Regulations Amending Certain Regulations Made Under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act, 2019: SOR/2019-240

Canada Gazette, Part II, Volume 153, Number 14

Registration

SOR/2019-240 June 25, 2019

PROCEEDS OF CRIME (MONEY LAUNDERING) AND TERRORIST FINANCING ACT

P.C. 2019-903 June 22, 2019

Her Excellency the Governor General in Council, on the recommendation of the Minister of Finance, pursuant to subsection 73(1) footnote a and paragraphs 73.1(1)(a) to (c) footnote b of the Proceeds of Crime (Money Laundering) and Terrorist Financing Act footnote c, makes the annexed Regulations Amending Certain Regulations Made Under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act, 2019.

Regulations Amending Certain Regulations Made Under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act, 2019

Proceeds of Crime (Money Laundering) and Terrorist Financing Suspicious Transaction Reporting Regulations

1 (1) The definitions accountant, accounting firm, British Columbia notary corporation, CICA Handbook, credit union central, dealer in precious metals and stones, electronic funds transfer, financial entity, financial services cooperative, life insurance broker or agent, real estate broker or sales representative, real estate developer, SWIFT and trust company in subsection 1(2) of the Proceeds of Crime (Money Laundering) and Terrorist Financing Suspicious Transaction Reporting Regulations footnote 1 are repealed.

(2) The definition funds in subsection 1(2) of the Regulations is replaced by the following:

funds means

For greater certainty, it does not include virtual currency. (fonds)

(3) The definition cash in subsection 1(2) of the English version of the Regulations is replaced by the following:

cash means coins referred to in section 7 of the Currency Act, notes issued by the Bank of Canada under the Bank of Canada Act that are intended for circulation in Canada or coins or bank notes of countries other than Canada. (espèces)

(4) Subsection 1(2) of the Regulations is amended by adding the following in alphabetical order:

fiat currency means a currency that is issued by a country and is designated as legal tender in that country. (monnaie fiduciaire)

virtual currency means

2 Sections 1.2 to 8 of the Regulations are replaced by the following:

Report Under Section 7 of the Act

3 (1) Subsection 9(1) of the English version of the Regulations is replaced by the following:

9 (1) Subject to section 11, a report made under section 7 of the Act concerning a financial transaction or attempted financial transaction in respect of which there are reasonable grounds to suspect that the transaction or attempted transaction is related to the commission of a money laundering offence or terrorist activity financing offence shall contain the information set out in Schedule 1.

(2) Subsection 9(2) of the Regulations is replaced by the following:

(2) The person or entity shall send the report to the Centre as soon as practicable after they have taken measures that enable them to establish that there are reasonable grounds to suspect that the transaction or attempted transaction is related to the commission of a money laundering offence or a terrorist activity financing offence.

4 The heading before section 10 and sections 10 to 12.3 of the Regulations are replaced by the following:

Report Under Section 7.1 of the Act

10 (1) Subject to section 11, a report made under section 7.1 of the Act shall contain the information set out in Schedule 2.

(2) The person or entity shall send the report to the Centre immediately.

Reports

11 (1) The requirement to report information set out in Schedule 1 or 2 does not apply in respect of information set out in an item of that Schedule that is not marked with an asterisk if, after taking reasonable measures to do so, the person or entity is unable to obtain the information.

(2) In the case of an attempted transaction, the requirement to report information set out in Schedule 1 does not apply in respect of information set out in an item of that Schedule that is marked with an asterisk if, after taking reasonable measures to do so, the person or entity is unable to obtain the information.

(3) The requirement to report information set out in Schedule 1 or 2 does not apply if the person or entity believes that taking the reasonable measures to obtain the information would inform a person or entity that conducts or attempts or proposes to conduct a transaction with them that the transaction and related information will be reported under section 7 or 7.1 of the Act.

(4) For greater certainty, although items in Schedules 1 and 2 are described in the singular, a person or entity shall report all known information that falls within an item.

(5) For greater certainty, a person or entity is not required to report information set out in any item of Schedule 1 or 2 that is not applicable in the circumstances.

12 A report shall be sent electronically in accordance with guidelines that are prepared by the Centre, if the sender has the technical capabilities to do so. If the sender does not have the technical capabilities to send the report electronically, the report shall be sent in paper format in accordance with guidelines that are prepared by the Centre.

12.1 (1) A person or entity that sends a report to the Centre shall keep a copy of the report for a period of at least five years after the day on which the report is sent.

(2) The copy of the report may be kept in a machine-readable or electronic form if a paper copy can be readily produced from it.

