FINTRAC EFTR Requirements: Who Reports an Electronic Funds Transfer, the $10,000 Threshold, and the Five-Working-Day Deadline

An Electronic Funds Transfer Report (EFTR) is the report you send FINTRAC when you initiate or finally receive an international electronic funds transfer of $10,000 or more. FINTRAC's guidance names three sectors that must comply: financial entities, money services businesses and foreign money services businesses, and casinos. Here is what the guidance and the Regulations require, section by section.

The guidance notes that a life insurance company, broker or agent may be considered a financial entity when it offers loans or prepaid payment products to the public, and that as of July 1, 2024, an armoured car business must register as a money services business. If you use a service provider, the guidance says it "can submit and correct an Electronic Funds Transfer Report on your behalf," and that you remain "ultimately responsible" for meeting the requirements.

What Counts as an International Electronic Funds Transfer

FINTRAC defines an electronic funds transfer as the transmission, by any electronic, magnetic or optical means, of instructions for the transfer of funds. For SWIFT messages, "only SWIFT MT-103 messages and their equivalent are included." An international electronic funds transfer is one "other than for the transfer of funds within Canada."

The guidance excludes a transmission of instructions for the transfer of funds:

• that involves the beneficiary withdrawing cash from their account;
• that is carried out by direct deposit or pre-authorized debit;
• that is carried out by cheque imaging and presentment;
• that is both initiated and finally received by persons or entities acting to clear or settle payment obligations between themselves;
• that is initiated or finally received by an entity in paragraphs 5(a) to (h.1) of the Act for internal treasury management, if one of the parties is a subsidiary of the other or they are subsidiaries of the same corporation.

If you act as an intermediary, the guidance says you "will not have to report this transfer to FINTRAC because you do not initiate or finally receive the transfer." You must still keep records of the transfer and include requester and beneficiary information under the travel rule.

Initiation and Final Receipt: Who Files the Report

FINTRAC defines initiation as the first transmission of instructions, which occurs when you are "the first reporting entity that initiates the sending of an electronic funds transfer at the request of a person or entity." Final receipt occurs when you are "the last reporting entity to receive an electronic funds transfer for remittance to a beneficiary."

For financial entities, paragraphs 7(1)(b) and (c) of the Regulations require a report of "the initiation, at the request of a person or entity, of an international electronic funds transfer of $10,000 or more in a single transaction" and "the final receipt of an international electronic funds transfer of $10,000 or more in a single transaction." Paragraphs 70(1)(b) and (c) set the same requirements for casinos. The rules for money services businesses add residential status:

The guidance says the money services business rule for both ends of a transfer "is meant to capture international electronic funds transfers that occur between clients who use the same money services business and when the transmission of instructions may not physically cross an international border." A client has a residential status of in Canada when at least one of these is met: their address is in Canada, the identity document or information used is issued by a Canadian province, territory or the federal government, or their banking, credit card or other payment service is based in Canada.

The $10,000 Threshold and the 24-Hour Rule

Under paragraphs 127(1)(a) to (c) and 128(1)(a) and (b) of the Regulations, you must also report two or more international electronic funds transfers that total $10,000 or more within a static 24-hour window. The guidance sets out when they combine:

• Transfers you initiate, when you know they were requested by the same person or entity, requested on behalf of the same person or entity (third party), or are for the same beneficiary.
• Transfers you finally receive, when you know they were requested by the same person or entity, or are for the same beneficiary.

SWIFT and non-SWIFT transfers combine. FINTRAC's own example: a client asks a bank to send $12,000 to Portugal over SWIFT and $7,000 to the United States over a non-SWIFT network. If both fall within the bank's 24-hour window, the two transfers "must be aggregated and submitted in the same Electronic Funds Transfer Report." Paragraphs 127(2) and 128(2) set out exceptions, which FINTRAC covers in its guidance Reporting transactions to FINTRAC: The 24-hour rule.

