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DAILY NEWS Jan 8, 2015 2:35 PM – 0 comments
Large electronic funds transfers must now be reported to Canada Revenue Agency

Comments by Dan White of Tax Audit Solutions: “This is a bit of closing the barn door after the money has already gone off shore. However now it is just one more tool into Big Brother is watching you.”

Canada Revenue Agency announced Wednesday that effective Jan. 1, certain companies and associations are now required to report electronic funds transfers of $10,000 or more.

Essentially, companies that have already been submitting reports to the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) will now be simultaneously sending the same information to CRA.

The information that companies now have to report to CRA “includes the transmission of instructions for a transfer of funds through any electronic, magnetic or optical device, telephone instrument or computer, made at the request of a client,” CRA stated in a release Jan. 7.

“In the case of Society for Worldwide Interbank Financial Telecommunication messages, only SWIFT MT 103 messages are included,” CRA stated.

The new rule applies to – among other entities – banks, credit unions, caisses populaires, financial service cooperatives, trust and loan companies, and crown corporations that accept deposits.

It applies to associations regulated by the Cooperative Credit Associations Act and to companies to which the Trust and Loan Companies Act applies.

It also applies to casinos and to any “money services business,” defined by federal regulation as “an entity engaged in the business of foreign exchange dealing, of remitting funds or transmitting funds by any means or through any entity or electronic funds transfer network, or of issuing or redeeming money orders, traveller’s cheques or other similar negotiable instruments except for cheques payable to a named entity.”

The new reporting requirements “are the same as those for reports currently provided” to FINTRAC, CRA said Wednesday.

While CRA’s new rule is intended to “identify taxpayers who participate in international aggressive tax avoidance and attempt to conceal income and assets offshore,” the purpose of FINTRAC is to detect and deter money laundering and financing of terrorist activities.

FINTRAC was established with the passage of Canada’s Proceeds of Crime (Money Laundering) and Terrorist Financing Act. That act imposes reporting and record-keeping requirements on several categories of firms, including life insurance companies, brokers or independent agents and securities dealers.

“Financial intermediaries will submit one report to both FINTRAC and the CRA at the same time,” CRA stated Wednesday. “EFTs must be filed no later than five working days after the day the transfer occurred.”

In addition to reporting EFTs of $10,000 or more, firms “must also report two or more EFTs of less than $10,000 each that are made within 24 consecutive hours by or on behalf of the same individual or entity when they total $10,000 or more, as these are considered to be a single transaction,” CRA noted.

FINTRAC reports to the federal finance minister. One of its mandates is to detect “unusual patterns of transactions that resemble money laundering or terrorist financing activity,” and in some cases to share that information with law enforcement agencies, the Canadian Security Intelligence Service or the Egmont Group of Financial Intelligence Units. The Egmont Group’s members include the United States Treasury Department’s Financial Crimes Enforcement Network (FinCEN) and Britain’s National Crime Agency, among others.

Canada’s Proceeds of Crime (Money Laundering) and Terrorist Financing Act generally does not require Canadian lawyers to report “communication that is subject to solicitor-client privilege.”

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