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MERTO FOREX CANADA LIMITED

THE PROCEEDS OF CRIME (MONEY LAUNDERING)AND TERRORIST FINANCING ACT

ANTI MONEY LAUNDERING PROCEDURES

and

COMPLIANCE MANUAL(Updated as of November 1st, 2008)

FOR

MONEY SERVICE BUSINESS OFMETRO FOREX CANADA LIMITED

ANDITS AGENTS

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Preface

This edition of Metro Forex Canada Limited (hereinafter called as “MFCL”) legal and regulatory policy manual for Employees and Agents (“the manual”) is intended to be a practical guide to special requirements of Financial Transactions Reports Analysis Centre of Canada (FINTRAC) in the money service business (MSB) with special emphasis on “The Proceeds of Crime (Money Laundering) and Terrorist Financing Act.

These laws impose specific obligations on all of us, in our daily lives as consumers and business people and especially on financial institutions, such as money transmitters, foreign currency dealers and check cashiers. These obligations are related to the preventions and avoidance of facilitating money laundering, in any way, through our systems. Compliance with the law and prevention of money laundering must involve and guide our practices in every phase of the money transfer business.

The information is presented in brief simple words, to make for speedy reading, wherever possible original government forms and publication have been quoted directly. Although the policies and procedures in the Manual are primarily based on FINTRAC law. MFCL will apply them to all transactions that are processed through its facilities, wherever those transactions may originate.

Introduction

Responsibility for Compliance

All statements of policy and interpretation of law contained in the Manual, when referring to MFCL Personnel shall apply to MFCL agents and their employees, as well as to direct employees of MFCL. It is also important to understand that concepts discussed in the Manual apply equally to MFCL and its agents and to MFCL Personnel as individuals. Although we may coordinate our efforts, no one of us may be relieved of our discrete liability in this area, solely by relying on the other. The following is an excerpt from the instruction from FINTRAC:

“The following persons or entities must report suspicious and certain other transactions to the Financial Transactions an Reports Analysis Centre of Canada (FINTRAC)

o Financial entities (such as banks, credit unions, cassias popularise, trust an Loan companies and agents of the Crown that accept deposit liabilities);

o Life insurance companies, brokers and agents;o Securities dealers, including portfolio managers and investment counsellors;o Persons engaged in the business of foreign exchange dealing;o Money services businesses (including Canada Post for money orders)

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o Accountants (when carrying out certain activities on behalf of their clients)o Real estate brokers to sales representatives (when carrying out certain

activities on behalf of their clients);o Certain casinos; ando Employees of such persons or entities

For example, many people rely on international forwarders and common carriers to file the required reports; you are still responsible for the omission, since it was your shipment.

The personal Risk to all Money Transmitters and their agents:

Penalties:

The following excerpt from the FAQ section of FINTRAC website:

The penalties for non-compliance include significant fines and jail terms. The penalties are outlined in Part 5 of the Act. Failure to comply can lead to criminal charges against the persons and entities subject to the Act.

The following are some of the elements of the penalties:

o Failure to report suspicious transaction: conviction could lead to 5 years imprisonment and/or a fine of up to $2,000,000.

o Failure to report large cash transaction: conviction could lead to a fine up to $500,000 for first offence and $1,000,000 for subsequent offences.

o Failure to retain records: conviction could lead to 5 years imprisonment and/or a fine of up to $500,000.

The objective of the Canadian legislation called the Proceeds of Crime (Money Laundering) and Terrorist Financing Act is to help detect and deter money laundering and the financing of terrorist activities. It is also to facilitate investigations and prosecutions of money laundering and terrorist activity financing offences. This includes implementation of reporting and other requirements for financial service providers and those that engage in businesses, professions or activities susceptible to being used for money laundering or terrorist financing. The Act also established the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) as the agency responsible for the collection, analysis and disclosure of information to assist in the detection, prevention and deterrence of money laundering and terrorist financing in Canada and abroad.

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This guideline has been prepared by FINTRAC to provide background information about money laundering and terrorist financing, including their international nature. It also provides an outline of the Canadian legislative requirements for a compliance regime, record keeping, client identification and sending reports to FINTRAC. In addition, it offers an overview of FINTRACs mandate and responsibilities.

This guideline uses plain language to explain common reporting situations under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act as well as the related Regulations. It is provided as general information only. It is not legal advice and is not intended to replace the Act and Regulations. For more information about money laundering, terrorist financing, or other reporting requirements under the Act and Regulations, see the guidelines in this series:

Guideline 1 : Backgrounder explains money laundering, terrorist financing, and their international nature. It also provides an outline of the legislative requirements as well as an overview of FINTRAC's mandate and responsibilities.

Guideline 2 : Suspicious Transactions explains how to report a suspicious transaction. It also provides guidance on how to identify a suspicious transaction, including general and industry-specific indicators that may help when conducting or evaluating transactions.

Guideline 3 : Submitting Suspicious Transaction Reports to FINTRAC explains when and how to submit suspicious transaction reports. There are two different versions of Guideline 3, by reporting method.

Guideline 4: Implementation of a Compliance Regime explains the requirement for reporting persons and entities to implement a regime to ensure compliance with their obligations under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act and associated Regulations.

Guideline 5: Submitting Terrorist Property Reports to FINTRAC explains when and how to submit terrorist property reports.

Guideline 6 : Record Keeping and Client Identification explains the requirement for reporting persons and entities to identify their clients and keep records. There are eight different versions of Guideline 6, by sector.

Guideline 7 : Submitting Large Cash Transaction Reports to FINTRAC explains when and how to submit large cash transaction reports. There are two different versions of Guideline 7, by reporting method.

Guideline 8 : Submitting Electronic Funds Transfer Reports to FINTRAC explains when and how to submit EFT reports.

Guideline 9 : Submitting Alternative to Large Cash Transaction Reports to FINTRAC explains when and how financial entities can choose the alternative to large cash transaction reports. This is only applicable to financial entities.

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Money Laundering

What is Money Laundering

The United Nations defines money laundering as any act or attempted act to disguise the source of money or assets derived from criminal activity. Essentially, money laundering is the process whereby dirty money-produced through criminal activity- is transformed into clean money, the criminal origin of which is difficult to trace. There are three recognized stages in the money laundering process.

Placement involves placing the proceeds of crime in the financial system.

Layering involves converting the proceeds of crime into another form and creating complex layers of financial transactions to disguise the audit trail and the source and ownership of funds. This stage may involve transactions such as the buying and selling of stocks, commodities or property.

Integration involves placing the laundered proceeds back in the economy to create the perception of legitimacy.

The money laundering process is continuous, with new dirty money constantly being introduced into the financial system.

Under Canadian law, a money laundering offence involves various acts committed with the intention to conceal or convert property or the proceeds of property (e.g. money) knowing or believing that these were derived from the commission of a designated offence. In this context, a designated offence means most serious offences under the Criminal Code or any other federal Act. It includes those relating to illegal drug trafficking, bribery, fraud, forgery, murder, robbery, counterfeit money, stock manipulation, etc. The few exceptions are for offences such as those related to tax evasion or breach of copyright, and some others that involve administrative and monetary penalty structure.

A money laundering offence may also extend to property or proceeds derived from illegal activities that took place outside Canada.

Methods of Money Laundering

There are as many methods to launder money as the imagination allows, and the schemes being used are becoming increasingly sophisticated and complicated as technology advances. The following are some examples of common money laundering methods.

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Nominees

This is one of the most common methods of laundering and hiding assets. A launderer uses family members, friends or associates who are trusted within the community, and who will not attract attention, to conduct transactions on their behalf. The use of nominees facilitates the concealment of the source and ownership of the funds involved.

Structuring or Surfing

Many inconspicuous individuals deposit cash or buy bank drafts at various institutions, or one individual carries out transactions for amounts less than the amount that must be reported to the government, and the cash is subsequently transferred to a central account. These individuals, commonly referred to as smurfs, normally do not attract attention as they deal in funds that are below reporting thresholds and they appear to be conducting ordinary transactions.

Asset purchases with bulk cash

Individuals purchase big-ticket items such as cars, boats and real estate. In many cases, launderers use the assets but distance themselves from them by having them registered in a friends or relatives name. The assets may also be resold to further launder the proceeds.

Exchange transactions

Individuals often use proceeds of crime to buy foreign currency that can then be transferred to offshore bank accounts anywhere in the world.

Currency smuggling

Funds are moved across borders to disguise their source and ownership, and to avoid being exposed to the law and systems that record money entering into the financial system. Funds are smuggled in various ways (such as by mail, courier and body-packing) often to countries with strict bank secrecy laws.

Gambling in casinos

Individuals bring cash to a casino and buy gambling chips. After gaming and placing just a few bets, the gambler redeems the remainder of the chips and requests a casino cheque.

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Black-market peso exchange

An underground network of currency brokers with offices in North America, the Caribbean and South America allows drug traffickers to exchange pesos for U.S. dollars. The dollars stay in the United States and are bought by South American (mainly Colombian) companies, which use them to buy American goods for sale back home.

Importance of Combating Money Laundering

The vast majority of criminals would not be in the business of crime if it were not for the tremendous profits to be made. There is a direct relationship between the profitability of most types of crime and their prevalence. A major objective of the battle against crime in Canada and elsewhere is, therefore, to deprive criminals of the profits from their efforts. Only by effectively laundering illegal assets can criminals use them and thereby benefit from their crimes.

Terrorist Financing

What is Terrorist Financing?

Terrorist financing provides funds for terrorist activity. Terrorist activity has as its main objective to intimidate a population or compel a government to do something. This is done by intentionally killing, seriously harming or endangering a person, causing substantial property damage that is likely to seriously harm people or by seriously interfering with or disrupting essential services, facilities or systems.

Methods of Terrorist Financing

There are two primary sources of financing for terrorist activities. The first involves getting financial support from countries, organizations or individuals. The other involves revenue-generating activities. These are explained in further detail below.

