Essential Insights into Remote Verification Procedures in Canada [August 2021 Updates]
In a significant move towards modernizing identity verification processes, the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) introduced amendments to the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA) in 2019. These changes have paved the way for alternative methods of identity verification, offering a more flexible and efficient approach, particularly for digital and remote businesses.
The new methods primarily focus on electronic verification, reliance on third parties, remote identity verification solutions, and ongoing monitoring. These methods provide an alternative to traditional on-the-spot ID verification, which requires a physical, in-person examination of identification documents at the point of interaction.
1. **Electronic verification**: This method involves securely verifying government-issued IDs via databases or third-party service providers.
2. **Reliance on trusted third parties**: Businesses can now rely on other reputable entities to perform identity verification on their behalf.
3. **Remote or digital identity verification solutions**: These solutions leverage biometrics or video calls to verify identities remotely.
4. **Ongoing risk-based monitoring**: This method allows businesses to continually monitor their customers' identities without the need for repeated ID checks.
5. **Verification through established business relationships**: This approach enables businesses to verify identities using data from previously established business relationships.
These methods, while not explicitly detailed in the search results, allow for remote, digital, or indirect verification processes, providing greater flexibility and efficiency. They are particularly beneficial for institutions handling remote or digital onboarding, such as crypto platforms or online financial service providers.
Traditional on-the-spot verification, which involves a direct physical check by a trained person who views the original ID document and confirms its authenticity face-to-face, is not always practical or possible in digital or remote contexts. The amendments promote the use of technology and third-party reliance to maintain regulatory compliance while facilitating modern business models.
It is important to note that the specific five methods are not explicitly listed in the available excerpts. For precise official identification methods, consulting FINTRAC's detailed guidance or the official amendments text would be necessary.
The new requirements affect various Canadian and foreign businesses that report to FINTRAC, including financial institutions, money service businesses, insurance companies, real estate, casinos, security dealers, accountants and accounting firms, agents of the crown, British Columbia notaries, dealers in precious metals and stones, and businesses dealing in virtual currencies.
For digital photo ID verification, the main requirement is to ensure that the ID is authentic, valid, and current. Businesses using the reliance method must have a written agreement with their partners that requires them to provide all information related to a client's verification process. In Method #1 for verification, credit files must be obtained from Canadian credit bureaus, not foreign ones.
In summary, the amendments to Canada's primary AML regulation have opened up new avenues for identity verification, providing businesses with a more flexible and efficient approach to regulatory compliance in the digital age.
Businesses, particularly those dealing in digital or remote contexts such as crypto platforms or online financial service providers, can now leverage electronic verification, remote or digital identity verification solutions, and ongoing risk-based monitoring to ensure regulatory compliance. This shift towards technology and third-party reliance creates a more flexible and efficient approach in the realm of finance and investing, modernizing business operations.
The introduction of amendments to Canada's Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA) in 2019 has also opened up opportunities for businesses to rely on trusted third parties for identity verification, further streamlining investment and financial processes.
