In an effort to combat sanctions evasion, on August 19, 2024, recent amendments to the Proceeds of Crime (Money Laundering) and Terrorist Financing Act("PCMLTFA") and its regulations came into force, expanding the reporting obligations for "reporting entities"
The recent amendments include a newly created "sanctions evasion offense" under the PCMLTFA, which is defined as:
an offence arising from the contravention of a restriction or prohibition established by an order or regulation made under the United Nations Act, the Special Economic Measures Act or the Justice for Victims of Corrupt Foreign Officials Act (Sergei Magnitsky Law).
The amendments expand the existing reporting requirement for transactions where there are reasonable grounds to suspect the transaction is related to money laundering or terrorist financing to include sanctions evasion, as well. Reporting entities are now required to report suspicious transactions to the Financial Transactions and Reports Analysis Centre of Canada ("FINTRAC") if there are reasonable grounds to suspect that a financial transaction in the course of their activities is related to the commission or the attempted commission of sanctions evasion. Notably, the reporting requirement applies to both completed and attempted transactions. Failure to report such transactions may result in fines up to $2,000,000 and/or five years imprisonment.
FINTRAC published a special bulletin to assist businesses in identifying transactions that may be associated with sanctions evasion.
FINTRAC updated its guidance on how to report suspected sanctions evasion in a Suspicious Transaction Report on August 19, 2024. Specific guidance on reporting suspected sanctions evasion is also available.
These new amendments are part of a broader series of changes to Canada's sanctions enforcement regime. Many of the changes that were passed in Bill C-59, the Fall Economic Statement's implementing legislation, have yet to come into force.
Our team will continue to closely monitor new developments in Canada's sanctions regimes, providing updates to keep clients informed. We have significant experience in the design and implementation of sanctions-related compliance programs and internal investigations. Where breaches are identified, we work closely with clients in making voluntary disclosures and in engaging with the ensuing investigations conducted by Canadian government departments and agencies. We also regularly assist clients with the application for delisting process as well as applications for exemption permits.
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