FINTRAC Interpretation Notice no. 4

August 31, 2009

The "24-Hour Rule"

Subsection 9(1) of the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA). Sections 3, 17, 21, 33.1, 35, 38, 39.2, 39.6, 40, 42 and 47; and subsections 12(1), and 28(1) of the Proceeds of Crime (Money Laundering) and Terrorist Financing Regulations.

The purpose of this notice is to help clarify for reporting entities the measures they must undertake with respect to reporting two or more cash transactions, electronic funds transfers or casino disbursements in a 24-hour period. Any references to dollar amounts (such as $10,000) refer to the amount in Canadian dollars or its equivalent in foreign currency.

LCTR

If you are a reporting entity, you have to submit a large cash transaction report (LCTR) to FINTRAC when you receive an amount of $10,000 or more in cash from a client in the course of a single transaction, unless the cash is received from a financial entity or a public body. In this context, cash means Canadian currency or foreign currency. Cash includes money in circulation in any country (bank notes or coins) but excludes cheques, money orders or other similar negotiable instruments.

You also have to submit an LCTR if you conduct two or more cash transactions of less than $10,000 each within 24 consecutive hours of one another, that were made by or on behalf of the same individual or entity, and that add up to $10,000 or more, unless the cash is received from a financial entity or a public body.

The 24-hour rule applies if you as the reporting entity know, or your employee or your senior officer knows, that the transactions were made within 24 consecutive hours of each other, by or on behalf of the same individual or entity. It applies only to transactions that are under $10,000. If a transaction is for $10,000 or more, it is reportable as a single transaction.

Other requirements and exceptions apply. For more information, see Guideline 7: Submitting Large Cash Transaction Reports to FINTRAC.

EFTR

Also, if you are a financial entity, a money services business or a casino, you have to submit an electronic funds transfer report (EFTR) to FINTRAC if you send or receive, in the course of a single transaction, international electronic funds transfer (EFT) of $10,000 or more, made at the request of a client.

You also have to submit an EFTR if you conduct two or more EFTs of less than $10,000 each within 24 consecutive hours of one another, that were made by or on behalf of the same individual or entity, and that add up to $10,000 or more.

The 24-hour rule applies if you as the reporting entity know, or your employee or your senior officer knows, that the EFTs were made within 24 consecutive hours of each other, by or on behalf of the same individual or entity. It applies only to EFTs that are under $10,000. If an EFT is for $10,000 or more, it is reportable as a single transaction. For more information, see Guideline 8: Submitting Electronic Funds Transfer Reports to FINTRAC.

Exceptions for EFTs

The 24‑hour rule does not apply for an EFT sent to two or more beneficiaries if it was requested by the administrator of a pension fund federally or provincially regulated, a public body or a very large corporation.

For information about what is considered a public body or a very large corporation, see Guideline 6: Record Keeping and Client Identification.

Other requirements and exceptions apply. For more information, see Guideline 8: Submitting Electronic Funds Transfer Reports to FINTRAC.

CDR

Effective September 28, 2009, if you are a casino, you have to submit a casino disbursement report (CDR) to FINTRAC when you make a disbursement of $10,000 or more in the course of a single transaction.

You also have to submit a CDR if you make two or more disbursements of less than $10,000 each within 24 consecutive hours of one another, that were received by or on behalf of the same individual or entity, and that add up to $10,000 or more.

The 24-hour rule applies if your employee or your senior officer knows, that the disbursements were received within 24 consecutive hours of each other, by or on behalf of the same individual or entity. It applies only to disbursements that are under $10,000. If a disbursement is for $10,000 or more, it is reportable as a single transaction.

Other requirements and exceptions apply. For more information, see Guideline 10: Submitting Casino Disbursement Reports to FINTRAC.

Rolling or Static 24-Hour

The 24-hour period is a rolling time frame. In other words, the 24-hour period begins with each new cash transaction or EFT of less than $10,000, if you know they were made by or on behalf of the same individual or entity. In the case of a casino disbursement, the 24-hour period begins with each new disbursement of less than $10,000, if you know they were received by or on behalf of the same individual or entity.

