Canada tightens customer identification requirements for cryptocurrency companies

Financial Transactions Analysis and Reporting Center of Canada (FINTRAC) updated KYC rules for cryptocurrency service providers and expanded the list of transactions requiring customer identification.

FINTRAC last week updated its guidelines for local and foreign businesses providing cash settlement services, currency exchange and money transfers without opening bank accounts. Now such companies must verify the identity of their customers.

According to the FINTRAC classification, these rules also apply to cryptocurrency service providers. Companies must bring their work in line with the new requirements by July 1, 2021. Cryptocurrency service providers must verify the identity of the customer in the following situations:

• Receiving cryptoassets worth $ 10,000 or more within 24 hours;

• Money transfer in the amount of $ 1,000;

• Foreign currency exchange transactions in the amount of $ 3,000 or more;

• Transfer in cryptoassets in the amount of $ 1,000;

• Exchange of cryptoassets worth $ 1,000 or more (including exchange for fiat currency and other cryptocurrencies);

• Transfer of cryptoassets to the recipient in an amount equivalent to $ 1,000 or more;

• Conducting or attempting to conduct suspicious transactions, regardless of the amount.

In these cases, cryptocurrency service providers must identify the customer within 30 days. The KYC check can be omitted when it comes to a government agency or its subdivision, as well as companies whose minimum net assets on the most recent audited balance sheet are $ 75 million, and their shares are traded on the Canadian Stock Exchange.

The transfer or receipt of cryptoassets worth more than $ 10,000 is also exempt from KYC verification if it is compensation for confirming a transaction that is recorded in the blockchain, or if the exchange and transfer of a cryptoasset was made for the purpose of confirming another transaction or transferring information.

Cryptocurrency service providers are required to continuously monitor their customers as part of their regulatory KYC / AML obligations. The frequency with which companies must update customer information depends on internal policies and procedures based on the risk level assigned to the customer.

Regulators around the world are gradually tightening KYC / AML requirements for cryptocurrency companies. Recently it became known that cryptocurrency exchanges in South Korea will be fined for not complying with AML rules.

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