This is Part 1 of a two-part series on the accelerated coming-into-force date of AML/ATF amendments. This Part 1 focuses on impact to businesses in the financing and leasing sectors (including those in the automobile and high-end luxury industries), factoring businesses, and cheque-cashing businesses, and the status of Canada's new private-to-private information sharing framework. Part 2 will include insights on the new sanctions evasion and obligations for importers and exporters impacted by these amendments.
Contrary to draft amendments released on November 30, 2024 that informed the public the federal government's measures to broaden its anti-money laundering and anti-terrorist financing ("AML/ATF") regime would come in force on October 1, 2025, the Department of Finance recently announced (the "Announcement") that the key amendments codifying these measures will be moved earlier by six months and come into force on April 1, 2025 instead.
The decision to accelerate the implementation timeline for these amendments appear to be driven by the Canadian government's response to concerns raised by the U.S. regarding organized crime and the Canadian-U.S. border. Specifically, the Announcement states that:
The amendments will greatly improve efforts to combat money laundering and its link to transnational crime and drug trafficking, particularly fentanyl, and complement the Government of Canada's Border Plan as well as the recently announced creation of a Canada-U.S. Joint Strike Force to combat organized crime and maintain the integrity of our shared border.
The main aspects and content of the finalized amendments to the Proceeds of Crime (Money Laundering) and Terrorist Financing Regulations and the administrative monetary penalty regulations remain substantively the same. Changes from the previous draft of amendments affect more granular requirements. For example, in the previous draft, the reporting requirement of noted material discrepancies regarding beneficial ownership information was triggered if the discrepancy was not resolved within 15 days; in the finalized regulations, that period has been lengthened to 30 days.
Our earlier blog post explains in further detail the key impacts these amendments bring to businesses: Canada's AML Framework Broadens its Reach with Regulatory Amendments, including New Import/Export Declarations and Records (the "Client Alert on Consultations")
As a result of the expedited timeline, certain sectors not currently subject to the federal AML/ATF regime will see the following businesses become regulated by the Financial Transactions and Reports Analysis Centre of Canada ("FINTRAC") as of April 1.
- Financing or leasing businesses while carrying out financing or
leasing activity with respect to
a. property for business purposes, other than real property or immovables,
b. passenger vehicles in Canada, or
c. property valued at $100,000 or more, other than real property or immovables (this includes high-end luxury retail goods). - Factoring businesses with or without recourse against the assignor.
- Cheque-cashing businesses will be required to register and be regulated as domestic or foreign money services businesses.
Businesses impacted by these changes will have a short runway to develop and implement an AML/ATF program that meets key requirements under the regime by April 1, which include record keeping, customer identity verification, and transaction reporting. Other amendments that have retained its original coming into effect date of October 1, 2025 include requirements for politically exposed persons, material discrepancy reporting of beneficial ownership and classification of violations with respect to assessing administrative monetary penalty.
The Announcement also notes the implementation of the information sharing regime we discussed in our Client Alert on Consultations, which permits FINTRAC reporting entities in the private sector (as opposed to public entities, such as government or regulators) to share information with other private sector reporting entities to assist in the detection and deterrence money laundering and terrorist financing activity. As we discussed in that client alert, the framework is voluntary but, if reporting entities choose to take part in the information-sharing framework, they must develop and submit Codes of Practice to the Office of the Privacy Commissioner of Canada ("OPC") for approval. These Codes of Practice must account for the disclosure, collection and use of personal information in a manner that the OPC considers to sufficiently address Canada's federal privacy laws. Unlike the other changes discussed above, this information sharing framework is now in force.
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