However, if your system permits you to know of multiple cash transactions, EFTs or casino disbursements only within a static 24-hour period (e.g. from 9:00 a.m. to 9:00 a.m. the next day) you are required to report the multiple transactions that you know of in that 24-hour period.

Examples

Example 1:

John Doe makes the following four cash transactions with a reporting entity called ABC on the same day. One of ABC's employees knows that these four cash transactions are all by the same individual. John Doe's cash deposits are as follows:

A transaction at 9 a.m. of $10,000 CDN constitutes LCTR 1. Transactions at 10 a.m., 2 p.m. and 4 p.m. of $4,000 CDN each constitutes LCTR 2

ABC would submit an LCTR (1) for the first cash deposit of $10,000 as it was received in the course of a single transaction. The other three smaller cash deposits of $4,000 would also have to be submitted in an LCTR (2) as they combine to an amount over $10,000 and they were conducted by the same individual within 24 hours.

Example 2:

Jane Doe requests a money services business called XYZ to send three EFTs on the same day. One of XYZ's employees knows that these three EFT transactions are all done at the request of the same individual. Jane Doe's EFT requests are as follows:

EFTs at 9:00 a.m. of $2,000 CDN, 10:00 a.m. of $10,000 CDN, and 4:00 p.m. of $2,000 CDN. The second EFT consitutes EFTR 1.

XYZ would submit an EFTR (1) to FINTRAC for the second EFT of $10,000 as it is sent in the course of a single transaction. The other two smaller EFTs do not have to be reported because they do not fall under the 24-hour rule (i.e., they combine to an amount under $10,000).

Example 3:

Entity A has a system that detects multiple cash transactions of less than $10,000 over a static 24‑hour period (starting at 8:00 am each morning). Entity B has a system that detects this based on a rolling 24‑hour period.

Three identical cash deposits occur at each entity as follows:

Deposits of $5,500 CDN each occur at 8:00 a.m. Monday, 4:00 p.m. Monday, and 10:00 a.m. Tuesday. The first and second deposits constitute LCTR 1 (for either static or rolling 24hrs). The second and third deposits constitute LCTR 2 (for rolling 24 hrs).

Both Entity A and Entity B would submit an LCTR (1) for the first two transactions as they would be detected by both systems. The second and third transactions would only be detected by Entity B's system as it is outside of the static 24-hour period for Entity A's system. Entity B would therefore submit another LCTR (2).

Example 4:

Casino 123 has a system that detects multiple disbursements of less than $10,000 over a static 24‑hour period (starting at 10:00 am each morning). Casino ZZZ has a system that detects this based on a rolling 24‑hour period.

Three different disbursements are made at each casino as follows:

Disbursements of $6,000 CDN at 10:00 a.m. on Wednesday, $7,000 CDN at 6:00 p.m. on Wednesday, and $5,500 CDN at 12:00 a.m. on Thursday are made. The first and second disbursements constitute CDR 1 (for either static or rolling 24hrs). The second and third disbursements constitute CDR 2 (for rolling 24 hrs.)

Both Casino 123 and Casino ZZZ would submit a CDR (1) for the first two disbursements as they would be detected by both systems. The second and third disbursement would only be detected by Casino ZZZ's system as it is outside of the static 24-hour period for Casino 123's system. Casino ZZZ would therefore submit another CDR (2).

Weekends

The 24-hour period cannot cover more than 24 consecutive hours. For instance, if the transactions in Example 3 above for Entity B occurred over a weekend period, (i.e., the first two transactions were made on a Friday, and the third made on a Sunday morning), the first two transactions would be reportable, but not the third.

Implementing Systems

The PCMLTFA and its accompanying regulations do not require the implementation of a system, whether automated or manual, for detecting multiple cash transactions, EFTs or casino disbursements of less than $10,000 occurring within a 24-hour period. This does not preclude regulators in your industry sectors from imposing more robust measures under their powers.

However, if you do have such a system and as a result you detect multiple cash transactions, multiple EFTs or multiple casino disbursements of less than $10,000 that add up to $10,000 or more in a 24‑hour period, those transactions must be reported. Therefore, depending on what your system allows you to know, reports should be made relative to a static or rolling 24-hour period.