Financial Support

Terrorism could be sponsored by a country or government, although this is believed to have declined in recent years. State support may be replaced by support from other sources, such as individuals with sufficient financial means.

Revenue-Generating Activities

The revenue-generating activities of terrorist groups may include criminal acts, and therefore may appear similar to other criminal organizations. Kidnapping and extortion can serve a dual purpose of providing needed financial resources while furthering the main terrorist objective of intimidating the target population. In addition, terrorist groups may use smuggling, fraud, theft, robbery, and narcotics trafficking to generate funds.

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Laundering of Terrorist-Related Funds

As explained above, the methods used by terrorist groups to generate funds from illegal sources are often very similar to those used by traditional criminal organizations. Like criminal organizations, they have to find ways to launder these illicit funds to be able to use them without drawing the attention of the authorities.

For this reason, transactions related to terrorist financing may look a lot like those related to money laundering. Therefore, strong, comprehensive anti-money laundering regimes are key to also tracking terrorists financial activities.

Importance of Combating Money Laundering

Acts of Money Laundering and terrorism pose a significant threat to the safety and security of people all around the world. Canada continues to work with other nations to confront terrorism and bring those who support, plan and carry out acts of terrorism to justice.

Business relationships with terrorist groups could expose financial institutions or financial intermediaries to significant reputation and operational risk, as well as legal repercussions. The risk is even more serious if the terrorist group is subsequently shown to have benefited from the lack of effective monitoring or wilful blindness of a particular institution or intermediary that enabled them to carry out terrorist activities.

To be successful, the fight against terrorism has to be conducted on many fronts. Canada is committed to working with its international partners in confronting and stamping out terrorism around the world.

The Government of Canada’s Anti-Terrorism Plan has four objectives:

Stop terrorists from getting into Canada and protect Canadians from terrorist acts;

Bring forward tools to identify, prosecute, convict and punish terrorists; Prevent the Canada-U.S. border from being held hostage by terrorists and

impacting upon the Canadian economy Work with the international community to bring terrorists to justice and

address the root causes of such hatred.

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Canada’s Legislation to Combat Money Laundering and Terrorism Financing

Anti-Money Laundering

Money laundering became an offence in Canada several years ago, under amendments to the Criminal Code. These amendments also gave law enforcement the ability to search, seize and restrain property believed to be proceeds of crime.

The criminalization of the laundering of proceeds of crime (money laundering) led to many other legislative changes, such as amendments to the Customs Act and the Excise Act, among others. New legislation was introduced as part of these measures to create an anti-money laundering regime.

To assist in the detection and deterrence of money laundering, the first components of Canadas anti-money laundering regime consisted of certain record keeping and client identification requirements. These requirements applied to financial entities, such as banks, credit unions, caisses populaires, and trust and loan companies.

They also applied to life insurance companies, securities dealers, casinos, foreign exchange dealers, and any person engaged in a business, profession or activity that received cash for payment or transfer to a third party. Although there were no reporting requirements at that time, these entities could provide information voluntarily about any suspicious transactions to law enforcement.

These measures were subsequently enhanced and additional components were introduced. These included reporting requirements, the first of which became effective in November 2001 for suspicious transactions. They also included other requirements, such as record keeping and client identification, that came into effect in 2002. Other reporting obligations are being phased-in over the course of 2002 and 2003.

Anti-Terrorism

The Government of Canada has taken steps to combat terrorist activities at home and abroad. These steps include signing and ratifying United Nations (UN) Conventions, such as the International Convention for the Suppression of the Financing of Terrorism, and implementing related UN resolutions through Regulations. They also include introducing tough new anti-terrorism measures in legislation called the Anti-Terrorism Act.

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Anti-Terrorism Act

Canada Anti-Terrorism Act (ATA) created measures to deter, disable, identify, prosecute, convict and punish terrorist groups. It provides new investigative tools for law enforcement and national security agencies. It also ensures that Canadian values of respect and fairness are preserved and the root causes of hatred are addressed through stronger laws against hate crimes and propaganda. The package also includes rigorous safeguards to ensure that the fundamental rights and freedoms of Canadians are upheld.

The ATA includes significant additions to the Criminal Code to include offences relating to terrorist activities and the financing of terrorism. These changes make it a crime to do any of the following:

Knowingly collect or provide funds, either directly or indirectly, to carry out terrorist activities;

Knowingly participate in, contribute to or facilitate the activities of a terrorist group;

Instruct anyone to carry out a terrorist activity on behalf of a terrorist group; or knowingly harbour or conceal a terrorist.

These Criminal Code changes also include a requirement similar to the one described under the heading United Nations Suppression of Terrorism Regulations above. These changes to the Criminal Code require anyone in Canada, as well as Canadians outside Canada, to disclose to the RCMP and CSIS the existence of any property in their possession or control that they know is owned or controlled by or on behalf of a terrorist group. This includes information about any transaction or proposed transaction relating to that property. Information is to be provided to them, without delay, as follows:

RCMP, Financial Intelligence Branch unclassified fax: (613) 993-9474 CSIS Security Screening Branch, Project Leader Government Operations,

unclassified fax: (613) 842-1902

A terrorist group includes anyone that has as one of their purposes or activities facilitating or carrying out any terrorist activity. This can be a person, a group, a trust, a partnership or a fund. It can also be an unincorporated association or organization. A list of terrorist groups is published in the Regulations Establishing a List of Entities made under the Criminal Code. More information about this is available from the following Web sites:

Many other legislative changes were included in the ATA. Among these are measures to revoke or deny an organization charitable status if it is believed to support terrorist groups.

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Canada’s Legislation: The Proceeds of Crime (Money Laundering) and Terrorist Financing Act

Objectives of the Act

The Proceeds of Crime (Money Laundering) and Terrorist Financing Act has three key objectives:

To implement specific measures to detect and deter money laundering and the financing of terrorist activities and to facilitate investigations and prosecution of the related offences;

To respond to the threat posed by organized crime by providing law enforcement officials with the information they need to deprive criminals of the proceeds of their criminal activities, while protecting individual privacy.

To help fulfill Canada’s international commitments to fight multinational crime.

The specific measures were included they are the following:

Record keeping and reporting

Reporting persons and entities to implement a compliance regime, keep certain records and ascertain client identification. They also have to report suspicious transactions to FINTRAC. In addition, coming into effect over the course of 2002 and 2003, they will also have to report certain other financial transactions to FINTRAC

Cross-border reporting

The import or export of currency or monetary instruments of or over $10,000 will have to be declared to the Canada Customs and Revenue Agency. This came into effect in early 2003.

Who has to Report to FINTRAC?

The following persons and entities will have to report suspicious and certain other transactions to FINTRAC:

financial entities (such as banks, credit unions, caisses populaires, trust and loan companies and agents of the Crown that accept deposit liabilities);

life insurance companies, brokers and agents; securities dealers, portfolio managers and investment counselors persons engaged in the business of foreign exchange dealing; Money services businesses (including alternative remittance systems,

such as Hawala, Hundi, Chitti, etc.)

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Canada Post for money orders; accountants and accounting firms (when carrying out certain activities on

behalf of their clients); real estate brokers or sales representatives (when carrying out certain

activities on behalf of their clients); and casinos (including those authorized to do business in Canada, with a slot

machine or roulette or card games, but excluding certain temporary charity casinos).

What has to be reported to FINTRAC?

The first of the reporting requirements described below became effective in 2001. The rest of the reporting requirements will be phased in throughout 2002 and 2003. Other guidelines will be updated and new guidelines will be created to explain these reporting requirements in more detail.

Suspicious Transactions

Since November 8, 2001, reporting persons and entities (see Section 5.2 above) have to report transactions if there are reasonable grounds to suspect that the transactions are related to the commission of a money laundering offence. Since June 12, 2002, they also have to report transactions if there are reasonable grounds to suspect that the transactions are related to the commission of a terrorist activity financing offence.

This does not prevent persons and entities from reporting suspicions of money laundering or terrorist financing directly to law enforcement, and FINTRAC encourages financial institutions and financial intermediaries to maintain established relationships with law enforcement.

Other Financial Transactions

Depending on the type of activities they are involved in, these same reporting persons and entities will have to report the following financial transactions:

as of June 12, 2002, the sending or receiving of international electronic funds transfers of $10,000 or more through the SWIFT network;

as of January 31, 2003, large cash transactions involving amounts of $10,000 or more; and

as of March 31, 2003, other international electronic funds transfers of $10,000 or more (through non-SWIFT networks).

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Terrorist Property

Since June 12, 2002, reporting persons and entities also have to report to FINTRAC if they have property in their possession or control that they know is owned or controlled by or on behalf of a terrorist group. This information also has to be disclosed to the RCMP and CSIS.

Other Information about Reporting to FINTRAC

Reporting persons and entities are protected from criminal and civil legal proceedings when they submit suspicious transaction or other financial transaction reports in good faith to FINTRAC, as required. The same applies to terrorist property reports.

In addition to the reporting requirements, reporting persons and entities will also be required to keep certain records after conducting specified transactions. This will also include specific requirements about identifying individuals with whom a reporting person or entity conducts a transaction.

Failure to comply with reporting and record keeping requirements can lead to criminal charges against a reporting person or entity. There are some penalties that could apply in cases of failure to comply. More information about these can be found in Guideline 4: Implementation of a Compliance Regime.

Suspicious Transaction Reporting (STR)

Who must report Suspicious Transactions?

If you are a reporting person or entity mentioned above, you must report suspicious transactions to FINTRAC.

If you are a money services business, you are only subject to this when you engage in the following activities:

If you are a money services business, you are subject to this when you remit or transit funds by any means through any persons, entity or electronic funds

transfer network. You are also subject to this when you issue or redeem money orders, travellers cheques or other similar negotiable instruments, except when you redeem cheques payable to a named person or entity.

Money services businesses include alternative money remittance systems, such as Hawala, Hundi, Chitti, etc. Money services businesses also include financial entities when they remit or transmit funds, issue or redeem money orders, travellers cheques or other similar negotiable Instruments for anyone who is not a client of theirs.

