Answer ... Canada’s anti-money laundering regime is largely established by the federal Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA) and associated regulations, which have the objective of implementing measures to detect and deter money laundering and the financing of terrorist activities, and to facilitate investigations and prosecution of offences in respect of same. In addition, money laundering and certain other financial crimes are offences under Canada’s Criminal Code.
The PCMLTFA requires ‘reporting entities’ to:
- implement a compliance regime;
- keep certain records and ascertain client identification;
- report suspicious transactions and terrorist property to the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC); and
- report certain large cash transactions and international funds transfers to FINTRAC.
Other requirements may apply depending on the type of reporting entity. Reporting entities include financial entities (eg, banks, credit unions, trust companies and loan companies), securities dealers, and money services businesses. Fintech businesses will need to determine, based on their business activities, whether they are considered reporting entities for the purposes of the PCMLTFA.
In addition, money services businesses in Canada must register with FINTRAC. A business will be considered a money services business if it provides certain prescribed services to the public, including transferring funds from one individual or organisation to another using an electronic funds transfer network or any other method.
The Department of Finance released amendments to the Proceeds of Crime (Money Laundering and Terrorist Financing Regulations in July 2019, which will largely come into force on 1 June 2010. Notably, the amendments impose obligations on reporting entities with respect to virtual currency transactions and the definition of ‘money services business’ has been expanded to include those that deal in virtual currency. Consequently, once the amendments are in force, a business dealing in virtual currency, such as a business providing virtual currency exchange services, will be required to register as a money services business and comply with the related obligations under the regulations, such as having a compliance regime and ascertaining client identification.