This article will briefly cover the topic of FINTRAC, but for full details please visit the following website. This is just a general outline based on research and content provided by FINTRAC, for further information, please refer to the site above.
What is FINTRAC?
FINTRAC stands for the Financial Transactions and Reports Analysis Centre, and it’s the national financial intelligence agency of Canada. They facilitate the detection, prevention and deterrence of money laundering and the financing of terrorist activities while protecting personal information. There are a couple of keywords mentioned as part of what FINTRAC prevents and detects. This would include money laundering and terrorist activity financing. As defined by FINTRAC, “money laundering is the process used to disguise the source of money or assets derived from criminal activity”. FINTRAC organizes to help prevent these activities for Canadians.
What FINTRAC cannot do
FINTRAC cannot lead or start any investigation, direct reporting entities to submit specific reports, freeze accounts or track real-time transactions.
Those who need to comply
Because FINTRAC is purposed to ensure compliance, there are particular people and entities in different sectors that need to comply. These would include but are not limited to:
- Accountants
- Agents of the Crown
- B.C Notaries
- Casinos
- Dealers in precious metals and stones
- Financial Entities
- Life insurance
- Money services businesses also known as MSB‘s
- Real Estate
- Securities Dealers
If you are in one of the sectors mentioned above, here’s how you can apply. FINTRAC has a pre-registration form that you can fill out online. After the form has been filed, it may be approved. Upon approval, some of the information that you gave during registration will become publically displayed on FINTRAC’s MSB registry search.
How does this relate to crowdfunding?
There has also been a recent regulatory amendment regarding crowdfunding. The crowdfunding platforms and services are now falling under the definition of Money Services Businesses. This means that if you are a crowdfunding platform or campaign, you will be subject to comply with FINTRAC.
Let’s define a crowdfunding platform. FINTRAC says that a crowdfunding platform is “a website or application or other software that is used to raise funds or virtual currency through donations”. This also includes the acceptance of donations in exchange for nominal gifts. They are targeting rewards-based models, those who raise funds for their own organization and accept donations other than funds or virtual currency such as medical supplies, food, etc.
What are your obligations to comply?
There are specific records and verification such as KYC (Know Your Customer) that you need to use. Records include but are not limited to names, addresses, nature of business, date of birth, etc. All such records need to be kept somewhere and submitted to FINTRAC. There are many more steps and procedures that platforms and campaigns may need to take in order to comply, please visit the following to learn more: https://www.fintrac-canafe.gc.ca/intro-eng
If you are a Canadian anticipating raising money via crowdfunding or if you are creating your own crowdfunding platform, it’s best to register for FINTRAC and learn more about compliance on their website.