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| Monday, September 21st, 2015

WHAT DOES "FINTRAC REGULATED" MEAN FOR A MONEY TRANSFER PROVIDER IN CANADA?

Anyone using a money transfer provider based in Canada should ensure the firm is FinTRAC regulated. FinTRAC is the Financial Transactions and Reports Analysis Centre. Created in 2000, it is responsible for overseeing financial transactions in Canada. Its specific remit is the detection, prevention and deterrence of money laundering and the financing of terrorist activities.

Similar in makeup and responsibilities to Financial Crimes Enforcement Network in the US, the organisation regulates and monitors Money Services Businesses (MSBs), which include money transfer providers and foreign exchange brokers. These MSBs have legal obligations under Canada's Proceeds of Crime (Money Laundering) and Terrorist Financing Act, and it is the job of FinTRAC to enforce these and impose fines for breaches. For example, failure to report a suspicious transaction can result in a fine of up to C$2 million or five years in prison.

Money transfer providers that are FinTRAC regulated therefore comply with the necessary Canadian legislation and follow best practice guidelines on how to handle client money, respond to complaints etc.

Protection for Consumers

Obligations for FinTRAC regulated MSBs include reporting large value transactions to the regulator or suspicious transactions. Customers using a FinTRAC regulated money transfer provider not only know that their money is not being used to finance criminal activity, but that the company must meet good customer service commitments. Providers can be looked up in the FinTRAC database.

Firms must produce a written set of practices to show they comply with the law, which include appointing a compliance officer; writing and applying compliance policies and procedures; assessing and writing down the risks of the business being used for money laundering or terrorist financing; and the ongoing training for employees in compliance measures.

In terms of consumer protection, FinTRAC regulated money transfer providers operate segregated client accounts. This means clients funds are kept independent of the business’s day-to-day operating accounts - if the broker gets into financial difficulty there is no risk to the client’s money. All Canada-registered money transfer providers on FXcompared are regulated by the FinTRAC.

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