On April 1, 2025, new amendments under the Proceeds of Crime (Money Laundering) and Terrorist Financing Regulations (the AML Regulations) will come into force that impact equipment financing and leasing companies.
What You Need to Know
The AML Regulations now apply to previously exempt parties, being any person or entity that is engaged in the business of financing or leasing of:
- property, other than real property or immovables, for business purposes;
- passenger vehicles in Canada; or
- property, other than real property or immovables, valued at $100,000 or more (individually or in the aggregate).
Since the $100,000 threshold applies to the value of the property and not the financed amount, structuring transactions to fall below this threshold is a potential risk. To provide clarity, the Financial Transactions and Reports Analysis Centre for Canada (FINTRAC) intends to share permitted aggregate mechanisms and timeframes for transaction structures.
The final publication of the regulatory amendments was published in the Canada Gazette on March 26, 2025. While the application of the AML Regulations still remains uncertain, FINTRAC has advised that all vehicle dealerships partnered with a financial institution to provide financing will be considered an independent Reporting Entity and, as such, expected to comply with the AML Regulations.
Background on the AML Regulations
The main objective of the AML Regulations, which are enacted under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (the Act), is to facilitate the deterrence, detection, investigation and prosecution of money laundering and terrorism financing offences. The Act and the AML Regulations obligate businesses and professionals regulated by the Act (Reporting Entities) to develop and implement compliance programs to identify clients, monitor business relationships, keep records, and report certain types of financial transactions. Equipment finance companies should start to think about how they will enact compliance policies.
Looking Ahead
There will be a transition period for all Reporting Entities until April 1, 2026, during which FINTRAC will focus on outreach and guidance activities related to the new amendments, in order to foster greater awareness among new Reporting Entities. FINTRAC is expected to share guidance shortly after the AML Regulations are published.
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.
