdog tweaks reporting rules

Canadian financial institutions, casinos and other businesses must report large cash transactions and suspicious activities to a federal agency whose job is to fight money laundering and fraud. Some of the rules for that reporting will change at the end of this month, and businesses and their software providers must make adjustments.

The Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) was set up in 2000 to collect, analyse and sometimes disclose financial intelligence in order to detect and prevent money laundering. The FINTRAC regulations include a long list of requirements. For instance, financial institutions, casinos and certain other businesses must report to FINTRAC any transaction in which they receive $10,000 or more in cash. They must also obtain identification.

The rules themselves are not changing at present. The federal Department of Finance did release a consultation paper last June on proposed changes to anti-money-laundering and anti-terrorist financing rules, but no action has been taken on those proposals yet, due largely to the change in government earlier this year.

On May 29, though, a new set of guidelines governing the details of FINTRAC reporting will take effect. The changes involve things like the addition of new fields to the reports, said Peter Lamey, a spokesman for FINTRAC. FINTRAC will also start sending reports back to the business that submits them if data is missing or incomplete, he said.

The change is hardly in the same league as the Year 2000 date problem or even the introduction of the Euro, but it does require some tweaking of software that helps businesses with FINTRAC reporting.

There are a number of such packages. Software vendor SAS Canada Inc. in Toronto, for instance, offers an Anti Money Laundering Solution module designed for larger banks, coupled with country-specific code to meet FINTRAC requirements. SAS has similar offerings to meet comparable requirements in other countries, said Ravi Natarajan, consulting manager at SAS. The company also offers money laundering detection software for smaller financial institutions, casinos and others covered by FINTRAC rules. “It’s a lighter version but it matches their obligations to report to regulatory bodies,” said Gary Love, financial services strategy manager at SAS Canada.

Other vendors offer software tailored for particular vertical markets. For instance, Clearview Systems Ltd. of Vancouver has a complete package for currency exchange businesses. Support for FINTRAC record-keeping and reporting requirements is built in, said Ehsan Malaki, director of business development at Clearview. Avatar Software Creations Inc. in Tecumseh, Ont., offers software to help casinos meet FINTRAC requirements.

The new reporting rules are an improvement in some respects, Natarajan said. For instance, they allow more information to be bundled into a single report rather than requiring it to be broken out into multiple reports. However, he said, “almost all the banks will have to change their submission process.”

Natarajan said SAS has been working on the changes for some time. “We have had extensive discussions with our customers,” he said, and the new version of the software is now being tested. Software for FINTRAC reporting must pass stringent certification tests by FINTRAC itself, he said.

FINTRAC has counterparts in many countries, but the Canadian agency’s rules are among the world’s most stringent, according to Natarajan. “With the exception of the Australian regulator, the most stringer regulation we have come across is the Canadian regulation.”


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