The person making financial transactions for illicit purposes isn’t necessarily the person pulling the strings. If you work for a money services business, you should try to ascertain if your customer is operating under instructions from a third party. This guidance comes from Canada’s FinTRAC, but it’s useful information for anybody with know-your-customer responsibilities:
Find out if there is a third party
As a money services business (MSB), you have to find out if your client is acting on behalf of a third party when you:
- conduct a large cash transaction and you have to keep a record of it
- have to keep a record about a service agreement
Who is a third party?
A third party is anyone else who gave instructions to your client to request MSB services from you. It is not about who “owns” the money, but rather about who gives the instructions to deal with the money.
How to find out if there is a third party
Ask the individual in front of you if they are acting on someone else’s instructions. If the answer is yes, that someone else is a third party.
Examples of a third party:
- Tarek wants to send money to his son Roger in Lebanon. He gives his daughter Tara $13,000 in cash and asks her to go to the MSB to send the money. Tara gives the money to the MSB and requests that a money transfer be made to Roger in Lebanon. Tarek is the third party as he is the one who gave the instructions to Tara to request that a money transfer be made.
- Jacques, a financial officer and employee of Voyages Inc. in Canada, goes to the MSB every month to transfer money to their head office in France. Jacques’ employer, Voyages Inc., is the third party as Jacques is acting on his employer’s instructions.
Records to keep on a third party
You have to keep a record for five years after the day you created it, if you:
- find out that there is a third party
- suspect that there is a third party
You find out that there is a third party
If you find out that there is a third party involved, you have to keep a record with the following information about the third party:
- name, address and job or main business
- if it is an individual, their date of birth
- if it is a corporation, their corporation number and place of incorporation
- the nature of the relationship between the third party and:
- the individual who gave you the cash if you are doing this because of a large cash transaction or
- the organization entering into a service agreement.
Examples of how to describe the nature of the relationship include that the third party is your client’s accountant, agent, customer, employee, friend, legal counsel or relative.
You suspect that there is a third party
If you are not able to find out that there is a third party, but you suspect that there are instructions from a third party involved, you have to keep a record to indicate the following:
- why you suspect the individual is acting on a third party’s instructions and in the case of a:
- large cash transaction, whether or not the individual giving the cash indicated that the transaction was being conducted on behalf of a third party
- service agreement, whether or not the client indicated that the agreement was being done on behalf of a third party