FINTRAC Reporting Service (Fintrac.RS)

1. FINTRAC Reporting Service (Fintrac.RS) Client Government Fintrac.RS

2. FINTRAC Compliance and Reporting Requirements • Proceeds of Crime (Money Laundering) Act received Royal Assent on June 29, 2000 • Legislates detection and deterrence of money laundering • All Canadian deposit-taking institutions are subject to the Act, Regulations and Guidelines • Suspicious transactions reporting starts 2001-Nov-08 • Requires: • Immediately report to FINTRAC all suspicious transactions • Periodically report and keep the prescribed records

3. FINTRAC Enforcement • Failure to implement a compliance regime: • Conviction up to 5 years + $500,000 fine • Failure to report a suspicious transaction could lead to substantial fines and legal actions • Conviction up to 5 years + $2,000,000 fine • No minimum threshold for reporting • Required maintain effective record-keeping system(penalty: up to 5 years imprisonment and $500,000) • FINTRAC and external auditors should have access to all the records in a timely fashion

4. FINTRAC Enforcement (con’s) • Employees who reported to their superior are exempted from being charged under the Act!!! • The ultimate executive responsibility • Need to document to discharge responsibility, archiving is crucial • For electronic records, an electronic signature of the signing individual “must be retained” • A special Individual Responsible for implementing FINTRAC Compliance must be appointed • Typically reports to the CEO or the Board

5. Focus on Service Success! • No paper pushing, easy to use, no training is required • Rapid approval cycle • Enhanced control, reporting and audit trail • Effectively manages executive participation; Line management and executives are fully in control • Reduces transaction cost of backroom administrative cycle from $54 to $8 • Substantial saving in development, maintenance and upgrades

6. FINTRAC Processes/Forms Integrated • Suspicious/Prescribed Transaction Report • Transaction type: Account transaction; Conducted for another entity Conducted for other individual(s) • Large case transactions • Exceptions to large cash transactions • Electronic funds transfers • Cross-border transactions to CCRA • FINTRAC Schedules (as introduced) • 1. Suspicious Transaction Report • 2. Large Cash Transaction Report • 3. Outgoing Electronic Funds Transfer Report Information • 4. Incoming Electronic Funds Transfer Report Information

7. A New Level of Accountability • Ensures compliance with all respective government and corporate policies • Additional Processes/Forms Integrated • Fintrac.RS Executive Reports • Cumulative Reporting (for all participants) • Maintains User Profile and reporting relations • Tracking Inquiries/Requests Archives • Transaction Logs • Service Quality Evaluations • Also FINTRAC compliance training and support

8. Fintrac.RS Step-by-Step 1) Suspicious/prescribed transaction report request with required identity data (without disclosing it to the Client) • Very complex forms with dozens of input fields are required to fill for every transaction 2) Request approval by corporate management 3) Automatic FINTRAC compliance clearance 4) Transaction reporting within Fintrac.RS 5) Periodic corporate reporting to FINTRAC 6) Reporting to CCRA on the import/export of currency 7) Prescribed effective, safe and secure record keeping 8) Internal and external auditing • We also implemented numerous interactive enablers that add value to users and lower overall service costs

9. Supervisor Compliance officer CEO Internal/External Auditors ?? Suspicious/ prescribed Transaction Report FINTRAC Teller Police Fintrac Schedules (4) Cross-border transactions CCRA Client(s) Fintrac.RS Fintrac.RS: (Un)Cooperating Users ? ? PKI PKI

10. Business Platform • Management framework • Integrated Government and corporate policies and expertise - on a transactional level • Central reporting • Built in user preferences/Feedback • Exception Management • Service Quality Evaluations — user feedback for every transaction • Archives, Transaction Logs

11. Business Platform (con’s) • Enhanced inherently secure processes • intranet solution — same security level as for all other legacy applications • Reporting relationships built in • Email approval notification/confirmations for every business cycle • Prescribed by Regulations safe and secure keeping of the records • Periodic PKI submission of cumulative records to the Government (batch file reporting starts Jan 2002).

12. Software Platform • Almost 1,000,000 lines of code — and growing... • Ubiquitous • W2k • Perl • .asp • Page style templates • Full compliance with Federal Government IT platform requirements • SMTP-compatible mail server • Compliant with STD0010 • RFC821, RFC1651, RFC1869, RFC1870

13. Software Platform (con's) • XML • xHTML • Backward compatible with older browsers • Potential for structuring every field • I.e., transparent interface with financial, HR, etc. legacy systems • SQL engine • MS Access • Implemented as ODBC/SQL compliant database • Upgradable to Oracle

14. Software Platform (con's) • No installation on a desktop • Any browser • Any email client • Rich, fully interactive Web site • Mailing list • Stats, Search engine, Guestbook, etc., etc • Workflow engine • Policy shell • AI smarts if required to deliver policy • Full expert system shell can be built in

15. Software Platform (con's) • Smart forms • Always change in context, workflow defined • Little writing in • Input field integrity checking, precise error messages • Integrated window warnings and password requests • Precise label links to the help file (Help in context) • Displays only relevant input/output fields • Always Web page acknowledgement at the end • Email acknowledgements after update sent to the originator and recipients in context • Email notifications in advance (i.e., to request updates)

16. System Architecture Audit Trail databases Client and Transaction databases Corporate users Internet CCRA Fintrac.RS Server Fintrac Fintrac.RS Administrator (Setup/modify corporate clients, authorizations and policy)

17. Advantages • Streamlines and expedites: • Internal suspicious transaction reporting • Authorization processes • Preserves interests of front-line workers, executives and clients • Avoiding false positives and false negatives • Reporting transactions are completed only after responsible managers authorize them • Government/corporate suspicious transaction reporting cycle guidelines and approval procedures available online to guarantee there are no misunderstandings of organization's policy

18. Advantages (con's) • Enhanced controls • Identifying exceptions • Countrywide and worldwide reach • Secure • Savings • No LAN installation • Low cost per online transactions and maintenance • Very fast payback • Customizable • Addresses your organization’s unique requirements • ERP off-ramps

19. Future Customization Options • Banking Systems • Optional customization modules for direct access to Banking Systems • HR Systems • Modules for direct access to HR Systems • i.e., reporting relationships • Financial Systems • Modules for direct access to Financial Systems • e.g. SAP, Oracle, ACCPAC • Comprehensive Reporting

20. FINTRAC Reporting Service (Fintrac.RS) Client Government Fintrac.RS