FINTRAC Updates Guidance on Verifying the Identity of Individuals and Other Entities

Following consultations with businesses and reporting entities, FINTRAC has updated its guidance on Methods to verify the identity of an individual and confirm the existence of a corporation or an entity other than a corporation (the “Guidance”) effective October 2019. The updated guidance reflects amendments to the Proceeds of Crime (Money Laundering) and Terrorist Financing Regulations that came into force on June 25, 2019.

The primary updates to the Guidance are outlined below:

  • Original documents are no longer mandatory. Government-issued photo identification used to verify the identity of an individual must be “authentic, valid and current”, as opposed to the previous requirement that it be “original, valid and current”. Authentic identification is described as identification which is genuine and has the character of an original, credible and reliable document issued by a competent authority.
  • The revised Guidance provides greater flexibility to businesses to effectively comply with KYC requirements by allowing the use of new technologies to verify identity and authenticate documents. Reporting entities can continue to determine the authenticity of government-issued photo identification in person; where an individual is not physically present, the authenticity of a government-issued photo identification must be determined using a technology capable of assessing the document's authenticity. For example:
    • an individual could be asked to scan the government-issued photo identification using their cellphone or electronic device; and
    • a technology could then be used by the reporting entity to compare the features of the identification against known characteristics (size, texture, character spacing, raised lettering, format, design, etc.), security features (holograms, barcodes, magnetic strips, watermarks, embedded electronic chips, etc.) or markers (for example, logos or symbols) to be satisfied that it is an authentic document.
  • The prohibition on accepting a copy or digitally scanned image of the identification has been lifted. While the Guidance continues to state that it is not adequate to just view a person and their government-issued photo identification online through a video conference, for example, a reporting entity may now use electronic images as a source of information provided that it relies on software or other technology that is able to authenticate the government-issued photo identification.
  • A reporting entity’s policies and procedures must describe the processes followed to authenticate government-issued photo identification, whether in person or not, and how a reporting entity confirms the identification is valid and current. The policies and procedures must also describe the steps used to verify that the name and photograph are those of the individual presenting the identification.

In addition to the above changes to the Guideline, FINTRAC has made a minor change to Guideline 5: Submitting Terrorist Property Reports to FINTRAC, to reflect the fact that the Office of the Superintendent of Financial Institutions has ceased publishing lists of designated persons. Terrorist group and listed person lists can now be found:

  • on Public Safety Canada’s website; and
  • in the Schedule of the Regulations Implementing the United Nations Resolutions on the Suppression of Terrorism.

Authors