For transfers in a foreign currency, section 125 of the Regulations and the guidance direct you to convert the amount using the Bank of Canada exchange rate in effect at the time of the transaction. Where the Bank of Canada does not publish a rate, you use the rate you establish in the normal course of business. The guidance says your process for setting the exchange rate should be outlined in your compliance policies and procedures.

The Deadline: Five Working Days

Subsection 132(1) of the Regulations reads: "A report that is required to be made under these Regulations in respect of an electronic funds transfer shall be sent to the Centre within five working days after the day on which the person or entity initiates or finally receives the electronic funds transfer, as the case may be."

The guidance's glossary defines a working day for an EFTR as a day from Monday to Friday, excluding Saturday, Sunday and a public holiday. The guidance adds that when a transfer is returned, "the original initiation of instructions is not impacted," and the transfer must be reported whether it is completed or returned. Our FINTRAC reporting deadlines page lists the EFTR deadline next to the LCTR, LVCTR, STR and CDR deadlines.

How to Submit an EFTR

Under subsections 131(1) and (2) of the Regulations, the guidance lists two electronic options: the FINTRAC Web Reporting System (FWR), which it describes as "geared towards reporting entities with lower reporting volumes," and FINTRAC API report submission, a "secure system-to-system transfer of report information." Paper is permitted only if you do not have the technical capability to report electronically.

The form has two main sections, General information and Transaction information. When you complete it, you select a direction, initiation or final receipt, and the guidance says that choice can change whether a field is mandatory or reasonable measures. Its example: the requester's date of birth is mandatory when you initiate the transfer for a person, and reasonable measures when you finally receive it.

Other Obligations Tied to the Same Transfer

• STR on the same transaction. The guidance says "you may be required to submit an Electronic Funds Transfer Report and a Suspicious Transaction Report for the same transaction." See our STR reporting page.
• LCTR on the same transaction. If a person or entity provides $10,000 in cash and asks you to initiate an international transfer, the guidance says you must submit a Large Cash Transaction Report in addition to the EFTR. See LCTR reporting.
• Listed person or entity property. If the transfer relates to property of a listed person or entity, the guidance says "you must not complete the transaction" and must submit a Listed Person or Entity Property Report immediately.
• Record keeping. Under section 144 and paragraph 148(1)(c), you keep a copy of each EFTR for at least five years from the date the report was created.
• Compliance program. The guidance says your policies and procedures must outline your process and criteria for selecting exchange rates and their source, aggregating transactions, determining whether you are dealing with a person or entity, and submitting reports to FINTRAC.

Eight Questions to Test Your EFTR Process

1. Do you report both directions? Initiation and final receipt each carry a reporting requirement for financial entities and casinos under paragraphs 7(1)(b) and (c) and 70(1)(b) and (c).
2. Do you screen out the excluded transmissions, such as direct deposits, pre-authorized debits and cheque imaging, using FINTRAC's definition of an electronic funds transfer?
3. If you are an MSB at both ends of a transfer, do you record each client's residential status? Paragraphs 30(1)(d) and (e) and Table 2 of the guidance.
4. Do you aggregate SWIFT and non-SWIFT transfers in the same 24-hour window? Paragraphs 127(1) and 128(1), and section 5 of the guidance.
5. Do you convert foreign currency at the Bank of Canada rate in effect at the time of the transaction? Section 125.
6. Do you file within five working days of initiation or final receipt? Subsection 132(1).
7. Do you report returned transfers? The guidance says they "must be reported regardless of whether the transaction is ultimately completed or returned to the originating entity."
8. Do your written policies cover exchange rates, aggregation, person or entity determination and report submission? Section 8 of the guidance.

Bottom Line

Financial entities, money services businesses, foreign money services businesses and casinos report international electronic funds transfers of $10,000 or more, alone or combined under the 24-hour rule, within five working days of initiating or finally receiving them.

In FINTRAC's words: "SWIFT and non-SWIFT electronic funds transfers must be aggregated together in accordance with the 24-hour rule."