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Know Your Client requirements under federal anti-money laundering legislation now requires an authentication software when a digital or photocopied picture ID is used as a single source to identify a client.
The updated guideline, issued November 15, 2019, reflects amendments to client identification requirements under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA) issued in July 2019. The amendments are as follows:
Using a Photo ID as a Single Source: While a reporting entity can now accept a digital or photocopied government-issued photo identification document as a means of ascertaining the identity of a client (for non-face-to-face onboarding / transactions), the reporting entity must use a software or some type of technology to authenticate the government-issued photo identification document.
In other words, you must use an authentication software to confirm the authenticity of the identification if using a digital or photocopied government-issued photo identification document as a single source of identity verification. Non-compliance will result in a penalty.
However, if using a dual-process method — a scanned government-issue photo ID, plus a downloaded bank statement, for example — is used to authenticate client identification, you don’t need to use authentication software. All other requirements remaining the same.
Note: It is not acceptable to rely on information if the account number or identifying number associated with the client profile on any of these documents is truncated or redacted.
For the Credit File Method: For a credit file to be used in ascertaining a client’s identity, the credit file must still:
However, the recordkeeping requirements when using a credit file method have been slightly reworded. Reporting entities are now required to keep the following documentation when using the credit file method to identify a client:
Update Your Compliance Policies and Procedures Manual
When adopting and updating your company’s compliance policies and procedures, here are the two most important things to consider:
What This Means for You
The processes for a reporting entity to determine that a government-issued photo identification document is (1) authentic, valid and current and (2) the verification step (ensuring the name and picture match the name and face of the person) do not need to happen concurrently. It is up to your management / compliance team to determine how to complete these two separate steps.
MNP’s Canadian Anti-Money Laundering Rules Amended for more details on the updated legislation. To link to the Government of Canada source, click
For more information, contact Claudius Otegbade, CFE, CFCS, CFI, at 647.475.4554 or
[email protected] or Mondiu Jaiyesimi, BSc., MSc., CAMS, at 647.475.4500 or
Related Topics:Anti-Money Laundering
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