(3) For greater certainty, if the copy is the property of a person’s employer or of a person or entity with which the person is in a contractual relationship, the person is not required to keep it after the end of their employment or the contractual relationship.

5 The heading before section 13 of the English version of the Regulations is replaced by the following:

Designated Information

6 (1) The portion of section 13 of the English version of the Regulations before paragraph (a) is replaced by the following:

13 The information that is prescribed as designated information for the purposes of paragraphs 55(7)(f), 55.1(3)(f) and 56.1(5)(f) of the Act is

(2) The portion of paragraph 13(a) of the Regulations before subparagraph (vii) is replaced by the following:

(3) Paragraph 13(a) of the Regulations is amended by adding “and” at the end of subparagraph (vii), by striking out “and” at the end of subparagraph (viii) and by repealing subparagraph (ix).

(4) The portion of paragraph 13(b) of the English version of the Regulations before subparagraph (i) is replaced by the following:

(5) Subparagraphs 13(b)(i) to (iii) of the Regulations are replaced by the following:

(6) Subparagraphs 13(b)(iv) to (vi) of the English version of the Regulations are replaced by the following:

(7) Subparagraphs 13(b)(viii) and (ix) of the Regulations are replaced by the following:

(8) Paragraph 13(c) of the Regulations is replaced by the following:

7 Schedule 1 to the Regulations is amended by replacing the references after the heading “SCHEDULE 1” with the following:

(Subsection 9(1) and section 11)

8 Part A of Schedule 1 to the Regulations is replaced by the following:

PART A

Information with Respect to Reporting Person or Entity and Place of Business Where Transaction Is Conducted or Attempted

9 The heading of Part B of Schedule 1 to the Regulations is replaced by the following:

Information with Respect to Transaction or Attempted Transaction

10 Items 3 to 9 of Part B of Schedule 1 to the Regulations are replaced by the following:

11 Parts C to F of Schedule 1 to the Regulations are replaced by the following:

PART C

Account and Reference Number Information

PART D

Information with Respect to Person or Entity That Conducts or Attempts To Conduct Transaction

PART E

Information with Respect to Person or Entity on Whose Behalf Transaction Is Conducted or Attempted

PART F

Information with Respect to Beneficiary

12 Item 1 of Part G of Schedule 1 to the Regulations is replaced by the following:

13 The heading of Part H to Schedule 1 to the Regulations is replaced by the following:

Action Taken

14 Schedule 2 to the Regulations is amended by replacing the references after the heading “SCHEDULE 2” with the following:

(Subsections 10(1) and 11(1) and (3) to (5))

15 Part A of Schedule 2 to the Regulations is replaced by the following:

PART A

Information With Respect to Reporting Person or Entity and Place of Business Where Transaction Is Conducted or Proposed To Be Conducted

16 The heading of Part B of Schedule 2 to the English version of the Regulations is replaced by the following:

Reason for Filing Report

17 Item 1 of Part B of Schedule 2 to the English version of the Regulations is replaced by the following:

18 Items 2 to 8 of Part B of Schedule 2 to the Regulations are replaced by the following:

19 The heading of Part C of Schedule 2 to the Regulations is replaced by the following:

Information with Respect to Property

20 Items 2 and 3 of Part C of Schedule 2 to the Regulations are replaced by the following:

21 Parts D to H of Schedule 2 to the Regulations are replaced by the following:

PART D

Information with Respect to Transaction or Proposed Transaction

PART E

Account and Reference Number Information

PART F

Information with Respect to Person or Entity That Conducts or Proposes To Conduct Transaction

PART G

Information with Respect to Person or Entity on Whose Behalf Transaction Is Conducted or Proposed To Be Conducted

Proceeds of Crime (Money Laundering) and Terrorist Financing Regulations

22 (1) Subsection 1(1) of the Proceeds of Crime (Money Laundering) and Terrorist Financing Regulations footnote 2 is replaced by the following:

1 (1) In the Act and in these Regulations, shell bank means a foreign financial institution that

(2) The definitions CICA Handbook, client information record, physical presence and transaction ticket in subsection 1(2) of the Regulations are repealed.