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What are Suspicious transactions?

Suspicious transactions are financial transactions that there are reasonable grounds to suspect are related to the commission of a money laundering offence. Since June 12, 2002, they also have to report transactions if there are reasonable grounds to suspect that the transactions are related to the commission of a terrorist activity financing offence.

Reasonable grounds to suspect is determined by what is reasonable in your circumstances, including normal business practices and system within your industry. While the act and regulations do not specifically require you to implement or use an automated system for detecting suspicious transactions, you may decide that such a system would be beneficial to your business.

More information about

Money laundering offence and terrorist activity financing offences is provided below.

Money Laundering Offence

Under Canadian law, a money laundering offence involves various acts committed with the intention to conceal or convert property (e.g. Money) knowing or believing that these were derived form the commission of a designated offence. In this context, a designated offence means most serious offences under the Criminal Code or any other federal Act. It includes those relating to illegal drug trafficking, bribery, fraud, forgery murder, robbery, murder, counterfeit money, stock manipulation, etc. The few exceptions are for offences such as those related to tax evasion or breach of copyright, and some others that involve administrative and monetary penalty structure.

A money laundering offence may also extend to property of proceeds derived from illegal activities that took place outside Canada.

Terrorist Activity Financing Offence

Under Canadian law, terrorist activity financing offences make it a crime to knowingly collect of provide property, such as funds, either directly of indirectly, to carry out terrorist crimes. This includes inviting someone else to provide property for this purpose. It also includes the use or possession of property or facilitate or carry out terrorist activities.

There are other offences associated with terrorist activities that are not specifically related to financing, such as participating in or facilitating terrorist activities, or instructing and harbouring terrorists. Only suspicion that a transaction to FINTRAC as related to terrorist activity financing.

Completed Transactions

The requirement for you to report a suspicious transaction applies only when the financial transaction has occurred. For example, If you process a deposit from a client, a financial transactions has occurred even if the final sale does not go through. In this example, the refund of the deposit would also be a financial

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transaction. If you decide or the client decides not to complete the transaction there is no obligation to report it as a suspicious transaction to FINTRAC.

You could choose to report an uncompleted transaction and your suspicion about it to law enforcement. You could also choose to provide this information voluntarily to FINTRAC. To find out how to provide information voluntarily to FINTRAC about suspicions of money laundering or of the financing of terrorist activities, refer to FINTRACs website at http:www.fintrac.qc.ca/reporting-declaration/vol/1 e. asp

Transactions related to Terrorist Property

If you know, rather than suspect, that a transaction is related to property owned or controlled by or on behalf of a terrorist or a terrorist group, you should not complete the transaction. This is because terrorist property must be frozen under the United Nations Suppression of Terrorism Regulations as well as the criminal code.

This could occur, for example, if your concern about the transaction is because you know that the property in question is owned or controlled by or on behalf of a listed person or listed entity (that is, someone believed to involved in terrorist activity).

How to make a suspicious transaction Report

Once you have detected a fact that leads you to have reasonable grounds to suspect that a transaction is related to the commission of a money laundering offence or to the commission of a terrorist activity financing offence, a suspicious transaction report must be sent to FINTRAC within 30 days.

Making a suspicious transaction report to FINTRAC does not prevent you from reporting suspicions of money laundering or terrorist financing directly to law enforcement. FINTRAC encourages you to maintain established relationships with law enforcement.

Identifying suspicious transactions

How to identify a suspicious Transaction

Transaction may give rise to reasonable grounds to suspect that they are related to money laundering or terrorist activity financing regardless of the sum of money involved. There is no monetary threshold for making a report on a suspicious transaction. A suspicious transaction may involve several factors that may on their own seem insignificant, but together may raise suspicion that the transaction is related to the commission of a money laundering offence, a terrorist activity financing offence, or both.

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As a general guide, a transaction may be connected to money laundering or terrorist activity financing when you think that it (or a group of transactions) raises questions or gives rose to discomfort, apprehension or mistrust.

The context in which the transaction occurs is a significant factor in assessing suspicion. This will vary from business to business, and from one client to another. As a reporting person or entity, or an employee of a reporting person or entity, you should evaluate transactions in terms of what seems appropriate and is within normal practices in your particular line of business, and based on our knowledge of your client. The fact that transactions do not appear to be in keeping with normal industry practices may be a relevant factor for determining whether there are reasonable grounds to suspect that the transactions are related to money laundering or terrorist activity financing.

An assessment of suspicion should be based on a reasonable evaluation of relevant factors, including the knowledge of the customers business, financial history, background and behaviour. Remember that behaviour is suspicious, not people. Also, it could be the consideration of many factors not just one factor that will lead you to conclusion that there are reasonable grounds to suspect that a transaction is related to the commission of a money laundering offence, a terrorist activity financing offence, or both. All circumstances surrounding a transaction should be reviewed.

As the reporting person or entity with whom the transaction occurs, you have to assess whether there are reasonable grounds to suspect that a transaction is related to a money laundering offence or a terrorist activity financing offence. The following information concerning indicators is provided to help you with this.

Distinguishing between money laundering and terrorist activity financing suspicion:

It may be difficult for you to distinguish between suspicion of money laundering and suspicion of terrorist activity financing. In fact, it is possible that a transaction could be related to both. For example, funds to be used for terrorist activity could be proceeds of criminal activity as well as from legitimate sources.

It is the information about the transaction and about what led to your suspicion that is important in a suspicious transaction report. Provide as many details as possible in your report about what led to your suspicion including anything that made you suspect hat it might be rated to terrorist financing, money that it is the information about your suspicion that is important, not the distinction between money laundering and terrorist activity offences.

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Suspicious Transaction Reporting Requirements

Suspicious Transaction Reporting Timelines

If you are a reporting person or entity (see section 1 above), you have to send a suspicious transaction report to FINTRAC when there are reasonable grounds to suspect that a transaction is related to the commission of a money laundering offence or a terrorist financing offence.

There is no minimum threshold amount for reporting a suspicious transaction. You have to submit suspicious transaction reports to FINTRAC, containing specific information (see Section4). Once you have determined that there are reasonable grounds to suspect that the transaction is related to the commission of a money laundering or terrorist financing offence, your report, including all required and applicable information, must be sent within 30 calendar days.

This 30-day reporting time limit begins when you or any one of your employees first detects a fact about a transaction that constitutes reasonable grounds to suspect that it is related to the commission of a money laundering or terrorist financing offence. If such a fact is detected at the time of transaction, the reporting timeline begins at the time of the transaction. However, If the fact were detected during a review by corporate security after the transaction took place, the 30-day time limit would begin when corporate security first detected the fact.

Means of Reporting

Electronic Reporting

As a reporting person or entity, you have to submit all reports on suspicious transactions to FINTRAC electronically if you have the technical capabilities to do so. The minimum technical capabilities are as follows:

The same electronic reporting requirements apply to reporting of large cash transactions and electronic funds transfers.

Paper Reporting

If you do not have the technical capabilities to send reports electronically, you must submit reports on paper. See Guideline3B: Submitting Suspicious Transaction Reports to FINTRAC by Paper for more information on submitting paper suspicious transaction reports to FINTRAC.

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Information to be contained in a Suspicious transaction report

Your suspicion about there being a relation to a money laundering or a terrorist financing offence may be a s result of more than one transaction. In this case, include all the transactions that contributed to your suspicion in the same report. See Section 4 (below) for more information about what has to be included in a suspicious transactions report.

Electronic Reporting

Options for Electronic Reporting

As a reporting person or entity, you have to report electronically to FINTRAC if you have the technical capabilities (see Section 2.2 above).

There are three options for electronic reporting:

FINTRACs secure Web site for low volume and low frequency reporting FINTRACs secure Web site with public key infrastructure (PKI) for low volume

but high frequency reporting Batch file transfer for high volume and high frequency reporting.

How to complete Electronic Reports

Acknowledgement of Receipt of an Electronic Report

FINTRAC will send you an acknowledgement message when your suspicious transaction report has been received electronically. This will include the date and time your report was received and a FINTRAC generated identification number. Please keep this information for your records. For all reports submitted via the FINTRAC secure website, please ensure you wait for the FINTAC acknowledgement message, which can be printed from the browser window.

Report Corrections.

If your suspicious transaction report contains incomplete information, FINTRAC may notify you. The notification will indicate the date and tie your report was received, a FINTRAC - generated identification number, along with information on the fields that must be completed or corrected.

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After receiving FINTRAC notification, you should provide the necessary information to FINTRAC within the 30-calendar days reporting deadline. In other words this information should be sent to FINTRAC with 30 calendar days of the time this suspicion was first detected. Your obligation to report will not be fluffed until you send the complete report to FINTRAC.

Who has to implement a Compliance Regime?

Financial Entities

If you are a financial entity, such as a bank, credit union, classes popularize, trust company, a loan company or agent of the Crown that accepts deposit liabilities, you have to implement a compliance regime to comply with your reporting, record keeping and client identification requirements.

When you remit or transmit funds , issue or redeem money order , travelers cheques or other similar negotiable instruments for anyone who does not hold an account , you are considered to be a

money services business . In this case, you have additional record keeping and client identification requirements.

Life insurance Companies, brokers and Independent Agents

Securities Dealers, Portfolio manager and investment counselors

Casinos

Real estate Brokers or Sales representatives

Agent of the Crown that sell OR redeems Money Orders

Foreign Exchange Dealing

If you are a person or entity engaged in the business of foreign exchange dealing , you have to implement a compliance regime to comply with your reporting , record – keeping and client identification requirements.

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If you are an employee of a foreign exchange dealer , it is your employer who is engaged in the business of foreign exchange dealing and therefore responsible for the compliance regime. If you are an agent of (or you authorized to act on behalf of) a person or entity engaged in the business of foreign exchange dealing , that other person or entity is responsible for the compliance regime for the relevant activities.

Money services Businesses .

You are a money services business if you are a person or entity engaged in following business activities.

