On March 7, 2025, the Department of Finance announced that certain amendments to Canada's anti-money laundering (AML) and anti-terrorist financing (ATF) regime that were published for consultation on November 30, 2024, will come into force on April 1, 2025. The announcement is unexpected, as the changes were expected to come into force six months from that date, on October 1, 2025.
The announcement follows a directive issued by the Minister of Finance to the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) on March 4, 2025, which directs FINTRAC to take immediate action and use all available tools to support the eradication of cartel activity in Canada, other criminal syndicates and the trafficking of illicit drugs including fentanyl. The announcement notes that the amendments will complement Canada's Border Plan and the recently announced creation of a Canada-U.S. Joint Strike Force to combat organized crime and maintain border integrity.
Amendments
The amendments to regulations made under the Proceeds of Crime (Money Laundering) and Terrorism Financing Act (PCMLTFA) will implement certain measures announced in federal budget bills (including the 2024 Budget, discussed in our April 18, 2024, blog entitled "Budget 2024 proposes new reforms to combat financial crime in Canada)".
The following is a summary of the amendments, the substance of which generally aligns with the amendments published for consultation on November 30, 2024, which we discussed in our December 5, 2024, Update:
- Factoring companies, cheque cashing businesses and
financing and leasing companies:These entities will be
subject to the PCMLTFA and, accordingly, will be required to
implement a compliance program, keep required records, report
suspicious and other types of transactions and comply with certain
know-your-client (KYC) and various other requirements.
- In force: April 1, 2025
- Information sharing between private
institutions:Reporting entities will be permitted (but not
required) to share information with each other to detect and deter
money laundering, terrorist financing and sanctions evasion.
- In force: March 4, 2025
- Enhancements to CBSA's
authorities:Regulations will come into force under the
PCMLTFA relating to reporting and record-keeping requirements for
entities that import or export goods, intended to detect and deter
trade-based financial crime.
- In force: April 1, 2025
- Mandatory reporting of beneficial ownership
discrepancies: Reporting entities, which under the PCMLTFA
are required to obtain and verify corporate beneficial ownership
information when they verify the identity of an entity, will be
required to report material discrepancies between their records and
a company's registry filings with Corporations Canada that they
observe in their regular course of business. The requirement will
apply only when a reporting entity determines that there is a high
risk of a money laundering or terrorist financing offence.
- In force: October 1, 2025
As the final amendments are not currently anticipated to be published until March 26, 2025, businesses will have little time to prepare to address what are significant regulatory requirements. The accelerated timeframe for implementation is reminiscent of FINTRAC's April 27, 2022, announcement that it was, effective immediately, retracting an interpretive carveout for certain payment service providers and merchant settlement providers, which then had to quickly reconsider whether they were now subject to the PCMLTFA and, if so, register with FINTRAC and implement an AML compliance program.
Likewise, as a result of the Department of Finance's March 7, 2025, announcement, factoring companies, cheque cashing businesses and financing and leasing companies will be required to swiftly implement a full AML compliance program and comply with a wide swath of obligations under the PCMLTFA and associated regulations.
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.
