Money Laundering Rules Get Cleaned Up In Canada

February 18, 2020

The past year has seen a shift in regulations and expectations for the anti-money laundering (AML) and anti-terrorist financing (ATF) in Canada.

Let’s take a look at the key regulatory developments already in force and a look ahead at what 2020/2021 will see in AML/ATF regulatory compliance.

The year 2020 will be a transition year for regulatory changes as some of the developments that were announced in the last year will come into effect while the majority will see their actual implementation in 2021.

The rules are changing as the legislation evolves for FIs, MSBs, casinos and securities dealers. Each reporting entity needs to ensure they manage the changes and prepare for the new rules.

The full list of changes to the Regulations under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA) were published in the Canada Gazette. 

Here’s a summary of the 2019 changes:

  • In 2019, the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) released regulations that amended the Regulations to the Proceeds of Crime (Money Laundering) and Terrorist Financing Act.  The changes were initially released in June 2018 but were revised after rounds of consultations with FINTRAC.
  • New Regulations allowing the use of scanned or photocopied documents came into force on June 25, 2019.‎
  • A change to section 462.31 of the Criminal Code came into effect in June 2019 to add the “recklessness” to the offence of money laundering. It made it an offence to move money on behalf of another person if you are aware there is a risk it could be from money laundering activities.
  • As of June 2019, FINTRAC is required to make all monetary penalties imposed on violators public.
  • FINTRAC also published an alert in December 2019 with indicators to help casinos identify and report suspicious transactions related to money laundering activities.

Coming into effect this year as of June 1, 2020:

  • Cryptocurrency dealers need to register as money services businesses (MSBs) by June. Virtual currency ‎dealers will also be required to comply with other legislative obligations that are followed by financial institutions. Companies dealing in virtual currencies can voluntarily register before the June 1 deadline.
  • New rules for cross-border currency and monetary instruments ‎reporting ‎will come into effect.
  • Investment Industry Regulatory Organization of Canada (IIROC)’s AML/ATF guidance for securities dealers was updated to reflect new amendments for dealers and other important guidance from FINTRAC to remove unnecessary duplication and makes the guidance easier to understand.

All other regulatory amendments in the New Regulations come into force on June 1, 2021.‎

Your company should seek legal advice to help you administer all of the changes that might affect your organization.

At CaseWare RCM, our flagship solution Alessa allows organizations to combat money laundering by screening individuals and entities as well as monitoring every financial activity across lines of businesses. If you are interested in finding out more about Alessa, please do not hesitate to reach out to me or visit our website at alessa.caseware.com.

About Eric Hansen

Eric Hansen (CAMS) (LinkedIn) is a Senior Risk Specialist at Caseware RCM. He has been consulting clients globally on matters of Risk and Compliance for over ten years. Eric is a member of Transparency International where he serves on their working group for Beneficial Ownership transparency. Previously, he was a Director of Risk & Compliance at Dow Jones Canada where he advised clients on areas such as AML, Anti-Corruption and Economic Sanctions.

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