Remitting or transmitting funds by any means through any person , entity or electronic funds transfer networks ; or

Issuing or redeeming money orders , travelers cheques or other similar negotiable instruments.

This include alternative money remittance systems, such as Hawala , Hundi ,Chitti etc. This also include financial entities when they remit or transmit funds , issue or redeem money orders, travelers cheque or other similar negotiable instruments for anyone who does not hold an account with them.

If you are a money service s business , you have to implement a compliance regime to comply with your reporting, record keeping and client identification requirements when you engage any of the business

activities described above. This does not include redeeming cheque payable to a named person or entity. In the other words, if your are only involving in cashing cheques made out to be a particular person or entity , you are not subject to this requirement.

If you are an employee of a money services business, it is your employer who is engaged in the business and therefore responsible for the compliance regime. If you are an agent of (or you are authorized to act on behalf of another person or entity that is a money services business, that other person or entity is responsible for the compliance regime for the relevant activities that you perform on their behalf.

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Accountants and Accounting Firms

What is Compliance Regime?

The implementation of a compliance regime is good practice for anyone subject to the Act and its Regulations. A well-designed, applied and monitored regime will provide a good foundation for compliance with the legislation. As not all persons and entities operate under the same circumstances, the compliance regime will have to be tailored to fit individual needs. it should reflect the nature, size and complexity of the operations.

Basics of a Compliance Regime

The basics of a Compliance Regime should have the following in place as far as practicable:

a) Appointment of a Compliance Officer or Managerb) Compliance Policies and Procedures c) Review of the Compliance Policies and Proceduresd) Ongoing Compliance Training

Compliance Manager: Mr. Ali Hassan Razvi has been appointed as a Compliance Manager and he will be responsible for the implementation of Compliance regime. Compliance Manager has the authority and resources necessary to discharge his responsibility effectively.

Compliance Polices and Procedures: An effective compliance regime includes policies and procedures and shows commitment to prevent, direct and address non-compliance. The formality of details, specificity of the regime varies according to the complexity of the issues and transactions involved. It will also depend on the risk of exposure to money laundering or terrorist financing.

Review of the Compliance Policies and Procedures: Another component of a comprehensive compliance regime is a review of the compliance policies and procedures, as often as is necessary and to test their effectiveness. This will help evaluate the need to modify existing policies and procedures or to implement new ones.

The review is to be conducted by an Internal or External auditor, if you have one. This review by an internal or external auditor could include interviews, tests and sampling, such as following:

Interview with those handling transactions and with their supervisors to determine their knowledge of the legislative requirements and your policies and procedures.

A review of the criteria and process for identifying and reporting suspicious transactions.

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A sample of large transaction followed by a review of the reporting of such transactions

A sample of International electronic funds transfer (if those are reportable by the reporting person or entity in question) followed by a review of the reporting of such transactions.

A test of the validity and reasonableness of any exceptions to large cash transaction report including the required annual report to FINTRAC(this is applicable only for financial entities who chose the alternative to large cash transaction for certain business clients)

A test of the record-keeping system for compliance with the legislation.

A test of the client identification procedures for compliance with the legislation.

The review process should be well documented and should identify and note weaknesses in the policies and procedures, corrective measure and follow –up actions.

Penalties for Non- Compliance

As stated above, FINTRAC favors a co-operative approach to monitoring and finding co-operative solutions. However, if this is not successful, FINTRAC has the authority to refer non-compliance cases to the appropriate law enforcement agencies.

Failure to comply with the legislative requirements can lead to criminal charges, as described in Section 2. The following are some of the penalties:

Failure to report suspicious transaction or failure to make a

terrorist property report conviction of this could lead to up to five years imprisonment, to a fine if $2,000,000 or both.

Failure to report a large cash transaction or an electronic

funds transfer conviction of this could lead to a fine of $500,000 for a first offence and $1,000,000 for each subsequent offence.

Failure to retain records, conviction of this could lead to up to five years imprisonment, to a fine of $500,000 or both.

Failure to implement a compliance regime conviction of this could lead to a five years imprisonment, to a fine of $500,000 or both.

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Failure to implement a compliance regime conviction of this could lead to up to five years imprisonment, to a fine of $500,000 or both.

Implementation of Compliance Regime .

Money services Business

The following is summary of requirements under Act and regulations for those engaged in the business of remitting or transmitting funds by any means. In addition to remitting or transmitting funds, you might also

be engaged in the business of remitting or transmitting funds by any means. In addition to remitting or transmitting funds, you might also be engaged in the business of foreign exchange dealing. If this is your situation, you need to be aware to your additional client identification and record keeping obligations as a foreign exchange dealer. These summarized in Appendix 1 G.

In general, the compliance policies and procedures should cover the following elements.

ReportingSuspicious transactions

You have to report transactions when there are reasonable grounds to suspect that the transactions are related to the commission of a money Laundering offence or to the commission of a terrorist activity financing office.

Terrorist property

You have to make a report to FINTRAC if you have property in your possession or control that you know is owned or controlled by on behalf of a terrorist or terrorist group. There is no time limit as such, it has to be reported to FINTRAC as soon as possible (ASAP)

Large cash transactions

You have to report large cash transactions involving amounts received of $10,000 or more in cash. More information on reporting large cash transactions can be found in this Manuel .

Electronic funds transfers

You have to make an electronic funds transfer (EFT) report to FINTRAC if you send or receive international EFTs. This applies to the transaction request of a client of instructions for transfer to or from Canada of $10,000 or more through any electronic , magnetic or optical device,

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Telephone instrument or computer. In case of SWIFT message sent through the SWIFT network, only SWIFT MT 100 or MT 103 has to be reported. There are several different types of EFT reports, depending on the whether the transfer is incoming to Canada or outgoing from Canada and depending upon whether you send a SWIFT or non SWIFT EFT.

Record Keeping

All the Records of the Transactions and Accounts have to be properly maintained and should be kept for 6 six years.

Maintain the following records:

Large cash transaction records Client information records Copy of official corporate records (binding provisions) Transaction records Concerning $ 3,000 or more received for

traveler cheques, money orders or other similar instruments Records concerning cashing of money orders of $ 3,000 or

above Records concerning transmission or remittance of $3,000 or

more by any means , through any person , entity or electronic funds transfer network.

However even if the Transaction is less then CAD 3000, basic details have to be obtained from the clients, such as address, Identity Number and the telephone number of the client.

Records of transaction less than $3000 also have to be kept for 6 years

Ascertaining Identity

Take measures to identify any individual with whom you conduct a large cash transaction, identify any individual or entity with which you have an on going business relationship or any individual for whom you issue, redeem or transmit $3,000 or more. More information about these identification measures can be found in Guide line 6: Record keeping and client identification.

Third –Party Determination

Whenever you have to keep a large transaction record, you have to take reasonable measures to determine whether the individual who gives you the cash in acting on behalf of a third party.

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Furthermore, you have to take reasonable measures to determine whether the individual who gives you the cash is acting on the behalf of third party.

If you determine that there is in fact a third party, you have to keep a record with specific information about the third party and the relationship between the third party and the individual who gives the cash.

More information about the requirements concerning third party determination can be found in Guideline 6: Record keeping and client identification.

Large cash Transaction reporting requirements

Throughout this guideline, any references to dollar amounts ($10,000), refer to the amount in Canadian dollars or its equivalent in foreign currency. In this context, cash does not include cheques, money orders or other similar negotiable instruments.

When does a large cash transactions report have to made ?

If you are a reporting person or entity (see section 1 above) , you have to send a large cash transaction report to FINTRAC in the following situations:

You receive an amount of $ 10,000 or more in cash in the course of a single transaction; or

You receive two or more cash accounts of the less than $10,000 that total $10,000 or more. In this case, if you are an individual , you have to make a large cash transactions report if you know the transactions were made with in 24 consecutive hours of each other by or on behalf of the same individual or entity. You have to make a large cash transaction report if your employee or senior officer knows the transactions were made with in 24 hours if your employee or senior officer knows the transaction were made within 24 consecutive hours of each other by on behalf of the same individual or entity.

You have to send large cash transaction reports to FINTRAC within 15 calendar day after the transaction.

If you are a reporting person and an employee of a reporting person or entity, your employer is responsible for meeting the large cash transaction reporting requirement associated to any of your activities as an employee.

Similarly, if you are a reporting person or entity and you are a agent of or you are authorized to act on behalf of a reporting person or entity, it is that reporting person or entity’s responsibility to meet the large cash transaction reporting requirement associated to any of your activities on their behalf. However, if you are a life insurance broker or independent agent, you are responsible for repotting to FINTRAC (unless you are an employee as explained above)

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You do not have to make a large cash transaction report to FINTRAC if the cash is received from a financial entity. In this context , a financial entity means a bank , credit union, calssee popularize , trust and loan company or an agent of the Crown that accepts deposits liabilities.

If you are a reporting person or entity other than a casino, you do not have to make a large cash transaction report to FINTRAC if the cash is received from a public body. In this context, public body means any of the following or their agents:

A provincial or federal department or Crown agency; An incorporated municipal body (Including an in corporate city ,

town , village , metropolitan authority , district , county ,etc) A hospital authority. A hospital authority means an organization

that operates a public hospital and that is designated to be a hospital authority for GST/HST purposes.

Financial entities may choose, in certain specific circumstances, an alternative to making large cash transaction reports for certain client that are corporations.

Cash Transaction in Foreign Currency

If a cash transaction is in foreign currency, you will need to check whether it is the equivalent of 10,000 Canadian dollars or more to determine whether or not it is reportable as al large cash transaction. For this purpose only, use that last noon rate provided by bank of Canada available at the time of the transaction. this calculation is not based on the actual exchange rate used to process the transaction this is only to check whether the $ 10,000 threshold is met for the transaction to be reportable as a large cash transaction.