(3) The definitions accountant, British Columbia notary corporation, dealer in precious metals and stones, deposit slip, electronic funds transfer, financial entity, funds, large cash transaction record, life insurance broker or agent, real estate broker or sales representative, receipt of funds record and trust company in subsection 1(2) of the Regulations are replaced by the following:

For greater certainty, it does not include virtual currency. (fonds)

(4) The definition cabinet d’expertise comptable in subsection 1(2) of the French version of the Regulations is replaced by the following:

cabinet d’expertise comptable Entité qui exploite une entreprise qui fournit des services d’expertise comptable au public et qui compte au moins un comptable parmi ses associés, ses employés ou ses gestionnaires. (accounting firm)

(5) The definition cash in subsection 1(2) of the English version of the Regulations is replaced by the following:

cash means coins referred to in section 7 of the Currency Act, notes issued by the Bank of Canada under the Bank of Canada Act that are intended for circulation in Canada or coins or bank notes of countries other than Canada. (espèces)

(6) The definitions fiche-signature and signature in subsection 1(2) of the French version of the Regulations are replaced by the following:

fiche-signature S’entend, à l’égard d’un compte, du document signé par une personne habilitée à donner des instructions à l’égard du compte ou des données électroniques constituant la signature d’une telle personne. (signature card)

signature S’entend notamment d’une signature électronique ou de tout autre renseignement électronique créé ou adopté par le client d’une personne ou entité visée à l’article 5 de la Loi et que cette personne ou entité reconnaît comme étant propre à ce client. (signature)

(7) The portion of the definition business relationship in subsection 1(2) of the Regulations before paragraph (a) is replaced by the following:

business relationship means a relationship that is established with a client by a person or entity to which section 5 of the Act applies and that involves financial transactions or the provision of services related to those transactions and

(8) The portion of the definition business relationship in subsection 1(2) of the Regulations after paragraph (a) is replaced by the following:

It does not include anything referred to in any of paragraphs 154(1)(a) and (c) and (2)(a) to (p) and subsection 154(3). (relation d’affaires)

(9) The portion of the definition ongoing monitoring in subsection 1(2) of the Regulations before paragraph (a) is replaced by following:

ongoing monitoring means monitoring on a periodic basis, based on an assessment of the risk referred to in subsection 9.6(2) of the Act that is undertaken in accordance with paragraph 156(1)(c), by a person or entity of their business relationship with a client for the purpose of

(10) Paragraph (b) of the definition ongoing monitoring in subsection 1(2) of the Regulations is replaced by the following:

(11) Paragraph (a) of the definition public body in subsection 1(2) of the Regulations is replaced by the following:

(12) The portion of the definition real estate developer in subsection 1(2) of the Regulations before paragraph (a) is replaced by the following:

real estate developer means a person or entity that, in any calendar year after 2007, has sold to the public, other than in the capacity of a real estate broker or sales representative,

(13) The portion of the definition senior officer in subsection 1(2) of the Regulations before paragraph (a) is replaced by the following:

senior officer, in respect of an entity, means

(14) Paragraphs (a) and (b) of the definition cadre dirigeant in subsection 1(2) of the French version of the Regulations are replaced by the following:

(15) Paragraph (d) of the definition contrôle continu in subsection 1(2) of the French version of the Regulations is replaced by the following:

(16) The portion of the definition organisme public in subsection 1(2) of the French version of the Regulations before paragraph (a) is replaced by the following:

organisme public S’entend :

(17) Paragraphs (b) and (c) of the definition organisme public in subsection 1(2) of the French version of the Regulations are replaced by the following:

(18) Paragraph (a) of the definition relation d’affaires in subsection 1(2) of the French version of the Regulations is replaced by the following:

(19) Subsection 1(2) of the Regulations is amended by adding the following in alphabetical order:

23 Sections 1.1 to 8 of the Regulations are replaced by the following:

2 (1) For the purposes of subsection 9.3(1) of the Act, a prescribed family member of a politically exposed foreign person, a politically exposed domestic person or a head of an international organization is

(2) For the purposes of the definitions head of an international organization and politically exposed domestic person in subsection 9.3(3) of the Act, the prescribed period is five years.

3 For the purposes of paragraph 5(l) of the Act, the prescribed precious metals are those defined as precious metals in subsection 1(2).

4 For the purposes of these Regulations, an entity is affiliated with another entity if one of them is wholly owned by the other, if both are wholly owned by the same entity or if their financial statements are consolidated.

PART 1

Requirements To Report Transactions and To Keep Records

Application of Parts 5 and 6

5 The provisions of this Part are subject to the provisions of Parts 5 and 6.

Financial Entities

6 (1) A financial services cooperative is engaged in a business or profession for the purposes of paragraph 5(i) of the Act.

(2) A credit union central is engaged in a business or profession for the purposes of paragraph 5(j) of the Act when it offers financial services to a person, or to an entity that is not a member of that credit union central.

7 (1) A financial entity shall report the following transactions and information to the Centre:

(2) A financial entity is not required to report the transaction and information under paragraph (1)(a), if the amount is received from another financial entity or a public body or from a person who is acting on behalf of a client that is a financial entity or public body.

