Coming changes to Canada’s anti-money laundering laws

The state of emergency declared by the Government of Canada in February 2022 was revoked as soon as the measures were adopted ¹ . However, given the wording used by the government in the Emergency Economic Measures Order (the Order) and its Emergency Measures Regulations (the Regulations) under the  Emergencies and remarks made at the time by the Deputy Prime Minister and Minister of Finance, interested observers wondered whether significant changes were to be made to key federal anti-money laundering and terrorist financing laws. Given the evolution of the situation, it is likely that some of these measures will be incorporated into Canadian law on a permanent basis despite the lifting of the state of emergency. In the 2022 Federal Budget (the Budget) tabled on April 7, the Government announced new regulations to expand the obligations of Canada’s Anti-Money Laundering Regime and the funding terrorist activities (AML/ATF regime) to payment service providers and crowdfunding platforms, as well as legislative changes to strengthen key federal anti-money laundering and anti-money laundering laws and related laws, including the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (the Act) and the Criminal Code. In addition, the government will conduct a comprehensive review of the AML/ATF regime, and additional legislative proposals will be introduced to address identified gaps. The Government of Canada is also proposing to provide $89.9M over five years to support its main anti-money laundering and anti-terrorist financing agency, the Financial Transactions and Reports Analysis Center of Canada. (FINTRAC), in addition to advancing its commitment to establish a public register of beneficial ownership for federal legal persons. We will not know the full effects of these changes on financial technology (fintech) companies and crowdfunding platforms, nor the fallout from the federal government’s decision to comprehensively review and strengthen the AML/ATF regime, until that draft laws or regulations are published for public scrutiny. In the meantime, we can rely on the temporary state of emergency measures imposed in February. The executive order, prior to its revocation, required certain payment service providers (which invariably include fintech companies) and certain crowdfunding platforms to register with FINTRAC if they possessed property belonging to a designated person. or owned or controlled by it or on its behalf or at its direction under the Regulations. Although it is not usually onerous for businesses to register with FINTRAC, reporting entities must meet a wide range of compliance requirements under the Act and related regulations. Regulatory Burden includes developing and monitoring a compliance program that is subject to biennial audits and reviews by FINTRAC and covers all relevant regulatory requirements, including, but not limited to, procedures related to customer identity verification, transaction reporting and record keeping. In addition, as the Order directly replicated payment functions provided for in the upcoming Retail Payments Oversight Framework (CSPD) under the new Retail Payments Activities Act , it is entirely possible that CSPD payment service providers are automatically subject to FINTRAC’s obligations. For more information on this topic, Canada’s Anti-Money Laundering and Anti-Terrorist Financing laws, or other regulatory issues related to financial services, please contact any of the authors. below.

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¹ On February 14, 2022, the Government of Canada declared a state of emergency and passed the  Emergency Economic Measures Order (the Order) and its Emergency Measures Regulations (the Regulations) ¹ pursuant to the Emergencies Act . These measures affected all of Canada and related to the financing of convoys and blockades of truckers. The measures were repealed by proclamation on February 23, 2022. The order and regulation are no longer in effect.