Agent Compliance TrainingProceeds of Crime (Money Laundering) &

Terrorist Financing Act (PCMLTFA) Requirements

Money Services Business (MSB) Registration

The PCMLTFA requires money services businesses (MSBs) to register with the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC).

A MSB is an individual or entity engaged in the business of any of the following:

• Foreign exchange dealing;• Remitting or transmitting funds by any means or through any person, entity or• electronic funds transfer network; or• Issuing or redeeming money orders, traveler's checks or other similar negotiable instruments except

for checks payable to a named person or entity.

Choice agents are covered by Choice’s registration unless your business conducts MSB activity outside of our agent relationship.

Because you process money transfers, you are subject to the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA), the Criminal Code and other anti-money laundering / anti-terrorism laws and The Financial Transactions and Reports Analysis Centre of Canada or FINTRAC (Canada's Financial Intelligence Unit, a specialized agency created to collect, analyze and disclose financial information and intelligence on suspected money laundering and terrorist activities financing)

Money Laundering Overview:

Money laundering is the attempt to conceal or disguise the nature, location, source, ownership or control of illegally obtained money. The money laundering process involves at least three basic steps, which often occur simultaneously:

• Placement: the process of placing unlawful cash proceeds, or cash to be used for unlawful purposes into traditional financial institutions. Through money transmitters the placement occurs when a remittance is placed using funds derived from illegal activities or intended to further those activities.

• Layering: The process of separating the criminal origin or purpose of funds through the use of layers of complex financial transactions, such as converting cash into money remittances, travelers checks, money orders, wire transfers, stored value cards, letters of credit, stocks, bonds or purchasing valuable assets, such as art or jewelry.

• Integration: the process of using an apparently legitimate transaction to disguise the illicit proceeds, allowing the laundered funds to be disbursed back to the criminal. Integration through a money transmitter occurs when illegitimately derived cash is remitted and received and later is used for legitimate purposes.

Structuring: Structuring is the act of breaking up a potentially large transaction into several smaller ones to avoid reporting or recordkeeping requirements. It is illegal for you or your clients to structure transactions in order to avoid the recordkeeping or reporting requirements. Likewise, it is illegal for you or your employees to assist anyone in structuring transactions in order to avoid recordkeeping or reporting requirements

Implementation of an Anti-Money Laundering Program.CHOICE MONEY TRANSFER’s agents requires to have an anti-money laundering program in place to prevent and detect money laundering. This program needs to ensure that policies, procedures and controls are introduced and maintained and is designed to achieve two purposes. Firstly to enable suspicious transactions to be recognized and reported to the authorities and secondly to ensure that if a customer comes under investigation, the company can provide the audit trail.

This Anti-Money Laundering Program consists of the following 4 key elements, encompassing all Bank Secrecy Act regulations:

1. Designate a Compliance Officer2. Document anti-money laundering procedures and controls, including Know Your Customer

policy, transaction analysis, record-keeping and reporting3. Establish Anti-Money Laundering Staff training program.4. Independent review of Anti-Money Laundering Program

Reporting and RecordkeepingYou must retain the physical documents for all money transfers of $1,000 or more Five(5) years and all reports to Fintrac and any additional Records must be kept in such a way that they can be provided to FINTRAC within 30 days of a request to examine them. Both sending and receiving agents must obtain and record specific information

Data ProtectionAgents must protect the client information the same way they compliance with the requirements of record keeping. This means:

• Destroy any form or documents of transactions or clients after the record keeping period• Keep safe the client information: Documents, forms, reports to government, etc

Large Transaction Reports: The Large Cash Transaction Report (LCTR) must be filed with FINTRAC for each transaction where you receive cash from or on behalf of the same person that equals CAD$10,000 or more in any consecutive 24-hour period. This report must be filed within 15 days of the transaction.

Large International Electronic Funds Transfer Report: An Electronic Funds Transfer Report (EFT) must be filed with FINTRAC for each money transfer involving a large international EFT requested by (or on behalf of) the same person of $10,000 or more, in a single transaction or aggregate in 24 hours. This report must be filed within five (5) days of the transfer

Suspicious Transactions: Suspicious transactions are financial activity that has reasonable grounds to suspect that it is related to a Money Laundering offense. STR must be reported to to FINTRAC within 30 days of the suspicious event.