8 (1) A financial entity is not required to report the transaction and information under paragraph 7(1)(a) if the following conditions are met:

(2) A corporation referred to in paragraph (1)(a) does not include one that carries on a business related to pawnbroking or whose principal business is the sale of vehicles, vessels, farm machinery, aircraft, mobile homes, jewellery, precious stones, precious metals, antiquities or art.

(3) A financial entity that, in accordance with subsection (1), does not report a transaction and information

24 (1) Subsections 9(1) to (5) of the Regulations are replaced by the following:

9 (1) A person or entity that is required under these Regulations to keep a signature card or an account operating agreement shall, when they open the account, take reasonable measures to determine whether the account will be used by or on behalf of a third party.

(2) If the person or entity determines that the account will be used by or on behalf of a third party, the person or entity shall take reasonable measures to obtain the following information and shall keep a record of the information obtained:

(3) If the person or entity is not able to determine whether the account will be used by or on behalf of a third party but there are reasonable grounds to suspect that it will, the person or entity shall keep a record that

(4) Subsection (1) does not apply if every account holder is a financial entity or a securities dealer that is engaged in the business of dealing in securities in Canada.

(5) Subsection (2) does not apply if a securities dealer is required to keep an account operating agreement in respect of an account of a person or entity that is engaged in the business of dealing in securities only outside Canada and

(2) Section 9 of the Regulations is renumbered as section 135 and is repositioned accordingly.

25 Sections 10 and 11 of the Regulations are replaced by the following:

9 A financial entity that maintains a list of clients for the purposes of subsection 9(3) of the Act shall

10 A financial entity shall keep a large cash transaction record in respect of every amount of $10,000 or more in cash that it receives from a person or entity in a single transaction, unless the amount is received from another financial entity or a public body or from a person who is acting on behalf of a client that is a financial entity or public body.

11 A financial entity shall keep a large virtual currency transaction record in respect of every amount of $10,000 or more in virtual currency that it receives from a person or entity in a single transaction, unless the amount is received from another financial entity or a public body or from a person who is acting on behalf of a client that is a financial entity or public body.

12 A financial entity shall keep the following records in respect of every account that it opens and of every transaction that is conducted with it, other than those referred to in section 13 or 14:

26 The heading before section 11.1 of the Regulations is replaced by the following:

Information with Respect to Directors of a Corporation or Other Entity, Persons Who Own or Control 25% or More of a Corporation or Other Entity and Beneficiaries and Settlors of a Trust

27 (1) Subsection 11.1(1) of the Regulations is amended by replacing “confirm the existence of an entity” and “electronic funds transfer” with “verify an entity’s identity” and “international electronic funds transfer”, respectively.

(2) Subsection 11.1(1) of the English version of the Regulations is amended by replacing “the existence of the entity is confirmed” with “the entity’s identity is verified”.

(3) Subsection 11.1(1) of the French version of the Regulations is amended by replacing “opérations de change” with “opérations de change en devise”.

(4) Paragraph 11.1(1)(a) of the English version of the Regulations is replaced by the following:

(5) Subsection 11.1(1) of the Regulations is amended by adding the following after paragraph (a):

(6) Paragraph 11.1(1)(c) of the English version of the Regulations is replaced by the following:

(7) Subsections 11.1(2) to (4) of the Regulations are replaced by the following:

(1.1) Subsection (1) also applies to

(2) Every person and entity that is subject to subsection (1) shall take reasonable measures to confirm the accuracy of the information when it is first obtained under that subsection and in the course of ongoing monitoring.

(3) The person or entity shall keep a record that sets out the information and the measures taken to confirm the accuracy of the information.

(4) If the person or entity is not able to obtain the information, to keep it up to date in the course of ongoing monitoring or to confirm its accuracy, they shall take

(8) The portion of subsection 11.1(5) of the Regulations before paragraph (a) is replaced by the following:

(5) If the entity whose identity is being verified under subsection (1) is a not-for-profit organization, the person or entity shall determine and keep a record that sets out whether that entity is

(9) Section 11.1 of the Regulations is renumbered as section 138 and that section 138 and the heading before it are repositioned accordingly.

