Section 7: Record-Keeping Requirements

What is the primary purpose of record-keeping requirements?

To maintain records that support AML ATF compliance and FINTRAC examinations

Can records be kept electronically?

Yes if a paper copy can be readily produced

Must original paper documents always be retained?

No if an acceptable electronic copy exists

What are the three learning objectives of this module?

Understand who must keep records identify record-keeping obligations and understand penalties for non-compliance

What common records are kept by many reporting entities?

Large cash transaction records client information records STR records and PEP HIO records

When client identification is required what must be recorded?

How the client was identified and what method or document was used

What identification methods may need to be recorded?

In person not physically present or through an agent or mandatary

Give two examples of identification documents that may be recorded.

Driver's licence and passport

What is a business relationship?

An ongoing relationship established to conduct financial transactions or provide related services

When does an account-based business relationship begin?

When a client opens an account

When does a non-account-based business relationship begin?

After two transactions requiring identification within five years

What must be recorded when a business relationship is established?

The purpose and intended nature of the relationship

Why must business relationship information be kept current?

To support ongoing monitoring and risk assessment

How often should high-risk business relationships be reviewed?

More frequently than lower-risk relationships

What important consequence can result from filing an STR?

The client becomes part of a business relationship requiring ongoing monitoring

What concept should you remember about STRs and business relationships?

1 STR can create a business relationship and trigger ongoing monitoring

How quickly must requested records be provided to FINTRAC?

Within 30 calendar days

What is the most important retention period to remember for the exam?

Five years

How long are most records retained?

Five years

What event often starts the five-year retention period?

The last business transaction

What event may start retention for account records?

Account closure

Who is responsible for records kept by employees or contractors?

The reporting entity

What must happen to records when an employee or contractor leaves?

The reporting entity must obtain and retain them

What criminal penalties may apply for failing to keep required records?

Up to 5 years imprisonment and or a $500000 fine

What does AMP stand for?

Administrative Monetary Penalty

Can record-keeping failures result in AMPs?

Yes

What AMP amount is mentioned for certain record-keeping failures?

Up to $100000

What are the highest-value exam concepts from this module?

Electronic records business relationships 5-year retention 30-day FINTRAC requests and penalties

What is the key retention number for Section 7?

Five years

What is the key FINTRAC response timeline for Section 7?

30 calendar days

How many qualifying identified transactions can create a non-account business relationship?

Two

Within what period must those two qualifying transactions occur?

Within five years

Why are records important in AML compliance?

They support investigations examinations and ongoing monitoring

What is the primary purpose of Section 7?

Record-keeping obligations under the PCMLTFR

What four prescribed transaction record types are covered in this module?

Large Cash Transactions Large Virtual Currency Transactions EFTs and STRs

What is the key difference between Section 5 and Section 7?

Section 5 covers reporting while Section 7 covers record-keeping

What three obligations generally accompany large cash and virtual currency transactions?

Keep records identify individuals and make third-party determinations

What threshold triggers a Large Cash Transaction Record?

CAD 10000 or more in cash

What rule aggregates multiple cash transactions into one reportable event?

The 24-hour rule

When does the 24-hour rule apply to cash transactions?

When transactions total CAD 10000 or more within 24 consecutive hours

What three aggregation categories apply under the 24-hour rule?

Conductor beneficiary and third party

What cash transaction details must be recorded?

Amount currency and method received

What transaction details must be recorded for a large cash transaction?

Date purpose type and account information if applicable

What individual details must be recorded for a large cash transaction?

Name address DOB occupation and ID information

How should occupation information be recorded?

Specifically and descriptively

Why is occupation information important?

It helps assess source of income and funds

What is the key question in a third-party determination?

Who is giving the instructions

Does ownership of funds determine third-party status?

No instructions determine third-party status

What major third-party determination change occurred in 2021?

The employer exception was removed

If a third party exists what information must be recorded?

Identity business information and relationship to the transaction

What threshold triggers a Large Virtual Currency Transaction Record?

CAD 10000 or more

Does the 24-hour rule apply to virtual currency transactions?

Yes

What must be done when virtual currency is received over the threshold?

Keep a record identify the individual and determine third parties

What virtual currency information should be recorded?

Type amount exchange rate source wallet addresses and transaction identifiers

Why are exchange rates important in virtual currency records?

To determine whether the CAD threshold is exceeded

What is an EFT?

Electronic transmission of instructions for the international transfer of funds

What threshold triggers EFT record-keeping obligations?

CAD 1000 or more

What must be done when a reportable EFT occurs?

Keep a record and identify the individual

What information must be recorded for an outgoing EFT?

Client information amount currency beneficiary and ID details

What information should be present on incoming EFTs?

Originator information

What reasonable measure may be taken if originator information is missing?

Contact the sending institution

What common transactions are not considered EFTs?

Credit cards debit cards direct deposits PADs and cheque imaging

When an STR is filed what record must be kept?

A copy of the STR

What is tipping off?

Informing someone that an STR has been or will be filed

Should clients be tipped off about an STR?

No

What protection exists when filing STRs in good faith?

Protection from civil and criminal liability

Are there formal record-keeping requirements for terrorist property reports?

No

What should still be kept regarding terrorist property reports?

A copy of the report as a best practice

Who should be notified when submitting a Listed Person or Entity Property Report?

RCMP and CSIS

What threshold should you remember for Large Cash Transaction Records?

CAD 10000

What threshold should you remember for Large Virtual Currency Transaction Records?

CAD 10000

What threshold should you remember for EFT Records?

CAD 1000

What is the most tested concept in third-party determination?

Who is giving the instructions

What is the most important operational rule in this module?

The 24-hour aggregation rule

What are the three major themes of this module?

Record-keeping obligations beneficial ownership and other obligations under the law

What information about identification must be recorded when a client is identified?

How they were identified and the document or method used

What information must generally be updated for an individual?

Name address telephone number and occupation

What information must generally be updated for a corporation?

Name address and directors

What information must generally be updated for a non-corporate entity?

Name address and principal place of business

Why must occupation be recorded as specifically as possible?

To assess whether activity matches expected source of income

What is an example of a good occupation description?

Investment Consultant

What is an example of a poor occupation description?

Consultant

Why must industry be recorded as specifically as possible?

To understand what the entity actually does

What is an example of a good industry description?

Residential Building Construction

What is a reasonable measure?

An action taken to satisfy a regulatory requirement

What must be recorded when reasonable measures are unsuccessful?

Measures taken dates and reasons they failed

What must be recorded when entering a business relationship?

Purpose and intended nature of the relationship

How often must business relationship information be reviewed?

Based on the client's risk level

What does an STR automatically create?

A business relationship requiring ongoing monitoring

Who must keep receipt of funds records when receiving $3000 or more?

Accountants accounting firms and BC notaries

When must real estate professionals keep a receipt of funds record?

For any amount received

When is a receipt of funds record not required?

When an LCTR exists for the same transaction or funds come from a financial entity or public body

Who must keep foreign currency exchange tickets?

Financial entities MSBs and casinos

When is additional identification required for foreign exchange transactions?

At $3000 or more

Who must keep virtual currency exchange transaction tickets?

MSBs and virtual currency exchanges

When is identification required for a virtual currency exchange transaction?

At $1000 or more

What must be kept for every virtual currency exchange transaction?

A virtual currency exchange transaction ticket

What important information is recorded for virtual currency transactions?

Exchange rates wallet information and transaction hashes

What is the Travel Rule?

Requirement to include originator and beneficiary information with transfers

At what amount does the Travel Rule apply to virtual currency transfers?

$1000 or more