Possible indicators of suspicious behavior, or “red flags”• Client admits or makes statements about involvement in criminal activities.• Client repeatedly uses an address but frequently changes the names involved.• Client over justifies or explains the transaction.• Client’s home or business telephone number has been disconnected or there is no such number

when an attempt is made to contact client shortly after opening account.• Client offers you money, gratuities or unusual favors for the provision of services that may appear

unusual or suspicious.• You are aware that a client is the subject of a money laundering or terrorist financing investigation.• Client enters into transactions with counter parties in locations that are unusual for the client.• Client instructs that funds are to be picked up by a third party on behalf of the payee.• A customer who is reluctant to proceed with a transaction after being informed that a report must be

filed or a record made.

Signs that a customer is using fake, invalid, or fraudulent forms of identification• Client produces seemingly false identification or identification that appears to be counterfeited,

altered or inaccurate.• Client only submits copies of personal identification documents.• A customer who is reluctant to provide information needed for a reporting or record-keeping

requirement, whether required by law or by company policy.• An identification document’s description of the individual does not match the customer’s appearance

(e.g. different age, height, eye color, sex).• An expired identification document.• An individual customer without a local address who appears to reside locally because he or she is a

repeat customer.

Signs that a customer is requesting or making a transaction for the purposes of facilitating illegal activities• Client starts conducting frequent cash transactions in large amounts when this has not been a normal

activity for the client in the past.• Client frequently exchanges small bills for large ones.• Client pay with musty or extremely dirty bills.• Client makes cash transactions of consistently rounded-off large amounts (e.g., $9,900,• $8,500, etc.).• Client consistently makes cash transactions that are just under the reporting threshold amount in an

apparent attempt to avoid the reporting threshold.• A customer who receives payment of multiple money transfers.• By the same send customer, each transfer in an amount just under $3,000 (or other relevant

threshold).

• By multiple send customers initiated at one MSB location within minutes of each other, each transfer in an amount just under $3,000 (or other relevant threshold).

• An individual customer conducts MSB transactions in large amounts inconsistent with the income generated by the individual’s stated occupation.

• A customer sends or receives money transfers to/from persons in other countries without an apparent reason or gives a reason inconsistent with the customer’s nationality or activity.

Signs that a customer knows about your MSB’s reporting and record-keeping requirements• Client attempts to convince Choice Money Transfer Inc.’s employee and/or agent not to complete any

documentation required for the transaction.• Client shows uncommon curiosity about internal systems, controls and policies.• Client has unusual knowledge of the law in relation to suspicious transaction reporting.• Client seems very conversant with money laundering or terrorist activity financing issues.• Client is quick to volunteer that funds are clean or not being laundered.

Employee/Agent behavior to look out for• An employee and/or agent whose lifestyle cannot be supported by his/her salary, which may indicate

receipt of tips or bribes.• An employee who is reluctant to take a vacation, which may indicate he/she has agreed, or is being

forced, to provide services to one or more in violation of law or company policy.• An employee who is associated with unusually large numbers of transactions or transactions in

unusually large amounts, which may indicate he/she has agreed, or is being forced, to provide services to one or more customers in violation of law or company policy.

By the same token, other situations not mentioned here might be suspicious if they are inconsistent with the normal activity of a particular customer or employee.

CHOICE MONEY TRANSFER – KYC FOR PROCESS TRANSACTIONS

• CC$1,000.00 and up including fee in any single day- Need valid acceptable ID information, DOB, Exp. date.

• C$3,000.00 and up in any single day- Need clear valid acceptable copy of ID, Exp. date, country of issue, Day of birth, occupation, reason for remittance. In this case, Compliance form need to be filled up with detail job information

• C$3,000.00 and up in last 30 days- Need clear valid acceptable copy of ID, Exp. date, country of issue, Day of birth, occupation, reason for remittance. In this case, Compliance form need to be filled up with detail job information

• C$5,000.00 and up in any single day - Need clear valid acceptable copy of ID, Exp. date, country of issue, Day of birth, occupation, reason for remittance. In this case-Compliance form need to be filled up with detail job information and source of funds have to be sent to Choice Money Transfer

• C$8,000.00 and up in last 60 days- Need clear valid acceptable copy of ID, Exp. date, country of issue, Day of birth, occupation, reason for remittance. In this case-Compliance form need to be filled up with detail job information and source of funds have to be sent to Choice Money Transfer

• C$10,000.00 and up in 24 hours- Need clear valid acceptable copy of ID, Exp. date, country of issue, Day of birth, occupation, reason for remittance. In this case-Compliance form need to be filled up with detail job information and source of funds have to be sent to Choice Money Transfer. Need to file EFT/LCTR to FINTRAC

