Canada: Amendments To The Proceeds Of Crime (Money Laundering) And Terrorist Financing Act

Last Updated: July 25 2019
Article by Suhuyini Abudulai

On July 10, 2019, the final version of the regulations (the Regulations) amending certain regulations made under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA) were released in the Canada Gazette. Draft amending regulations were initially released in June 2018. A number of changes between the draft version and the final Regulations have been made to address concerns raised by stakeholders in feedback provided to the Department of Finance and FINTRAC.

The amendments come into force using a staged approach, to allow reporting entities time to make necessary changes for compliance. The identification verification amendments referenced below are now in effect as of June 25, 2019. Amendments applying to dealers in virtual currencies, foreign money services businesses, cross-border currency and monetary instruments reporting, administrative monetary penalties, and suspicious transaction reports will come into force on June 1, 2020. The remaining amendments will come into force on June 1, 2021.

The amendments will require reporting entities to update their policies and procedures to ensure compliance with the Regulations and will add new requirements of foreign money service businesses and dealers in virtual currency.

An overview of certain significant amendments in the Regulations follows.

Prepaid Payment Products

Prepaid payment products issued by financial entities will now be subject to the PCMLTFA regime. Financial entities that issue prepaid products will be subject to the identity verification, record-keeping, and reporting requirements of the PCMLTFA, similar to the requirements that apply when a bank account is opened.

The prepaid payment product amendments do not apply to certain prepaid payment products, including prepaid products that are issued for single use as part of a retail rebate program, prepaid products that enable a person or entity to access a credit or debit account, prepaid products issued for use with a particular merchant, and prepaid products that can only be funded or reloaded by a public body or that can only be funded or reloaded by a non-profit agency or registered charity for the purposes of humanitarian aid relief.

Virtual Currencies

“Virtual currency” is defined in the Regulations as “(a) a digital representation of value that can be used for payment or investment purposes that is not a fiat currency and that can be readily exchanged for funds or for another virtual currency that can be readily exchanged for funds; or (b) a private key of a cryptographic system that enables a person or entity to have access to a digital representation of value referred to in paragraph (a).”

All persons and entities “dealing in virtual currencies” (e.g., virtual currency exchange services, digital wallet providers, and value transfer services) will be required to implement a full compliance program and register with FINTRAC. In addition to other prescribed records for certain virtual currency transactions, reporting entities that receive C$10,000 or more in virtual currency from a person or entity in a single transaction will have record keeping, identity verification and reporting obligations (unless the amount is received from another financial entity or a public body or from a person who is acting on behalf of a client that is a financial entity or public body).

Foreign Money Services Businesses

The Regulations extend the application of the PCMLTFA to foreign money services businesses (MSBs). Foreign MSBs are defined as persons and entities that do not have a place of business in Canada and are engaged in the business of providing at least one of the following services that is directed (e.g. targeted, advertised, having a Canadian domain name) at persons or entities in Canada, and that provide those services to their clients in Canada: (i) foreign exchange dealing; (ii) remitting funds or transmitting funds by any means or through any person, entity or electronic funds transfer network; (iii) issuing or redeeming money orders, traveler’s cheques or other similar negotiable instruments except for cheques payable to a named person or entity; (iv) dealing in virtual currencies; or (v) any prescribed service.

Foreign MSBs are subject to substantially similar obligations as domestic MSBs (e.g., compliance program, registering with FINTRAC, record-keeping and reporting requirements), however, there are additional obligations of foreign MSBs, such as obligations in respect of reporting international electronic fund transfers.

Domestic and foreign businesses dealing in virtual currency will now be included as MSBs.

Identity Verification

Currently, the documents that reporting entities are permitted to use to verify identities must be “original, valid and current” and must not include a scanned or photocopied document. This prohibition has been repealed in the Regulation, and the requirement for an original document has been amended to instead require an “authentic, valid and current document” (emphasis added). This is a welcome change in light of the realities of the technological environment that reporting entities are now operating in, allowing reporting entities to use electronic means for identity verification.

The Regulations change the single and dual source methods of identification, including (i) permitting the use of a prepaid product account for the dual process method and (ii) for the credit file method, requiring the credit file information to be derived from more than one source.

Suspicious Transaction Reports

The timing for the reporting of a suspicious transaction to FINTRAC has been changed to “as soon as practicable” after the person or entity has taken measures that enable them to establish that there are reasonable grounds to suspect that a transaction or attempted transaction is related to the commission of a money laundering offence or a terrorist financing offence. This is a welcome change, as the draft regulations proposed a three-day filing requirement. The current requirement is to report within 30 days after the day on which the person or entity or any of their employees or officers detects a fact respecting a financial transaction or an attempted financial transaction that constitutes reasonable grounds to suspect that the transaction or attempted transaction is related to the commission of a money laundering offence or a terrorist activity financing offence.

Record-Keeping Requirements

The record-keeping requirements under the PCMLTFA have been expanded to require reporting entities to collect additional information in respect of certain types of records (e.g., large cash transaction records). The Regulations also modify the record-keeping (and reporting) obligations to remove burdensome requirements such as the requirement to include “every other known detail” in respect of a transaction.

Electronic Funds Transfer

There are numerous amendments in respect of the electronic funds transfer (EFT) reporting requirements, including (i) reporting entities that are intermediaries in a transaction or that receive an EFT are now required to keep records of the transaction; (ii) the travel rule (requiring certain reporting entities to include prescribed information in respect of international EFTs) has been changed to require the information to be included in an international EFT to be the beneficiary’s name and address and, if applicable, account or other referenced number; (iii) requiring reporting entities subject to the travel rule to develop and apply risk-based policies and procedures to determine where, despite reasonable measures, an EFT received by the reporting entity does not include prescribed information; and (iv) expanding the record keeping requirement in respect of EFTs to include EFTs that are initiated not only at the request of a client, but at the request of a person or entity.

Politically Exposed Persons

The amendments require reporting entities to take reasonable measures to determine the sources of a politically exposed person’s wealth. Additionally, in determining whether a person is a politically exposed person, reporting entities will have additional requirements to make the determination in respect of prepaid products and virtual currency.

Life Insurance Companies

Life insurance companies that make loans or issue prepaid payment products will be subject to the requirements of other financial entities, other than in respect of (i) loans made by the insurer to a policy holder if the insured person has a terminal illness that significantly reduces their life expectancy and the loan is secured by the value of an insurance policy; (ii) loans made by the insurer to the policy holder for the sole purpose of funding the life insurance policy; and (iii) advance payments to which the policy holder is entitled.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Similar Articles
Relevancy Powered by MondaqAI
 
In association with
Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions