FINTRAC Reporting Guidelines Quiz

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Questions and Answers

What information must Canadian financial institutions report to CRA for accounts held by US persons?

Name, address, and US taxpayer identification number (correct)

Bank account number, income, and assets

Social security number, date of birth, and occupation

Passport number, marital status, and education level

What is the consequence of Canadian financial institutions not complying with Part XVIII of the ITA?

30% withholding tax under FATCA (correct)

10% withholding tax penalty

20% withholding tax penalty

Account closure by CRA

What is the purpose of CRA reporting information to the IRS for accounts held by US persons?

To share account holder's investment strategies

To comply with international tax regulations (correct)

To ensure Canadian financial institutions pay taxes in the US

To provide details on account holder's citizenship

As a Dealing Representative, what should you familiarize yourself with regarding FATCA?

Dealer's policies and procedures Signup and view all the answers

What responsibility may a Dealing Representative have concerning US persons?

Identifying clients who are US persons Signup and view all the answers

How do Canadian financial institutions avoid the punitive 30% withholding tax under FATCA?

By reporting certain financial information to CRA Signup and view all the answers

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. Signup and view all the answers

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. Signup and view all the answers

Which of the following positions in a foreign country classify individuals as politically exposed foreign persons?

Military general or higher rank Signup and view all the answers

What action should be taken if a client is evasive or unwilling to provide adequate identification information?

Inform the Compliance Department. Signup and view all the answers

What change in identification requirements was introduced in June 2020?

Inclusion of Politically Exposed Persons (PEPs), both foreign and domestic. Signup and view all the answers

What is the status of health cards from Ontario, Manitoba, and PEI for identification purposes?

They are not allowed under any circumstances. Signup and view all the answers

Which category was added to the identification requirements for Politically Exposed Foreign Persons in June 2020?

Heads of International Organizations (HIOs) Signup and view all the answers

What should be done if a client volunteers their health card for identification purposes in Québec?

'Thank them' and accept it for identification purposes. Signup and view all the answers

Which government body does a securities dealer report suspicious transactions to?

Financial Transactions and Reports Analysis Centre of Canada Signup and view all the answers

What is the minimum cash transaction amount that must be recorded as a large cash transaction record?

$10,000 Signup and view all the answers

What is the consequence for a Canadian financial institution that fails to comply with FATCA?

A 30% withholding tax on certain US-source payments Signup and view all the answers

Which of the following records must be kept by securities dealers, portfolio managers, and investment counsellors?

Client statements Signup and view all the answers

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 Signup and view all the answers

According to FATCA, who is considered a US person for US tax purposes?

A person who is a US resident or a US citizen Signup and view all the answers

In which situation is a securities dealer required to confirm a client's identity?

When conducting a suspicious transaction Signup and view all the answers

What motivated Canadian and US governments to sign an InterGovernmental Agreement (IGA) regarding FATCA?

To ensure compliance with FATCA through mutual enforcement measures Signup and view all the answers

Which of the following documents can be used to identify an individual?

Driver's license Signup and view all the answers

What is the maximum time limit within which records must be provided to FINTRAC upon request?

30 days Signup and view all the answers

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 Signup and view all the answers

Which of the following is not a requirement for securities dealers, portfolio managers, and investment counsellors regarding record-keeping?

Keeping employee records Signup and view all the answers

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 Signup and view all the answers

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 Signup and view all the answers

Which of the following is not a requirement for confirming a client's identity?

When a client conducts a small cash transaction Signup and view all the answers

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 Signup and view all the answers

Which of the following is NOT considered personal information under PIPEDA?

An individual's name on a business card Signup and view all the answers

What is the intention of the National Do Not Call List (DNCL)?

To give consumers the choice about receiving telemarketing calls Signup and view all the answers

Which of the following is a factual information under PIPEDA?

An individual's age Signup and view all the answers

What does telemarketing refer to under the DNCL?

Unsolicited telecommunications to sell or promote a product or service Signup and view all the answers

Which of the following is NOT a rule of PIPEDA regarding personal information?

Private sector organizations can do whatever they want with personal information Signup and view all the answers

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 Signup and view all the answers

Which of the following is a subjective information under PIPEDA?

An individual's opinions Signup and view all the answers

Who established the National Do Not Call List (DNCL) in Canada?

The Canadian Radio-television and Telecommunications Commission (CRTC) Signup and view all the answers

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.

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Description

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.