If you’ve been asked to show identification for a transaction, even as a long-time customer, you may wonder why it’s necessary. These requests are part of Canada’s efforts to combat money laundering and terrorist financing, ensuring the safety of our financial system.
What is the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA)?
The Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA) requires financial institutions and other businesses to verify the identities of clients conducting financial transactions. This law is designed to help FINTRAC (the Financial Transactions and Reports Analysis Centre of Canada) in its mission to track and analyze financial activities linked to money laundering and terrorist financing.
Why Do Businesses Ask for ID?
Under the PCMLTFA, financial institutions and businesses covered by the legislation must verify your identity during financial transactions, such as depositing funds, buying a money order, or purchasing life insurance. This process helps prevent funds from illegal activities from entering the formal financial system.
Even if you’ve been a loyal customer for years, businesses are required by law to ask for your ID. By providing this information, you help support the fight against money laundering and terrorism financing.
Money Laundering and Terrorist Financing Explained
Money laundering is the process of disguising money earned from criminal activities—like fraud or drug trafficking—to make it appear legitimate. According to the International MonetaryFund (IMF), an estimated $500 billion (USD) is laundered globally each year.
Terrorist financing involves funding activities intended to support terrorism. These funds can come from illegal activities, but also from legal sources like community fundraising or charities. Both money laundering and terrorist financing pose significant threats to our financial security.
What Types of ID Are Required?
Under the PCMLTFA, you must provide valid identification, such as a birth certificate or driver’s license. Depending on the transaction, you may also need to provide additional information, such as whether you’re acting on behalf of a third party.
How We Can Help
As notaries, we understand how crucial identity verification is under Canadian law. Whether you’re conducting a financial transaction or need assistance navigating the complexities of compliance, we’re here to help make the process smooth.
Contact us more information or assistance with document notarization.
