Canada: New FinTRAC Guidance – ID Verification

Since July 2015, when draft amendments to the Proceeds of Crime (Money Laundering) and Terrorist Financing Regulations (Draft Regulations) were published in the Canada Gazette, the industry has been expecting changes to aspects of the current AML/TF regime, particularly with respect to customer identification. After a lengthy delay, caused at least in part by the change in government, FinTRAC signaled the imminent arrival of the updated rules by releasing a new guideline on its website regarding methods to ascertain the identity of individuals (the Guideline). The Guideline refers to amended regulations that were apparently made on June 17th, but are yet to have been officially published in the Canada Gazette. The Guideline offers guidance on certain elements of the yet unseen final amendments to the regulations.

Highlights and Observations

Based on the Guideline, it appears that the methods for verification of identity of individuals proposed in the Draft Regulations have not been substantially changed from what was proposed last summer. For a summary of the proposals in the Draft Regulations, please see our update from July 2015. Here are some areas of note:

Single Process Method

The only single process method of identification of an individual who is not physically present at the time of identification discussed in the Guideline is the credit file method. The Draft Regulations include an additional single process method, which involves referring to information that is received from a federal or provincial government body or an agent of such body. We understand that there is currently no such process available in Canada and for this reason this method is not included in the Guideline.

As in the Draft Regulations, the credit file method referred to in the Guideline requires a Canadian credit file that has been in existence for at least three years. Submissions from various industry participants requesting that the three year period be reduced have apparently not been accepted.

Reliable Sources for Dual Process Methods

One of the key updates proposed in the Draft Regulations is the new concept that identity may be verified by referring to information from two different reliable sources (referred to in the Guideline as the "dual process method"). This is a welcome development as it is less prescriptive than the current requirements and provides flexibility; however, with less prescription, there is also less certainty about what will be considered acceptable. FinTRAC has provided the following criteria for determining whether a source would be considered "reliable":

  1. The source must be an originator or issuer of information;
  2. The reporting entity must trust the source to verify the identity of the client;
  3. The source should be well known and considered reputable; and
  4. The source cannot be the reporting entity or the client.

These criteria are helpful, but they raise additional questions:

  • What does it mean for a reporting entity to "trust" the source?
  • Is this an objective or subjective test?
  • If trust will be determined objectively (i.e. whether it was reasonable for the reporting entity to trust the source), what diligence must the reporting entity have done to come to the conclusion that it may trust the source?
  • What diligence must the reporting entity do to determine whether a source is "well known" and "considered reputable"? Considered reputable by whom?

The Guideline provides some examples of reliable sources: various levels of government, crown corporations, financial entities and utility providers. Note that a municipal government is considered a reliable source for the dual process method, but an identity document issued by a municipal government is excluded from acceptable photo identification.

Use of Agents

Under the current regulations, a reporting entity may use an agent to verify identity on its behalf provided that it has a written agreement or arrangement in place with the agent. The Draft Regulations include additional flexibility with respect to the use of agents. In particular, based on the Draft Regulations, a reporting entity may rely on measures previously taken by the agent to verify identity even if the agent took those measures on its own behalf or on behalf of another reporting entity under a written agreement or arrangement. The Guideline adds the following in connection with these provisions:

  1. If an agent ascertained the client for another entity and the information is still current, the reporting entity may rely on it;
  2. If the identifying information used by the agent has expired, the reporting entity may still rely on it, provided that the reporting entity's agreement with the agent was in place before the information expired.

This appears to give reporting entities some leeway when they use agents who have previously identified clients, but we question whether it is overly cumbersome to be of practical assistance.

Here is an example to illustrate how this would work: ABC Mortgages (a mortgage broker) identified Sally, the prospective borrower, on June 15, 2014 on behalf of Bank A by referring to Sally's Ontario driver's license. Sally's driver's license expires on May 31, 2016. Bank B is now opening a new mortgage account for Sally.

If Bank B has a written agreement with ABC Mortgages for ABC Mortgages to verify the identity of clients on behalf of Bank B and that agreement was in place before May 31, 2016, Bank B can rely on ABC Mortgages' previous identification of Sally. If, however, Bank B entered into the written agreement with ABC Mortgages after May 31, 2016, Sally's identity will have to be re-verified as the previous identification cannot be relied on.

This guidance suggests that reporting entities should enter into written agreements as soon as possible with any potential agent that they may use to verify identity on their behalf. Also, the agent's record of the identity document, and in particular, the expiry date of the document will have to be reviewed for each individual client to determine whether the (a) identity document is still current; or (b) if the identity document is not current, whether the date of the reporting entity's agreement with the agent predates the expiry date of the identity document; if it does not, the individual will need to be re-identified.

Acceptable Documents

The Guideline includes a long list of acceptable Canadian federal, provincial and territorial government-issued photo identification documents. Although the list is stated not to be exhaustive, reporting entities may wish to use the list in the Guideline to help them document which Canadian identity documents they will generally accept.

The Guideline provides that reporting entities are not permitted to accept a copy or a digitally scanned image of photo identification. Further, if a reporting entity is referring to a document in a dual process method, the original document is the one the client received from the issuer. If any information has been redacted, the document is not acceptable.

Application of Guideline

The Guideline applies to all entities that are subject to the PCMLTFA, to the extent that the entity is required to verify identity of individuals. Although the Guideline uses the terminology "individual clients" and "client identity", based on the Draft Regulations and the current regulations under the PCMLTFA, the methods for identifying an individual client and an individual who is an authorized signer or other representative of a corporate client are the same. The Guideline is therefore relevant to reporting entities that only provide services to corporate clients in addition to those that provide services to individuals.

Next Steps

The Guideline provides for a one-year transition period from June 17, 2016 until June 17, 2017 during which the current methods for verification of the identity of individuals (those included in the regulations before amendment and described in FinTRAC Guideline 6) can also be used in addition to the new methods.

We expect that reporting entities will wait until the amended regulations have been published before they begin using the updated methods for identity verification. We will continue to track developments and will post a further update following publication of the final amendments to the regulations.

About Norton Rose Fulbright Canada LLP

Norton Rose Fulbright is a global law firm. We provide the world's preeminent corporations and financial institutions with a full business law service. We have 3800 lawyers and other legal staff based in more than 50 cities across Europe, the United States, Canada, Latin America, Asia, Australia, Africa, the Middle East and Central Asia.

Recognized for our industry focus, we are strong across all the key industry sectors: financial institutions; energy; infrastructure, mining and commodities; transport; technology and innovation; and life sciences and healthcare.

Wherever we are, we operate in accordance with our global business principles of quality, unity and integrity. We aim to provide the highest possible standard of legal service in each of our offices and to maintain that level of quality at every point of contact.

For more information about Norton Rose Fulbright, see

Law around the world

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.