Chances are you’re no stranger to electronic funds transfers. Broadly speaking, an EFT can mean any type of standard non-paper payment, including debit and credit card payments, email or wire money transfers (both domestic and international) and direct payroll deposits. Most organizations handle at least some of these transactions every day. The key question for businesses is: How do you keep track of these electronic transfers and, if necessary, register them with the Financial Transactions and Reports Analysis Centre of Canada?
What’s that you ask? Yes, the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC). It’s watching, and if your organization falls into any of the following categories, you’d better understand your EFT reporting obligations:
- Financial entities — banks (i.e., those listed in Schedule I or II of the Bank Act) or authorized foreign banks with respect to their operations in Canada, credit unions, caisses populaires, trust companies, loan companies and agents of the Crown that accept deposit liabilities
- Money service businesses — organizations engaged in foreign exchange dealing; remitting or transmitting funds by any means or through any individual, entity or electronic funds transfer network; or issuing or redeeming money orders, traveller’s cheques or other similar negotiable instruments
Registered charities may be authorized to carry on business temporarily as a casino for charitable purposes. If this type of business is carried out in the establishment of a casino for no more than two consecutive days at a time under the supervision of the casino, the activities are considered to be the supervising casino’s. In this case, the supervising casino is responsible for the requirements explained in this guideline related to the charity casino.
FINTRAC, in case you don’t know, is an independent agency of the federal government that “gathers, analyzes, assesses, and discloses financial intelligence” in order to “facilitate the detection, prevention and deterrence of money laundering, terrorist activity financing and other threats to the security of Canada”. The agency has the power to assess penalties on organizations that don’t comply, including stiff fines and imprisonment. For example, failing to report a large cash transaction or an electronic funds transfer can result in a fine of up to $500,000 for the first offence and $1 million for subsequent offences; and failing to meet record-keeping requirements could mean a fine of up to $500,000 and/or five years in prison.
See the latest release of Finance & Accounting PolicyPro for more details on EFTs and what they mean for your business.
First Reference Internal Controls, Human Resources and Compliance Editor