• C$20,000.00 and up in 6 months - Need clear valid acceptable copy of ID, Exp. date, country of issue, Day of birth, occupation, reason for remittance. In this case-Compliance form need to be filled up with detail job information and source of funds have to be sent to Choice Money Transfer

• C$40,000.00 and up in 12 months - Need clear valid acceptable copy of ID, Exp. date, country of issue, Day of birth, occupation, reason for remittance. In this case-Compliance form need to be filled up with detail job information and source of funds have to be sent to Choice Money Transfer

If you know or suspect that your client is sending or receiving a transaction on behalf of someone else, then you must also obtain the similar information on that other person.

Acceptable IDID such as a Drivers License, Passport, Permanent Residence card or other similar documents that contain a photo issued by the Province or Territory. Government issued Photo Identification document(Health insurance cards with photo issued by Ontario, Manitoba and Prince Edward Island, should never be accepted as ID as the law prohibits it.)

Anti-Terrorist / Sanctions LegislationA terrorist or terrorist group includes anyone that has as one of their purposes or activities, facilitated or carried out any terrorist activity. PCMLTFA regulations prohibit any person from providing or collecting any funds or dealing with a “Listed Person”. A consolidated list is published and maintained by the Office of the Superintendent of Financial Institutions (OSFI).

Under the Criminal Code and Suppression of Terrorism Regulations, every person is required to disclose to the Royal Canadian Mounted Police (RCMP) and the Canadian Security Intelligence Service (CSIS) the existence of property in their possession that they know is owned or controlled by or on behalf of a terrorist group plus the information about a transaction or proposed transaction. Whenever a disclosure is made under the Criminal Code, a report must also be filed with FINTRAC. The form to be used for reporting to FINTRAC is a Terrorist Group Property Report.

Choice money Transfer (Canada) Ltd Compliance Officers may request additional documents such as those identify individuals on transactions that are below any threshold due to a possible match in the OSFI LIST.

Civil and Criminal Penalties

The penalties for violating the PCMLTFA, the Criminal Code, the United Nations Act, or any of the regulations made under such statutes include fines and possible prison terms.

Under certain circumstances, businesses can be held criminally liable for the acts of their Employees; it is important for your employees to be trained in these matters and for your business to have a system in place to ensure employees’ compliance with the laws andregulations. If you or your employees do not comply, you may be subject to large fines and/or imprisonment.

Directors or officers of an entity that have committed an offence could also be subject topenalties for the entity’s non-compliance. Choice Money Transfer may immediately cancel the contract of any agent who knowingly or negligently fails to comply with the laws and regulations.

Fraud prevention

Agents are financially responsible for any loss to their business due to fraud. Your help is crucial in stopping this activity. To protect yourself from fraud, please to follow these steps:

• Protect your pin Change the pin every time an employee leaves Change the pin periodically• Never state your pin or agent number in front of a customer Do not post your pin in the store or in customer view• Never provide your pin unless you initiate the call to the provider Do not share any confidential information with anyone Choice will never ask you for your pin number• Never send a ‘test’ or ‘training’ transaction Choice will never ask you to send a test transaction• Never send a transaction without cash in hand Do not process a transaction without the customer in your location• Balance your account to detect losses immediately• Share this information with your employees• Remove or restrict any call forwarding features from your business telephone• Should you receive a call from someone representing the providers asking for pin or other

confidential information, hang up, and call their customer service line• If you believe that your pin number has been compromised call Choice Tech Support• If you have any questions, contact the Fraud Prevention Department at 212-268-9290

Examples of agent fraud related activity:• A suspect calls the license using phone masking technology and attempts to send transactions using a

store’s agent number and pin.• One of your employees processes a send transaction, but the customer does not pay for the

transaction.• A suspect calls your store representing himself as one of your money transfer provider’s employee

and asks your employee to process a test transaction.

Examples of consumer fraud related activity:• A customer is told that he has won the lottery, but he must pay taxes or processing fees before he

can receive his winnings.• A customer purchases an item on an on-line auction and sends a wire transfer to pay for her

purchase, but never receives the product.• A customer sells something on an on-line auction and receives a check for an amount much greater

than the selling price. The “buyer” asks the seller to deposit the check and send a wire transfer.• A customer receives an email or letter asking for help to pay fees or taxes to recover money that was

confiscated by a foreign government.