38 Questions
What information must Canadian financial institutions report to CRA for accounts held by US persons?
Name, address, and US taxpayer identification number
What is the consequence of Canadian financial institutions not complying with Part XVIII of the ITA?
30% withholding tax under FATCA
What is the purpose of CRA reporting information to the IRS for accounts held by US persons?
To comply with international tax regulations
As a Dealing Representative, what should you familiarize yourself with regarding FATCA?
Dealer's policies and procedures
What responsibility may a Dealing Representative have concerning US persons?
Identifying clients who are US persons
How do Canadian financial institutions avoid the punitive 30% withholding tax under FATCA?
By reporting certain financial information to CRA
What is the protocol regarding accepting health cards from clients in Québec?
You can accept it if the client offers it as a form of identification.
What is the appropriate action if you are unable to identify an individual when opening an account?
Accept the initial deposit but do not carry out any further transactions until identification is completed.
Which of the following positions in a foreign country classify individuals as politically exposed foreign persons?
Military general or higher rank
What action should be taken if a client is evasive or unwilling to provide adequate identification information?
Inform the Compliance Department.
What change in identification requirements was introduced in June 2020?
Inclusion of Politically Exposed Persons (PEPs), both foreign and domestic.
What is the status of health cards from Ontario, Manitoba, and PEI for identification purposes?
They are not allowed under any circumstances.
Which category was added to the identification requirements for Politically Exposed Foreign Persons in June 2020?
Heads of International Organizations (HIOs)
What should be done if a client volunteers their health card for identification purposes in Québec?
'Thank them' and accept it for identification purposes.
Which government body does a securities dealer report suspicious transactions to?
Financial Transactions and Reports Analysis Centre of Canada
What is the minimum cash transaction amount that must be recorded as a large cash transaction record?
$10,000
What is the consequence for a Canadian financial institution that fails to comply with FATCA?
A 30% withholding tax on certain US-source payments
Which of the following records must be kept by securities dealers, portfolio managers, and investment counsellors?
Client statements
Under FATCA, what types of accounts must foreign financial institutions, including Canadian firms, report on?
Financial accounts held by US taxpayers and foreign entities with US ownership
According to FATCA, who is considered a US person for US tax purposes?
A person who is a US resident or a US citizen
In which situation is a securities dealer required to confirm a client's identity?
When conducting a suspicious transaction
What motivated Canadian and US governments to sign an InterGovernmental Agreement (IGA) regarding FATCA?
To ensure compliance with FATCA through mutual enforcement measures
Which of the following documents can be used to identify an individual?
Driver's license
What is the maximum time limit within which records must be provided to FINTRAC upon request?
30 days
What is the purpose of Part XVIII of the Income Tax Act of Canada in relation to FATCA?
To mandate reporting of accounts held by US persons by Canadian financial institutions
Which of the following is not a requirement for securities dealers, portfolio managers, and investment counsellors regarding record-keeping?
Keeping employee records
Why would a person with closer economic and social ties to Canada than the US not be considered a US resident according to the text?
Because economic and social ties are stronger with Canada than the US
Why does FATCA impose a 30% withholding tax on certain US-source payments for non-compliant Canadian financial institutions?
To encourage compliance by creating a significant financial consequence
Which of the following is not a requirement for confirming a client's identity?
When a client conducts a small cash transaction
What is the primary role of Canadian mutual fund dealers under Part XVIII of the ITA?
Identifying accounts held by clients who are US persons for US tax purposes
Which of the following is NOT considered personal information under PIPEDA?
An individual's name on a business card
What is the intention of the National Do Not Call List (DNCL)?
To give consumers the choice about receiving telemarketing calls
Which of the following is a factual information under PIPEDA?
An individual's age
What does telemarketing refer to under the DNCL?
Unsolicited telecommunications to sell or promote a product or service
Which of the following is NOT a rule of PIPEDA regarding personal information?
Private sector organizations can do whatever they want with personal information
What happens if a person has registered their phone number on the DNCL?
You are not permitted to call them for telemarketing purposes without their express permission
Which of the following is a subjective information under PIPEDA?
An individual's opinions
Who established the National Do Not Call List (DNCL) in Canada?
The Canadian Radio-television and Telecommunications Commission (CRTC)
Study Notes
FATCA
- Canadian financial institutions must report information about accounts held by US persons to CRA, which will automatically report to the IRS.
- Institutions must report the following information: account holder's name, address, US taxpayer identification number, and certain financial information.
- Failure to comply with FATCA will result in a 30% withholding tax on certain US-source payments.
US Persons
- A person is a US person for US tax purposes if they are a US resident or a US citizen.
- However, a person with economic and social ties closer to Canada than the US is not generally considered a US resident.
Identifying Clients
- Confirm client's identity in certain circumstances: opening a non-registered account, large cash transaction, suspicious transaction, or when an individual is authorized to give instructions for an account.
- Acceptable identification documents include birth certificate, driver's license, passport, and more.
- Health cards from Ontario, Manitoba, and PEI are not allowed for identification purposes.
Politically Exposed Foreign Persons
- Individuals are considered politically exposed foreign persons if they or their immediate family hold certain positions in a foreign country, such as head of state, ambassador, or president of a state-owned company.
Record-Keeping
- Securities dealers, portfolio managers, and investment counsellors must keep records of large cash transactions, account opening records, client statements, and other designated records.
- Records must be kept in a way that they can be provided to FINTRAC within 30 days of a request.
FINTRAC
- Dealers must report suspicious transactions to FINTRAC.
- FINTRAC publishes guidelines for when to file reports and offers instructions for how to file them.
PIPEDA
- PIPEDA has rules governing what private sector organizations can do with "personal information".
- Personal information includes age, name, medical records, ID numbers, income, and more.
Do Not Call List (DNCL)
- The Canadian Radio-television and Telecommunications Commission (CRTC) established a National Do Not Call List (DNCL) to give consumers the choice about whether to receive telemarketing calls or not.
- Telemarketing refers to unsolicited telecommunications to sell or promote a product or service.
- If a person has registered a phone number on the DNCL, you are not permitted to call that person for telemarketing purposes unless they have given express permission.
Test your knowledge on the guidelines for reporting suspicious transactions to FINTRAC, including when to file reports and how to file them. Understand the record-keeping requirements for securities dealers, portfolio managers, and investment counsellors.
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