FinTech

by Team Azilen

March 07, 2024

Breaking Down FINTRAC Reporting Changes: Challenges, Solutions, and How We Can Help

Are you impacted by the latest FINTRAC reporting changes?

In this guide, we have covered those modifications alongside the new challenges they pose, the significance of RegTech, and how Azilen can offer assistance.

Reporting Forms Implementation Schedule (Updated in February 2024)

HTML Table Generator

Forms	Start of Technical Implementation	Form Release
Large Virtual Currency Transaction Report	July 2022	Completed
Large Cash Transaction Report	July 2022	Completed
Suspicious Transaction Report	June 2023	April 6, 2024
Electronic Funds Transfer Report	September 2023	June 2024
Casino Disbursement Report	October 2023	June 2024

Key Insights into FINTRAC Reporting Changes in Canada

FINTRAC has been undertaking an initiative to update and modernize several of its reporting forms since 2022.

These changes are intended to strengthen Canada’s anti-money laundering and anti-terrorist financing regime and streamline the reporting process for reporting entities by making the forms more user-friendly and introducing new reporting options.

The following FINTRAC reporting changes that are in the process of being updated:

FINTRAC is revamping reporting forms (LCTR, STR, EFTR, CDR) for greater clarity and efficiency.
REST-API is now available for secure and streamlined submission of LCTR and LVCTR reports (as of Oct 2023).
An STR is needed for suspected money laundering or terrorist financing must be submitted promptly after suspicion confirmation.
An EFTR is required for transferring $10,000 CAD or more into or out of Canada in one transaction or multiple transactions within 24 hours by the same person or entity.
Casinos must report disbursements of $10,000 CAD or more in one transaction or within 24 hours to the same person or entity. The report must be filed within 15 days.

FINTRAC cracking down on foreign cash flow into Canada. Direct wire transfers from countries on the sanctioned lists are no longer allowed. Huge step into curbing money launder in Canada.

Ie my Brokerage no longer accepts direct wires from Russia, China, Iran, and North Korea.

— Kaitlyn Lee, CPA, CA (@kaitlynleeRE) February 29, 2024

What are the Newly Emerged Challenges for Reporting Entities?

The upcoming changes to FINTRAC’s reporting forms are likely to have several impacts, including:

Increased Compliance Requirements

The updated forms may require to collect and report additional information to FINTRAC.

This could necessitate changes to system design and data collection processes to ensure compliance.

Cost Implications

Implementing and maintaining new systems can be costly for reporting entities, especially smaller businesses.

Architecture Upgradation

The current system can make it difficult to adapt to changing reporting requirements, increasing the risk of non-compliance and potential penalties.

Hence, upgrading to modern architecture is essential.

However, it can be challenging due to change management, lack of understanding of architectural needs, and justifying the investment.

Implementing the REST-API

Integrating the API effectively typically requires specialized programming skills and knowledge of API development and security protocols.

This can be particularly challenging for smaller entities lacking internal technical resources.

Potentially Adopting RegTech Solutions

Identifying and selecting the most cost-effective RegTech solutions that offer functionalities that meet specific reporting needs can be complex.

In addition, integrating RegTech solutions requires careful evaluation of their data security practices and ensuring compliance with relevant privacy regulations.

Data Collection and Management

This involves tackling challenges like ensuring data accuracy during collection (especially with manual processes or diverse data sources), complying with FINTRAC’s mandated data formats, and implementing robust security measures to protect sensitive financial information.

Successfully addressing these complexities is crucial for entities to fulfill their reporting obligations effectively.

👉 Check Out Our Detailed Blog on FinTech App Development

What’s the Role of RegTech Solutions in FINTRAC Reporting?

RegTech refers to technology-driven solutions designed to automate, streamline, and simplify the process of complying with regulations, including those set forth by FINTRAC.

Here is how it can help with FINTRAC reporting complexities.

Automated Data Collection and Reporting

RegTech solutions can automatically gather data from various sources within your organization and populate FINTRAC reports according to the latest formats and requirements.

This saves time and reduces manual errors.

Enhanced Transaction Monitoring

RegTech utilizes advanced analytics and machine learning to identify suspicious activity more effectively than traditional methods.

This helps businesses detect potential money laundering or terrorist financing attempts and fulfill their reporting obligations efficiently.

Thought it was blockchain? FINTRAC to use AI for suspicious transactions, or additionally to even partner with financial institutions to lower risks. Canada’s move to AI-driven anti-money laundering. Once you know, $TAO and Bittensor potential can’t be undone. pic.twitter.com/Jrcl88d3tc

— Andy ττ (@bittingthembits) January 9, 2024

Improved Risk Assessment

RegTech can help you identify and assess compliance risks associated with your operations and implement appropriate controls to mitigate them.

This proactive approach can minimize the likelihood of non-compliance issues and potential penalties.

Streamlining Compliance Processes

RegTech can automate various tasks associated with FINTRAC compliance, such as customer onboarding and due diligence checks, transaction monitoring and SAR filing, Data collection, aggregation, and population of FINTRAC reports.

This automation reduces manual work, minimizes human error, and improves overall efficiency in meeting your compliance obligations.

👉 Check Out Our Insightful Case Study on Digital Wallet For Cashless Micropayments

How Azilen can Simplify Your FINTRAC Compliance Journey?

We’re a software product engineering company.

We recognize the serious threat posed by money laundering and terrorist financing to the financial system and global safety.

Drawing from over a decade of experience, we can assist you in navigating the FINTRAC reporting challenges and achieving seamless compliance.

Here’s what we offer to help you adapt and stay on track.

1. Engineer a Tailored RegTech Solution

We understand that every organization’s FINTRAC compliance needs are unique.

That’s why we offer custom-built RegTech solutions designed to seamlessly integrate with your existing systems and workflows.

We’ll work closely with you to understand your specific challenges and develop a solution that addresses them effectively.

2. Seamless FinTech and RegTech Integration

If the challenges involve integrating new FINTRAC reporting requirements into existing systems, we can help you integrate software modules or interfaces to facilitate seamless data flow and reporting.

Our expertise in integration allows us to create smooth connections, ensuring your data flows effortlessly from your FinTech platforms to your reporting system, minimizing manual intervention and errors.

👉 Explore Our FinTech Software Development Expertise

3. Automated FINTRAC Reporting

Streamline your compliance efforts with our automated FINTRAC reporting solutions.

We’ll automate the process of extracting relevant data from various sources, formatting it according to FINTRAC specifications, and ensuring timely and accurate submissions, reducing manual data entry and error-prone processes.

4. REST-API Implementation and Management

As FINTRAC transitions to API-based reporting, our team will handle the complexities for you.

We have the expertise to securely integrate your systems with FINTRAC’s API, ensuring secure and reliable communication between internal systems and FINTRAC’s platform.

We also provide ongoing maintenance and support for API connections.

5. Unwavering Data Security and Privacy:

We prioritize the security and privacy of your sensitive financial data.

We adhere to the highest compliance standards, including PIPEDA, to safeguard your information at all times.

You can rest assured that your data is in safe hands with us.

Achieve Seamless Compliance with Confidence

Talk with Our Subject-Matter Experts

Contact Today