Canada Updates KYC Identity Verification Guide for VASPs
On March 23, the Financial Transactions and Reports Analysis Center of Canada (FINTRAC) updated its Know Your Customer (KYC) guideline on Money Services Companies (MSBs) and Foreign Money Service Companies (FMSBs). FINTRAC classifies Virtual Asset Service Providers (VASPs) as MSBs, which means that they too must comply with these new guidelines under the Law on Income from Crime (Money Laundering) and Terrorist Financing (PCMLTFA).
Currently, VASPs are only required to collect identification and KYC information in relation to transactions that are considered suspicious (where there is reasonable suspicion of money laundering or terrorist financing) and in the case of MSB transactions involving traditional / non-virtual assets such as fiat -Bank transfer and foreign exchange. Starting June 1, 2021, VASPs operating in Canada will be required to verify and collect their identity You know your customers or you know your customer’s guidelines (KYC) … more Information relating to a variety of virtual currency transactions.
According to the guidance, VASPs are required to verify the identity of their customer in the following situations if they have not previously done so and kept the associated records:
- Receive virtual currency worth $ 10,000 or more within 24 hours
- Transferring $ 1,000 or more in funds
- Currency exchange transactions of $ 3,000 or more
- Transfer of $ 1,000 or more in virtual currency
- Exchanges in virtual currency worth $ 1,000 or more (this includes fiat crypto and crypto-crypto)
- Transferring virtual currency to a beneficiary for a minimum of US $ 1,000 1
- Initiate an electronic money transfer (EFT) of $ 1,000 or more
- Conduct or attempt to conduct suspicious transactions, regardless of the amount
VASPs may also need to verify the identity of a company or other legal entity 30 days after the day the information set is created for:
- an ongoing service agreement for international EFTs, money transfers or foreign exchange services;
- a service agreement for the issuance or redemption of money orders, travelers checks, or similar negotiable instruments; or
- a service agreement to exchange or transfer VC.
Exceptions to KYC verification
The following are excluded from the customer verification triggers listed above:
- A legal person is exempt from identity verification if:
- It is a public body
- It is a subsidiary of a public body or
- The latest balance sheet audited shows net worth of at least $ 75 million and its shares are listed on a Canadian stock exchange.
- The transfer or receipt of virtual currency worth more than $ 10,000 is excluded for compensation for the validation of a transaction made on the A blockchain – the technology that underlies Bitcoin and other technologies. More or you exchange, transfer or receive the virtual currency solely for the purpose of validating another transaction or transfer of information.
- Suspicious activity is exempted if you believe that verifying the identity of the natural or legal person would inform them that you are reporting a suspicious transaction.
- You do not need to verify the identity of an authorized employee performing a transaction for their employer under a service contract.
“In addition to verifying customer identity, there are some elements of KYC information that are quite prescriptive and required at the same thresholds,” noted Amber D. Scott, CEO of the Outlier Compliance Group. “For example, recording a job (for individuals) or primary business (for companies) is a KYC requirement that seems to surprise many VASPs. We have often been asked whether this is necessary or “nice to have”. It is definitely a requirement. “
Keep KYC information up to date
MSBs are required to continuously monitor their customers as part of their regulatory KYC / AML obligations. Therefore, Canadian VASPs must keep customer identification information up to date. The frequency with which a What is a Virtual Asset Service Provider (VASP)? A virtual A … more Updating customer information depends on internal policies and procedures based on the level of risk assigned to the customer during their risk assessment.
Read the full KYC guide here: https://www.fintrac-canafe.gc.ca/guidance-directives/client-clientele/client/msb-eng
Read the full guide to ongoing monitoring here: https://www.fintrac-canafe.gc.ca/guidance-directives/client-clientele/omr-eng