The regulatory landscape is evolving rapidly for money service businesses (MSBs), payment service providers (PSPs), and other reporting entities in 2026. A key obligation that businesses must fulfill is client identification in specific circumstances and maintaining accurate verification records.
Understanding the recent FINTRAC client identification requirements is essential for proper compliance. If you wish to learn more about it, you can check out our guide below.
What Does FINTRAC Client Identification Mean?
FINTRAC client identification includes processes and documentation that allow reporting entities to verify the identities of their clients before forming a financial partnership or conducting specific transactions.
The FINTRAC client identification requirements help ensure that the transactions are being performed by a real individual or corporate entity. These rules help fintechs prevent illicit transactions and support Canada's anti-money laundering (AML) regulations.
FINTRAC Client Identification Requirements: What has Been Updated in 2026?
The most recent updates to FINTRAC's guidance, effective October 1, 2025, brought two significant changes to client identification practices:
Use of Agents or Mandataries
Reporting entities can now use agents or mandataries to conduct identity verification on their behalf for both individuals and corporate entities. This allows you to expand operational flexibility for remote onboarding.
Identity Verification for Unrepresented Parties in Real Estate
Real estate brokers and sales representatives must verify the identities of unrepresented parties in property transactions. This now closes a previous regulatory gap and potential AML vulnerabilities in real estate.
What are FINTRAC Client Identification Requirements in 2026?
FINTRAC client identification requirements include specific circumstances during which a reporting entity must verify its client's identity, such as when setting up an account. Other key circumstances include:
Large Cash Transactions
Every reporting entity must verify the information of an individual or entity when they receive $10,000 or more in cash during a transaction. These also include cases in which you received cash because you authorized another person or entity to obtain it on your behalf. The verification must be performed at the time of the transaction for compliance purposes.
Large Virtual Currency Transactions
You must verify the identity of your client when you receive virtual currency equivalent to $10,000 or more at the time of a transaction. This FINTRAC client identification requirement is similar to the rule for large cash transactions.
Suspicious Transactions
Transactions may be deemed suspicious by MSBs, PSPs, and other reporting entities in certain circumstances. If you believe your client is performing a suspicious transaction, verifying their identity becomes essential under FINTRAC client identification requirements. Once you've taken reasonable measures, you must send the regulatory agency a suspicious transaction report (STR).
Significant Electronic Funds Transfer (EFT)
FINTRAC client identification requirements make it essential to verify the identities of all people who ask you to initiate an EFT of $1,000 or more. Any reporting entity that fails to meet this obligation is said to be non-compliant with the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA).
Issuing or Redeeming Cheques, Money Orders, or Other Similar Instruments Worth $3,000 or More
Negotiable money instruments include traveller's cheques, money orders, bank drafts, and promissory notes. If your MSB is issuing or redeeming any instrument worth $3,000 or more, they must verify the identity of the person or entity requesting the transaction.
Transmitting Significant Funds by Means Other Than EFT
When an individual or entity transmits funds above a specific threshold by means other than an EFT, they may trigger FINTRAC client identification requirements. Currently, MSBs must verify client identity when transmitting $1,000 or more by informal value transfer systems such as Hawala remittance.
How to Perform FINTRAC Client Identification for Individuals in 2026?
Knowing FINTRAC client identification requirements helps you understand when you should be verifying client information. However, you may also be wondering about FINTRAC client identification methods. Below, we have listed some methods to verify information about individuals:
Government-Issued ID
The most common method to verify the identity of a client is by using their government-issued photo IDs, such as:
- Driver's License
- Passport
- Citizenship Card
- Permanent Residence Card
- Provincial Photo ID Card
You must ensure that the identity card being presented is currently valid and issued by a government authority.
Credit File Method
Money service businesses, payment service providers, and other reporting entities can also use credit file information to fulfill FINTRAC client identification requirements. The credit file must be current, valid, and from a Canadian Credit Bureau. You can use the file to match the name, address, and date of birth of the person being identified.
Dual-Process Method
Another reliable method for fulfilling FINTRAC client identification requirements is the dual-process method. The process involves confirming client information from two independent and reliable sources. These sources must confirm any one thing listed below:
- Name and address of the person
- Name and date of birth of the person
- Name and confirmation that the person has a deposit account, prepaid payment product account, or a credit card
All information acquired must be current and valid for it to be reliable for the best fintech practices and FINTRAC client identification.
Affiliate/Member or Reliance Method
Affiliate/Member method or reliance method are two other less common ways that reporting entities can use for FINTRAC client identification. You will have to confirm the name, address, and date of birth of the person being identified using either method.
How to Perform FINTRAC Client Identification for an Entity in 2026?
MSBs, PSPs, and other reporting entities can use three ways to confirm the identity of a corporate entity under FINTRAC client identification requirements. These include:
- Confirming existence by confirming the corporation name, address, and names of directors of the corporation by their incorporation certification, annual records, or a recent informational record, like a certificate of active corporate status
- Reliance method in which you can rely on identity verification measures, such as those under section 5 of the PCMLTFA
- Simple identification by identifying regulated businesses under section 5 (a) and (g) of the PCMLTFA through a risk assessment, confirming their existence
Any one of these methods can be used to identify corporate entities for fulfilling FINTRAC client identification requirements in 2026.
FAQs
How Long FINTRAC Client Identification Records Must be Kept?
Reporting entities such as MSBs must store identity verification records for a minimum of five years. These include copies of documents and information on the method used to confirm identity. If needed, these records will support audit readiness for regulatory reviews.
Is FINTRAC Client Identification a One-Time Thing?
Verification is not a one-time task. Reporting entities must also update client information as part of ongoing risk assessments and monitoring procedures, ensuring risk factors remain current and managed.
What Happens if you don't Perform FINTRAC Client Identification?
Non-compliance with FINTRAC client identification rules can lead to regulatory fines, reputational damage, and compliance enforcement actions. FINTRAC has the authority to levy administrative monetary penalties, issue compliance orders, and enforce administrative or criminal sanctions.
Stay Compliant and Maintain FINTRAC Client Identification Requirements With Renno & Co. Fintech
FINTRAC client identification requirements are extensive and may require you to seek legal help for compliance. At Renno & Co. Fintech, we can help you stay informed, adopt reliable verification methods, and maintain meticulous records with our AML services. Contact us today to speak to our AML compliance specialists and get started.