For example, for a cash transaction in foreign currency, that happened at 9.00 am on Tuesday following a holiday Monday, you should use the Bank of Canada noon rate from previous Friday to determine whether its is a large cash transaction. You can find the noon rate applicable at the time of a transaction on the Bank of Canada If there is no Bank of Canada noon rate published for the currency of the transaction, use the actual exchange rate applied when you processed the transaction to determine whether it is reportable.

Once you have determined that cash transaction in foreign currency is in fact reportable based on the Bank of Canada noon rate, you will have to send a large cash transaction report to FINTRAC. On this report, you will indicate the amounts involved in the transaction in foreign currency, and indicate the appropriate currency code. The large cash transaction report does not require information about any exchange rate applicable to transaction. The exchange rate is only relevant to determine whether or not transaction I a large cash transaction.

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Other requirements associated with large cash Transactions

In addition to reporting requirements explained in this guideline, consider the following relating to a large cash transaction.

Electronic Funds transfer report.

If a large cash transaction results in an electronic funds transfer outgoing (EFT), then MFCL have to make a electronic funds transfer report to FINTRAC about the same transaction in addition to large cash transaction report .

Suspicious transaction report

If anything about a large cash transaction gives MFCL a reasonable ground to suspect that it could be related to a money laundering or a terrorist activity financing offence, then MFCL have to make a suspicious transaction report to FINTRAC . This would be in addition to making the large cash transaction report about the same transaction required.

This suspicious transaction report has very similar fields to those of a large cash transaction report. There are some differences, such as field in the suspicious transaction report for you to explain your suspicion about the transaction. There is also a field in that report for you to describe what action, if any was taken by MFCL as a result of the suspicious transaction. This would include stating that MFCL have made a large cash transaction report for the same transaction (if that is the case)

Transaction related to terrorist property

If MFCL discovers any proposed transaction is related to property owned or controlled by or on behalf of a terrorist or a terrorist group, MFCL will block the transaction and that transaction will not be executed. This is because terrorist property must be frozen under the United Nations Suppression of Terrorism Regulations as well as the Criminal Code, and the same transaction will be reported immediately to FINTRAC as soon as it is discovered terrorist property, and no information will be passed to the client.

Means of Reporting to FINTRACReporting requirements are same as mentioned in the section “ Suspicious Transaction”

Electronic ReportingAs a reporting person or entity, you will have to submit all large cash transaction reports to FINTRACElectronically if you have the technical capabilities to do so.

Paper ReportingIf you do not the technical capabilities to send reports electronically, you must submit reports on paper.

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Electronic Reporting

Options for electronic reporting

As the reporting person or entity, you will have to report large cash transaction electronically to FINTRAC if you have the technical capabilities.

How to Complete Electronic Reports

Reporting via FINTRAC’s report preparation software.

FINTRAC’s report preparation software is a standalone software for you to create, store maintain and submit your electronic reports.

Reporting via the website

FINTRAC’s secure website large cash transactions reporting screens(i.e., web form) , with some completion instruction . Drop-down menus appear wherever a code or specific selection is required.., In addition details concerning formatting of a particular field may appear at the bottom of your screen.

Instruction for Completing a Large Cash Transaction Report

General Instructions

A large cash transaction report can be about multiple transaction of less than $10,000 conducted with in 24 consecutive hours of each other that add up to $ 10,000 or more . Because those individual transaction were under $10,000., the information for some mandatory fields in the report may not be available in your records or from the time of transaction. In this case “reasonable efforts” applies to other mandatory fields.

Instruction s for submitting a New Report

There are seven part of large cash transaction report but some are only be completed if applicable

For instruction about each filed in each part of the report. If you use FINTRAC’s web form, you should also refer to the instruction in Appendix 2 regarding the reporting screens . If you report via batch or The FINTRAC Report preparation software, you should also refer to the appropriate technical documentationFor specific instruction relating to that report mechanism.

MFCL Compliance Policy Statement.

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With respect to compliance with “The Proceeds of Crime (Money Laundering) and terrorist Financing Act”, it is the policy of MFCL:

To establish and implement KNOW YOUR CUSTOMER (“KYC”) programs; to make every appropriate effort to know our customers and to insist that our customers (agents) know their customers. By this we mean that their level and pattern of activity are commensurate with their customer profile. MFCL will not deal with individuals or business that refuses to identify themselves or produce proper documentation for their business.

To be alert to signs in any customer activity, that may be indicative of drug trafficking, terrorism, money laundering or any other criminal activity.

To co-operate with law enforcement authorities, within confines of applicable law, to report suspicious transaction or activity to the proper Government Authorities, according to the guidelines of applicable law. All transaction out of the ordinary will be appropriately questioned and if satisfactory answers are not obtained, the transaction will be refused. No customers are worth Jeopardizing or organization or ourselves.

To comply with “ The Proceeds of Crime ( Money Laundering) and Terrorist Financing Act”; maintaining all required records for at least five (6) years ; to comply with all applicable local and international laws, especially those for relating to the money service business.

Never to give any advice or other assistance to customers regarding how to structure currency transactions, in order to evade any requirements of the Government or of MFCL’s compliance procedures and

MFCL will not do business with money launderers or those involved in any criminal enterprise, but will only conduct business with those individuals/organizations involved in legitimate commercial enterprise.

In order to control the operations MFCL will have a Compliance regime which will be according to FINTRAC. MFCL compliance regime will have a independent Compliance Department to ensure that all the KYC and due diligence measure are in place. This department will be lead by a Compliance Manager and he/she will be directly reporting to directors or senior management, or to the owner or chief operator on a regular basis. He /She will be responsible to maintain Reporting standards according to International Standards and it should comply same time with the local regulatory authorities (FINTRAC).

Responsibility of Compliance Manager

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Following are the responsibility of the Compliance Manager

a) To report following transactions to FINTRAC:Suspicious Transactions (STR)Electronic Fund Outgoing transfer (EFTO)Electronic Fund Incoming transfer (EFTI)Large Cash Transaction (LCTR)

b) To train employees and Agents on Anti-Money Laundering (AML)/Anti-Terrorist (AT).

c) To ensure proper the record keeping within organization.d) To implement and monitor proper KYC and due diligence

measure taken before undertaking the transactions by the employees or by the agent. Due diligence measures such as,

e) To conduct internal audit of the operations of the organization and of Agents transactions on a regular basis.

f) To keep abreast of any developments on FINTRAC and other regulatory authorities. If there is any changes in rules and regulations, it is the duty of the compliance Manager to implement the new changes by organizing seminar or training session to employees or Agents.

Anti-Money Laundering (AML)/Anti-Terrorist (AT) Training program:

MFCL has ongoing training programs for its employees and Agents. The training program consists of the following:

Copy of the compliance questionnaire and important provision of the Anti-Money Laundering Act will be provided to the participants.

Training will be given on reporting system which MFCL and its agents have to follow.

Case studies of suspicious transactions will be explained to the participants and steps to be followed by them.

Case studies on the large cash transaction will be given to the participants.

The time limit for reporting of various types of transaction such as (EFT out/incoming, large cash transaction, and suspicious transaction) to FINTRAC will be explained to the participants

The statutory provisions of record keeping will be explained to the participants.

Training will be provided on completing “KYC and Due diligence procedures” for opening new corporate account or to appoint new agent.

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Training will be provided on “Client Identification” which have to be met at the time of executing any transaction.

The AML and AT training is conducted by the Compliance Manager on

quarterly bases or if new Staff/Agent is appointed or if any changes in the rules and regulations in reporting.

MFCL Accounting and Record Keeping Policies: MFCL will follow accounting standards according to Canadian Generally Accepted Accounting Principals (GAAP). Following are the policies which are documented in this Manual which MFCL will follow:

MFCL will maintain its accounts in accounting software, which is tailored made according to the requirements of MFCL Operations. The operations of MFCL will be on real time and all the accounting entries will be posted simultaneously when the transaction is created.

The accounting software of MFCL has a feature to store the details of the Sender/Receiver and it will allow to create the sender profile where one can enter all the mandatory details of the Sender; at any point of time any transaction details can be accessed for review.

The corporate client’s, Agent’s and other Money Service Business records will be kept separately. Their profile will be created and all the transactions will be monitored on a regular basics.

All accounting vouchers and transactions records will be kept by MFCL for at least 6 (Six) years irrespective of the amounts. In addition to the record keeping, Backup for the daily Operations will be taken and it will stored on CD and kept at a different location.

Accounting Software: The software of MFCL is tailored made according to the business requirements. It is a real time Foreign Exchange Accounting software. It has following features:

Foreign currency Purchase/Sale

Remittance Outgoing/Incoming

Travelers Cheques Purchase/Sale

Accounting entries, Balance Sheet and Profit & loss and MIS reporting.

The Software has a facility to keep Client Identification Records and Blacklisted names according to OFFAQ list. At the time of transaction if any of the Names matches with the OFFAQ then it will block the user to process the transaction and it will ask for more details such as

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Passport number and the date of birth of the sender and the transaction will be pending for a review by the Compliance Manager.

The details of the Blacklisted Names will be taken from the OFFAQ list and it will be monitored by the Compliance Manager; if a new name is added then it will be updated in our Software and a circular will be issued to all the concerned departments and agents.

Client profile can be created for regular clients, Agents, and Money Service Business Companies.

The Accounting software of MFCL is developed on VISUAL BASIC, and the supported with SQL server2000 at back end on Windows platform.

MFCL and Agent Compliance Obligations

a) MFCL is responsible for the training to agents and its employees in regards to compliance with “The Proceeds of Crime” ( Money Laundering) and Terrorist Financing Act” and FINTRAC guidelines and regulations.

b) Agent understands and warrants that agent and its employees (hereinafter collectively referred to as “Agent”) will comply with the following FINTRAC guidelines and MFCL’s policies at all times:

1. Agent will never commit or knowingly facilitate the crime of money laundering

2. Agent will complete MFCL application form and obtain photo ID such as Drivers License or Pass Port or PR card copy from their client and it will be sent to MFCL

or processing. MFCL will process transaction after obtaining all the details such as Sender Name, beneficiary Name , Purpose of transfer irrespective of amount from the agents or other Money service business (MSB)

3. Agents are not responsible for reporting to FINTRAC, since as a principal MFCL will be responsible.

4. Agents will be responsible to obtain the photo ID and correct details of the Clients. MFCL will not execute any payments till they obtain the Photo ID from the agents.

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5. Agents will be responsible for the record keeping for at least 6 years for their transactions, and such records should be available for inspection.

6. MFCL will monitor large transactions of agents in order to detect individuals who may be attempting to structure transactions to avoid FINTRAC’s requirements. Structured than the legal thresholds and conduct transactions for these lesser amounts over the course of few days.

7. MFCL shall complete a Suspicious Transaction Report (STR) and obtain a copy of the customer’s identification OR contact FNTRAC (1-866-346-8722) if there is a reasonable ground to suspect that a transaction is part of a structuring scheme or it could be related to a money laundering or a terrorist activity financing offence.

8. MFCL will send all LCTR form on behalf of their agents to FINTRAC online reporting with in fifteen (15) days of the transaction, and all Suspicious Transaction will Reported to FINTRAC within thirty (30) days.

9. Agent will maintain records of wire transfers advices and Currency exchange receipts for all their transaction with MFCL.

10. Agent will strictly follow MFCL’s Know Your Customer Policy i.e.; a) Obtain as much information as possible about each customer, specially regular customers, in order to detect suspicious transactions, b) Ask Customers about the source of funds used to conduct frequent and/or large currency transactions, specially when Agent considers a transaction suspicious, c)

Report transactions, which agent know result in the laundering of funds.

11. Agent acknowledges receipt of MFCL Compliance training and Compliance manual. Agent will read the MFCL compliance manual completely and all the materials it receives from MFCL concerning compliance with FINTRAC and other money laundering statutes.

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12. Agent will contact MFCL Compliance Department if they have any questions or doubts about proper compliance procedures.

13. Agent will follow all MFCL policies concerning FINTRAC compliance, which MFCL may establish from time to time. Agent shall indemnify and hold harmless MFCL its officers, directors, and shareholders for and against any loss, liability caused directly or indirectly by a failure of Agent to perform its compliance obligations.

14. In respect of the transaction that originates from the agents locations, agent should undertake to indemnify MFCL that all the transactions comply with Anti Money Laundering regulations.

Independent Review on the Compliance Policies & Procedures

MFCL External Auditors will review the Compliance polices and procedures. The external auditors will document any deficiency in the compliance policies and procedures, and will report to the directors the steps to be taken to rectify the deficiency.

MFCL COMPLIANCE AND REPORTING POLICY

The following procedures are required to be followed by Centrum Global (Canada) Ltd and its Authorized Agents under the terms of Agency Agreement with MFCL.

KNOW YOUR CUSTOMERS PROCEDURES

IDENTIFICATION AND RECORD KEEPING REQUIREMENT OF WIRE TRANSFERS.

Background

MFCL Know your customer procedures are based largely on the Proceeds of Crime (Money Laundering) and Terrorist Financing Legislation in Canada, which requires money service business located in Canada. Including money transmitters and their

agents, to collect certain information and maintain records for domestic and international wire transfers of C$3000 and over.

Multiple Transactions

Multiple transactions must be treated as a single transaction if the financial institution has knowledge that

a) They are by or on behalf of any one person or institution

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b) Result in either cash or cash out of the financial institution totaling more than C$10,000 during any one business day.

If a person conducts a currency transaction more than once in a day, and the aggregate total is over C$10,000 and if we are aware of it, it is our obligation to obtain all of the FINTRAC information and report it. If we are not aware that the person has been here before, but in the course of reviewing our receipts, we notice that the aggregate total is over C$ 10,000, we must try to obtain whatever missing

information required for FINTRAC reporting with whatever information we have and mark it as a multiple currency transaction.

Multiple purchases of the same or different types of monetary instruments on the same business day totaling between C$3000 to C$10,000 must be treated as one purchase. If the financial institution has knowledge that the purchases have frequently occurred it may be an indicative of money laundering.

All employees must be on alert for separate transactions in amounts slightly less then C$2600, C$3000 or C$10,000 which is perhaps separately executed by individuals, perhaps with the same surnames and perhaps addresses or by individuals or entities who are known to be affiliated with each other. Upon closer inspection, these transactions may prove to be a single, although disguised, reportable transaction. Please refer these type of questions to your immediate supervisor.

Finally we must try to alert our colleagues and the next time customer visits, either get satisfactory explanation as to this apparent pattern of structuring or cease all future dealings with this customer, and so advise his or her.

MFCL identification Requirement

Whenever the term “Valid Id” is used in these procedures, it means verification of the identity of the person conducting the transactions through reviewing and of the following non expired, original identification documents, issued by a governmental agency and bearing the photograph of the holder.

Driver’s License Passport Birth Certificate Provincial Health Card ( except Ontario, Manitoba & Prince Edward Island

where use or collection of health card information for identification purpose is prohibited by the law)

Other similar record issued by the Provincial, territorial or the Federal government (Citizenship card, PR card)

There is no exemption for elderly or disabled customers.

You must compare the customer’s signature and appearance while he signs the application with the Original ID, and verify that they do match with each other, and that the transaction is done in customer’s correct, complete legal name as per ID, in

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order to continue further with the transaction. We must also record the specific identifying information in the system. In the system, that is the state or country of issuance and the type and number of the official ID.

Passport and Drivers License are the valid ID for Address Prove. However if customer address does not appear on the ID, then MFCL personnel shall ask the client to state his address in writing and sign the statement, and shall ask for some other means of verification. It is often difficult to verify the address of a customer especially of a foreign national because foreign passports, driver’s licenses and identification cards do not generally include address information. Also, in a business that caters to travelers and immigrants many customers can claim not to have a fixed address.

Nevertheless any client that repeatedly uses the services of MFCL must eventually bring evidence of his address as a pre-condition to our servicing future transactions. In such case if the relevant information cannot be provided by the time of next visit, the transaction must be refused.

If the person conducting the transaction is a corporation, the existence of the corporation must be verified by referring to its certificate of corporate status, a record that is required to be filed annually under the applicable provincial

legislation, or other business documents. The agent should record the corporation’s name, registration number, address and name of directors.

Customers Identification Procedures for Corporate or Business Entities:

MFCL shall take reasonable steps to ascertain satisfactory evidence of an Entity name and address, its authority to make the contemplated transfer its objective and source of funds. When establishing a relationship with a customer you obtain sufficient information about the business entity.

As a reference tool a Customer Identification Due Diligence Checklist is attached as The Compliance Officer will obtain certain of the following documents as appropriate under the circumstances.

a. Copy of Trade License whose renewal date should be registered in order to maintain a copy of a valid license in the firm’s files at all times.

b. Name, address of partners /directors/Principals.c. Registered Name of business, registered number and any other trading

names.d. The volume of funds flowing through the account (turn over in the account).e. It is strictly prohibited to deal with individuals or companies with assumed

names and numbers. The firm should always rely on the persons/companies name as per his or her passport or trade license.

f. Certificate/Indemnity from the customer that they are aware and complies with anti money laundering policies, procedures and controls (AML certificate) and they are aware of the source of funds and are fully responsible for the objective of the remittance.

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g. List of Directors/Partners/ Managers and Accountants granting authority to act and move funds on behalf of the company.

h. Original Authorized Signatory list.i. Description of customer’s primary line of business and nature and level of

activity that will be undertaken.j. Reasons for establishing the business with the firm and ORIGIN (source of

funds) and DESTINATION (purpose of funds)k. Destination of funds in case of transfers from the account.

l. Identity of the persons making the transactions in case they were other than the beneficial owners.

The customer’s identification procedures should be reviewed in light of the specific characteristics presented by the customer and in any instance the Compliance Officer may determine to apply enhanced measures .

CLIENT INFORMATION AND IDENTIFICATION REQUIREMENT FOR SENT TRANSACTIONS:

Requirements for sent transactions, MFCL or its agents must post and record the required information in the computer as well as hard copy prior to processing any transaction which include.

Full Name address and telephone number of the sender. Full Name address, bank name and branch, bank account details of

the receiver. Invoice Number of the order. Amount and currency of the transaction ( with information of payment

in full or charges to beneficiary) Date of Birth of the Sender. Valid ID of the sender, including ID type, reference number and place

of issue. (Incase the customer is a Company, then Companies name, address and Trade/Corporation Certificate.)

Execution date and time of the order. Application/Invoice duly signed by the sender. Include payment instructions provided by the sender. Purpose of transfer Source of funds

Transaction is conducted on behalf of the Third Parties

In case MFCL or its agents know that the sender is not concluding the transaction on his or her own behalf, the following information is required for the person on whose behalf the transaction is being conducted.

1. Full name, address and telephone number of the third party.

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2. Photo copy of picture ID such as Drivers License with ID Number and date of birth of the Third Party.

3. Relationship with the actual Sender

Canadian Compliance Form

Prior to processing any sent transactions of C$ 3000 or above to anywhere, a Canadian Compliance form containing required information of the sender, as well as compliance form containing required information on any third party, must be completed and sent to MFCL together with a copy of valid ID of the sender.

Sent Transaction of C$10,000 or over including fees anywhere require additional information

In addition to the above requirements, the following must be obtained and recorded by MFCL or its agents on the compliance form prior to processing a sent transaction of C$10,000 and over.

1. Work telephone, cell phone number of the sender or any third party.2. Principal business or occupation of the sender and any third party.3. Incorporation Number and place of corporation of third party ( if it’s a

Company)4. Relationship between the sender and the third party(If any). 5. Purpose of transfer6. Source of funds

Transaction suspected to be conducted on behalf of third parties:

When MFCL or its agent receive cash of C$10,000 and above in one and multiple transactions from the same sender on the same day, or involving in a goods or services offered, MFCL or its agent should determine whether transactions are conducted on behalf of the third party. If MFCL or its agent is unable to determine that the sender is conducting transaction on behalf of the third party, but has reasonable grounds to suspect that the sender is doing so, then the following should be documented and sent to MFCL compliance department.

1. Whether, according to the sender, the transaction is being conducted on behalf of the third party.

2. Details of the agent’s suspicion that the transaction is conducted on behalf of the third party.

Rules regarding Method of Payment:

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The mode of payment will be Cash or Cheque, the payment should be made at MFCL Counters or to authorized agent.

No third parties Cash or Cheque will be deposited in MFCL bank account directly.

If the payment is made via cheque, the transaction will be executed only after the realization of cheque and after obtaining the confirmation from our Banks

Requirement for Receive Transactions

MFCL or its agents must post and record the required information in the computer as well as hard copy prior to processing any transaction, which include.

a. Full Name address and telephone number of the receiver.b. Full Name address, bank name and branch, bank account details of

the receiver with the valid photo ID such as Drivers License c. Invoice Number of the order. d. Amount and currency of the transaction ( with information of payment

in full or charges to beneficiary)e. Date of Birth of the Sender. f. Valid ID of the sender, including ID type, reference number and place

of issue.(Incase the customer is a Company, then Companies name, address and Trade/Corporation Certificate.)

g. Execution date and time of the order.h. Application/Invoice duly signed by the receiver.

Transaction is conducted on behalf of the Third Parties

In case MFCL or its agents know that the receiver is not concluding the transaction on his or her own behalf, the following information is required for the person on whose behalf the transaction is being conducted.

Full name, address and telephone number of the third party. ID Number and date of birth of the Third Party. Relationship with the actual sender

Authorization from the principal to the third party to collect money on his/her behalf. The Identity of the principal have to be submitted along with the details of the third party

Canadian Compliance Form

Prior to processing any sent transactions of C$ MFCL or above to anywhere, a Canadian Compliance form containing required information of the receiver, as well as compliance form containing required information on any third party, must be completed and sent to MFCL together with a copy of valid ID of the receiver.

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Received Transaction of C$10,000 or over including fees anywhere require additional information

In addition to the above requirements, the following must be obtained and recorded by MFCL or its agents on the compliance form prior to processing a received transaction of C$10,000 and over.

Work telephone, cell phone number of the sender or any third party. Principal business or occupation of the sender and any third party. Incorporation Number and place of corporation of third party ( if it’s a

Company) Relationship between the sender and the third party if it is Third part

transaction.

Transaction suspected to be conducted on behalf of third parties:

When MFCL pays cash of C$10,000 and above in one and multiple transactions from the same sender on the same day, or involving in a goods or services offered, MFCL should determine whether transactions are conducted on behalf of the third party. If MFCL is unable to determine that the sender is conducting transaction on behalf of the third party, but has reasonable grounds to suspect that the sender is doing so, then the following should be documented.

Whether, according to the receiver, the transaction is being conducted on behalf of the third party.

Details of the agent’s suspicion that the transaction is conducted on behalf of the third party.

Sale of Instruments C$MFCL and Greater

The Sale/Purchase of one or more types of instruments totaling to C$3000 or more must be recorded in the log as one purchase. In addition, multiple purchases during one business day totaling to C$ MFCL or more must be treated as one purchase. If an individual, employee, officer or director of the financial institution has knowledge that purchases occurred, then multiple sales must be noted on such log.

The financial institution may use information that it’s maintains in its records system to complete the log for multiple purchases and moreover, may contact the purchaser after the purchase has been completed in order to obtain missing information required by the regulators. If the institution maintains a separate log at the end of the day in order to obtain knowledge of multiple transactions unless it does so as part of its internal procedures or aggregation system.

There is no requirement that the log be in written form, as long as it can be printed whenever required and requested. The log can be maintained on the computer disk, MFCL maintains log by date of purchase regardless of the type of instrument sold.

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Exchange of Currency C$MFCL and Greater

Currency dealers and Exchangers such as MFCL have to record all transactions and all receipts have to be maintained for records. The details of the Identity of the client will be recorded for the transaction less then CAD MFCL.

If it is CAD MFCL and more the Identity copy of the client have to be kept in file for records. The details which have to be recorded are at the time of currency exchange are driving license number or passport number or business number and place of issue.

Additional Record Keeping:

Each dealer or exchanger must retain either originals or copies of each of the following.

a. Statement of Accounts from Banks, including paid checks, charges or other debit entry memoranda, deposit slips and other credit memoranda representing the entries on such statements.

b. Daily work records, including purchase and sales slips or other memoranda needed to identify and reconstruct currency transactions with customers and foreign banks.

c. A record of each exchange of currency involving transactions the name and address of the customer (and passport number unless received by mail or common carrier) date and amount of the transaction and currency name, country and total amount of each foreign currency.

d. Each item, including checks, drafts or transfer of credit of more than C$10,000 remitted or transferred to a person, account or place outside Canada.

e. A system of books and records that will enable a dealer or exchanger to prepare and accurate balance sheet and income statement.

The institutions must retain a copy of both the front and back of each such instrument or document unless no copy is needed because the back is blank or it contains standardized information, a copy of which is kept on the file. Records

required may be those made in the ordinary course of business by the institution. All records must be kept of (6) years and be accessible to FINTRAC or any other regulatory.

KNOW YOUR CUSTOMER (KYC) – Beyond Identification

For any customer that comes to the counter, the following procedures are followed to determine whether the customer is a first time or a repetitive customer.

Ask the customer whether he or she has been here before.

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Check our computer and manual file. The repetitive customer’s documentation is then places in a KYC file. A separate folder is established for each customer and the following steps are taken.

a. Supervisor interviews the customer on his or her next visit to the counter and requests documentary verification of address (especially for out of country customers)

b. We try to determine that the profession of the sender or beneficiary is stating is true. If the person state they have business, we determine that the customer actually is in that business.

Monitoring Activity and Action on Significant Changes.

MFCL will monitor Agents and Corporate accounts on regular bases, like the frequency, type and volume of transactions which is generated from the Agents or regular clients. MFCL will prepare a client profile for the regular corporate clients and Agents, where all their details are centralized in customer profile file along with other relevant date.

a. type of client or agent – Nature of business b. type, volume and purpose of transactions to be verified. c. Clients dealing with our agents. d. Contact persons (owners or officers)

Monitoring Agents Transactions

Agents are monitored for any unusual transaction pattern or any significant variance in the overall movement detected by the Compliance Department and are questioned immediately. If the change is significant and other agents in the same type of business are not experiencing the similar increase in activity and we are not satisfied with the explanation received, then MFCL will terminate the agency agreement and cease all operations with that agent.

The Special Challenges of Foreign Clients, Extra Care with Financial Institutions

Just as we, as transmitter are special clients for the banks with which we maintain our accounts, so must we treat our correspondents and foreign based clients with special care.

Red Flags – Examples of Suspicious Customer Behavior

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1. A customer does not want to go forward with transaction of more than C$10,000 after being informed that a LCTR will be filled, or ties to reduce the amount of the transaction.

2. A customer is concerned about reporting of LCTR and will either ask the employee not to file or how to avoid filing a LCTR. Suspicious Behavior might include asking too many questions before delivering funds.

3. If the customer asks what is the largest amount of funds he can transmit without triggering the reporting threshold, this may soon becomes a suspicious transaction.

4. A customer is reluctant to provide information or identification gives incomplete information or gives information that cannot be readily verified.

5. A customer brings in small denomination bills in exchange for a large denomination bills.

6. A potential new customer attempts to establish a business relationship providing us with no identification, no references and/or sketchy information.

7. A repetitive customer that normally conducts small currency transactions suddenly increases them substantially in either amounts or frequency.

8. A customer routinely purchases monetary instruments with currency in amounts under C$3000.

9. Two customers enter the counter area, go to the different tellers and want to transmit money in amounts under C$MFCL0 to the same beneficiary.

10. The recipient of disposal check in an amount in excess of C$10,000 requests that payment be made in currency in amounts under C$10,000 on two consecutive days.

11. A customer sends or receives wire transfers that are inconsistent with his normal funds transfer practices and there does not appear to be valid business reason for the transfers.

12. A new customer offers substantial amounts of gold for sale at a significant discount from the market price.

13. A customer sends a wire transfer on different days in amount just under C$10,000 with instructions to pay the same payee.

14. A customer attempts to conduct a large cash transaction without valid explanation as to the source of funds.

Procedures for Handling Transactions:

The definition of suspicion is the act if suspecting guilt with little or incomplete supportive evidence. Unusual transactions may or may not truly be suspicious and should routinely be discussed with a supervisor. A decision is then made as to whether or not the transaction is suspicious, if the transaction will be accepted or rejected, and if it is to be reported to MFCL or FINTRAC compliance Officer or to an enforcement agency. To determine this, the supervisor should attempt to question the customer as to among other things, the source of the funds.

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The decision as to either accept or reject transaction must be made by a financial institution based on all the facts and circumstance surrounding each case. If we are satisfied with the information provided and grounds are weak, there is nothing wrong with conducting the transaction.

If we are not satisfied with the information and it appears that the proposed transaction is derived from some type of criminal activity, the transaction should be immediately rejected. To do otherwise would involve ourselves helping the violator.

We should be on the alert for any transaction that is not in the ordinary course of business. If it is an establish customer, we should question any transaction that is not commonly done by them. We should be aware that money laundering is not restricted to cash and can involve wire transfers, bank checks, travelers Cheques, precious metals, cashiers checks, and money orders.

Handling Conversation Safely

If a customer asks to have a private discussion, this may be legitimate desire for security and privacy, or prelude to a suspicious question be so advised. If possible always have a colleague present for such a discussion.

Similarly if a customer asks for a confidential discussion or if he can trust you or anything of the sort, you should quickly advise him that …we are financial institution and as such respect our customer’s privacy but like a bank can never keep a transaction confidential if the law requires that report be made.

Appropriate questions and Willful Blindness

If a customer says anything that you do not fully understand or hear, instead acting on what you think you heard, ask for clarification. Make sure you understand what the customer is saying before you proceed. If a customer asks for something that doesn’t make economic sense, refuse to do until you fully understand why. Your acceptance may be seen as collusion or willful blindness.

If a customer says he is involved with any sort of illegal activity, or that the transfer funds relate to illegal activity in any way, you must stop that transaction at that very moment and let him know that MFCL never has been and never will be,

interested in that kind of business. Collect all the information you can and report the incident to your supervisor of FINTRAC compliance officer.

The most important way to avoid being used in a structuring or other suspicious transaction is to know your customer and to always be on the look out.

Referral to a Central Location – Internal Evaluation of Referrals.

The reporting of suspicious transactions will be done by MFCL & FINTRAC compliance department, under the direction of FINTRAC compliance officer. This

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centralization is important so that such information can be controlled, examined, and the reporting handled by someone with knowledge and experience in these matters. This is especially true in helping the company to determine whether to refuse transaction, terminate a business relationship and/or report the activity to the proper enforcement agency

Appropriate Reporting of Suspicious Transactions to Proper Authorities Structuring or splitting detected by MFCL Personnel, therefore, as well as any and all suspicious transactions, should be reported to either or all of the President, General Manager or FINTRAC compliance officer of MFCL , who in turn may decide to consult with our lawyers, and who may then decide to lie a Suspicious Transaction Report (STR).

No Tipping OffIn general MFCL personnel shall not inform the subject of an STR or an official Government inquiry, of the existence or nature of that inquiry.

Subpoena LogAll suspicious transactions will be documented to the greatest extent possible, even if the transaction was rejected. The decision to accept, reject or stop such transactions may be made by a supervisor alone or, when appropriate, in consultation with (and/or with advice to) either or all of the President, General Manager or FINTRAC compliance officer of MFCL.

MFCL’s FINTRAC compliance department shall, in addition to logging and reporting suspicious activity, shall log all official government Inquiries (the ‘Subpoena log’).

Persona-Non-Grata (PNG) fileAs Improvements in our software capabilities allow, MFCL’s FINTRAC compliance department shall, in addition to OFAC screening, undertake to screen for personae non grate (PNGs): those with whom, for various reasons, we should refuse to conduct business, as well as those who just need to answer a few follow up questions.

Other legal perspectives

Financial Privacy and Safe Harbor

There are number of laws and regulations that seek to protect the privacy rights of consumers, especially with regard to their financial transaction. We do not give out private customer Information to unauthorized persons, except in cooperation with government authorities. As such, we are protected by statue (“Safe Harbor”) form

consumer ‘breach of privacy’ lawsuits; In those cases where we do disclosure such private information to government authorities, pursuant to their request.

FINTRAC REPORTS

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Types of Reports: The following FINTRAC reports have to be prepared by MFCL as described below:

Suspicious Transactions Report (STR).i. General Rule: Effective November 8, 2001, each “Money Services

Business”(MSB) Including money transmitters and their agents, in Canada must file an STR or every financial transaction suspicious of a money laundering offence. Effective June 12, 2002. MSBs in Canada also have to report financial transactions suspicious of terrorist financing offences. If there are reasonable grounds to suspect that a transaction is related to a money laundering or terrorist financing offence, the transaction must be reported. There is no minimum threshold Dollar amount for reporting a suspicious transaction. Agents must not complete any transaction reported on an STR, unless it was completed prior to discovery of the suspicious activity. If the transaction is not complete there is no obligation to report under the Canadian legislation.

ii. Prohibition on disclosure: The legislation prohibits MFCL or its agents from notifying any person that he or she has been reported on a STR, with the intent to prejudice a criminal investigation. There is a criminal penalty of up to two years of imprisonment for making such disclosures.

iii. Protection form liability: The legislation protects MFCL or Its agents and their employees, officers and Directors from liability of the offence of not reporting a suspicious transaction to FINTRAC if that transaction was reported to their superior. This protection is available only when reports are made in good faith.

iv. Filing dead fine: Reports must be filed within 30 (thirty) days of discovery of the suspicious activity.

v. Filling address: The form for STR can be obtained from FINTRAC web site: www.fintrac.gc.ca. Reports are to be sent electronically to FINTRAC when the agent has the technical capability to do so. If the reports have to be filed in paper format, the agent can send the reports to FINTRAC via-

FAX: 1-866-226-2346 or; Mail to the following address: Financial Transaction and

Reports analysis centre of Canada (FINTRAC), Section A, Ottawa, Ontario, Canada X1P 1H7

vi. Filing Instructions: For each transactions identified as suspicious, the form should be filed out and sent to FINTRAC on a timely basis. Each STR must be completed in accordance with the instructions that accompany the form.

vii. Terrorist related properties: Effective June 12, 2002, If MFCL or its agents are aware of the existence of any property in their possession or control that they believe is owned or controlled by or on behalf of any one or entities associated with terrorist activities.

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viii. MFCL or its agents should report this knowledge to FINTRAC without delay. A list of Individual or entities believed to be in or associated with terrorist activity developed by the office of the Superintendent of Financial Institutions (OSFI) and published one OSFI’s web site www.osfibsif.gc.ca. Under Canada’s anti-terrorism legislation, this knowledge has to be reported to the following Government agencies as well:

Royal Canadian Mounted Police (RCMP) Financial Intelligence Task Force Unclassified Fax:613-993-

9474 or RCMP information line 1-888-349-9963 and Canadian Security Intelligence Services (CSIS), Security

screening branch, Project leader, Government Operations, unclassified fax: 613-842-1902.

Agents can contact FINTRAC for a terrorist property report form. This form can only be filled in paper format.

ix. Copy to MFCL: The agent must immediately fax to the MFCL compliance department a copy of each STR completed by the agent with the related records.

x. Record retention: All records must be retained for Six years.

Large Cash Transaction Report (LCTR).xi. General Rule: Effective November 30, 2002, an LCTR must be filed

by each money service business located in Canada, Including money transmitters and their agents, for receipts by or on behalf of the same person (Broadly defined to include any individual, company, partnership or other type of entity ) of or more than CS 10,000 including fees in cash on one business day. An LCTR must also be filed for multiple cash transactions that total or are more than C$ 10,000 on the same business day, If the agent knows that the transactions are being paid in to the institution by or on behalf of the same person.

The agent must Fax to the MFCL compliance department, a copy of each LCTR filed by the agent together with a copy of the valid ID, the day after the transaction.Record Retention: All records must be retained for Six years.

SWIFT Electronic Funds Transfers

I. General Rule: Effective June 12, 2002, an EFT is only applicable for transmission of a SWIFT MT 100 OR MT 103 message, as a SWIFT member, through the SWIFT network. SWIFT means the Society for Worldwide Inter bank Financial Telecommunication. It is a co-operative owned by the

International banking community that operates a global data processing system for the transmission of financial messages.

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II. MFCL or It’s agents have to report the following transactions to FINTRAC as of June 12, 2002 an Outgoing SWIFT MT 100 or MT 103 message for $10,000 or more outside Canada at the request of a client in the following manner:

i. In a single transaction; or ii. In two or more transfers of less than $10,000 (that total

$10,000 or more) If your employee or senior officer knows they were made within 24 consecutive hours of each other by or on behalf of the same individual entity.

III. You receive an Incoming SWIFT MT 100 or MT 103 message for $10,000 or more sent from outside Canada at the request of a client in the following manner:

i. In a single transaction; or ii. In two or more transfers of less than $10,000 (that total $10,000

or more) If your employee or senior officer knows they were made within 24 consecutive hours of each other by or on behalf of the same individual entity.

IV. These reports can only be made electronically using the batch file reporting mechanism You do not have to make an EFT report if you send a transfer to an individual or an entity in Canada even if the final recipient is outside Canada. Similarly, you do not have to make an EFT report if you receive a transfer from an individual or an entity in Canada, even if the original sender was outside Canada.

V. MFCL or its agents have to report the following transactions to FINTRAC as of march 31, 2003 as explained in the following:

a. This reporting covers EFTs that are the transmission of Instructions for a transfer of funds through any electronic, magnetic or optical device, telephone instrument or computer. This includes SWIFT MT 100 or MT 103 messages described above.

b. For an outgoing EFT’s. These are instructions sent electronically for the transfer of $10,000 or more outside Canada at the request of a client in the following manner:

i. In a single transaction:ii. In two or more transfers of less than $10,000 (that total $10,000

or more) in the following situations:iii. If you are an entity, your employee or senior officer knows the

transfers were made within 24 consecutive hours of each other by or on behalf of the same individual or entity: or

iv. If you are an individual, you know the transfers were made within 24 consecutive hours of each other by or on behalf of the same individual or entity.

c. You receive incoming EFTs. These are instructions sent electronically for transfer of $10,000 or more from outside Canada at the request of client in the following manner:

i. In a single transaction:

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ii. In two or more transfers of less than $10,000 (that total $10,000 or more) in the following situations:

iii. If you are an entity, your employee or senior officer knows the transfers were made within 24 consecutive hours of each other by or on behalf of the same individual or entity; or

iv. If you are an individual, you know the transfers were made within 24 consecutive hours of each other by or on behalf of the same individual or entity.

For additional information on timeframes, means of reporting, EFTs in foreign currency and other requirements associated with EFTs, consult.

CONTROLS:

The MFCL compliance department has instituted various controls to monitor that all of MFCL’s procedures are being followed, as well as to detect structuring to evade legislative reporting or record keeping requirements or these procedures, possible money laundering or other criminal or unusual activity. The existence of MFCL controls does not relieve the agent of their responsibility to monitor and report transaction as required by these procedures and Canada’s proceeds of crime (Money Laundering) and terrorist financing legislation. The MFCL and its agents must complete an LCTR in the event of multiple cash transactions that total or are more than C$ 10,000 on the same person. In addition, the agent determines that any activity appears to indicate structuring to evade FINTRAC reporting or record keeping requirements or these procedures, precede money laundering or other criminal or unusual activity, it must follow the procedures in section 6 of Suspicious Transaction Procedures. Some transaction may require rep