28 The headings before section 11.2 and sections 11.2 to 33.2 of the Regulations are replaced by the following:

13 A financial entity shall keep the following records in respect of every credit card account that it opens and of every transaction that is connected to that account:

14 (1) A financial entity shall keep the following records in respect of every prepaid payment product account that it opens and of every transaction that is made by means of a prepaid payment product that is connected to that account:

(2) In this section, prepaid payment product slip means a record that sets out

15 (1) A trust company shall also keep the following records in respect of a trust for which it is trustee:

(2) In this section, institutional trust means a trust that is established by a corporation or other entity for a particular business purpose and includes a pension plan trust, a pension master trust, a supplemental pension plan trust, a mutual fund trust, a pooled fund trust, a registered retirement savings plan trust, a registered retirement income fund trust, a registered education savings plan trust, a group registered retirement savings plan trust, a deferred profit sharing plan trust, an employee profit sharing plan trust, a retirement compensation arrangement trust, an employee savings plan trust, a health and welfare trust, an unemployment benefit plan trust, a foreign insurance company trust, a foreign reinsurance trust, a reinsurance trust, a real estate investment trust, an environmental trust and a trust established in respect of an endowment, a foundation or a registered charity.

16 (1) For the purposes of subsections 9.4(1) and (3) of the Act,

(2) A financial entity shall, when it enters into a correspondent banking relationship, keep the following records:

(3) The financial entity shall take reasonable measures to ascertain whether the foreign financial institution has in place anti-money laundering and anti-terrorist financing policies and procedures, including procedures for approval for the opening of new accounts and, if the reasonable measures are unsuccessful or the policies and procedures are not in place, shall, for the purpose of detecting any transactions that are required to be reported to the Centre under section 7 of the Act, take reasonable measures to monitor all transactions conducted in the context of the correspondent banking relationship.

(4) For greater certainty, section 12 does not apply in respect of an account that is opened for a foreign financial institution in the context of a correspondent banking relationship.

Life Insurance Companies and Life Insurance Brokers or Agents

17 (1) A life insurance broker or agent is engaged in a business or profession for the purposes of paragraph 5(i) of the Act.

(2) Subsection (1) does not apply to a life insurance broker or agent when they are acting as a managing general agent.

18 A life insurance company or life insurance broker or agent that receives an amount of $10,000 or more in cash from a person or entity in a single transaction shall report the transaction to the Centre, together with the information set out in Schedule 1, unless

19 A life insurance company or life insurance broker or agent that receives an amount of $10,000 or more in virtual currency from a person or entity in a single transaction shall report the transaction to the Centre, together with the information set out in Schedule 4.

20 A life insurance company or life insurance broker or agent shall keep a large cash transaction record in respect of every amount of $10,000 or more in cash that they receive from a person or entity in a single transaction, unless

21 A life insurance company or life insurance broker or agent shall keep a large virtual currency transaction record in respect of every amount of $10,000 or more in virtual currency that they receive from a person or entity in a single transaction, unless the amount is received from a financial entity or public body or from a person who is acting on behalf of a client that is a financial entity or public body.

22 (1) A life insurance company or life insurance broker or agent shall, regardless of the means of payment, keep an information record in connection with the sale of an immediate or deferred annuity or a life insurance policy

(2) The information record

(3) In the case of a life insurance policy that is a group life insurance policy or in the case of a group annuity, the information record shall be kept in respect of the applicant for the policy or annuity.

(4) Paragraph (2)(b) does not apply if the life insurance company or life insurance broker or agent, due to facts or circumstances beyond its control, is unable to create the information record within the time period in which they are required, under federal or provincial legislation, to first remit funds or virtual currency to the beneficiary.

23 A life insurance company or life insurance broker or agent that keeps an information record under section 22 in respect of a corporation shall also keep a copy of the part of the official corporate records that contains any provision relating to the power to bind the corporation in respect of transactions with the life insurance company or life insurance broker or agent.

24 Sections 18 to 23 do not apply to a life insurance company or life insurance broker or agent when they are dealing in reinsurance.

Securities Dealers

25 A securities dealer that receives an amount of $10,000 or more in cash from a person or entity in a single transaction shall report the transaction to the Centre, together with the information set out in Schedule 1, unless the amount is received from a financial entity or public body or from a person who is acting on behalf of a client that is a financial entity or public body.

26 A securities dealer that receives an amount of $10,000 or more in virtual currency from a person or entity in a single transaction shall report the transaction to the Centre, together with the information set out in Schedule 4.

27 A securities dealer shall keep a large cash transaction record in respect of every amount of $10,000 or more in cash that they receive from a person or entity in a single transaction, unless the amount is received from a financial entity or public body or from a person who is acting on behalf of a client that is a financial entity or public body.

28 A securities dealer shall keep a large virtual currency transaction record in respect of every amount of $10,000 or more in virtual currency that they receive from a person or entity in a single transaction, unless the amount is received from a financial entity or public body or from a person who is acting on behalf of a client that is a financial entity or public body.

29 A securities dealer shall keep the following records in respect of every account that they open:

Money Services Businesses and Foreign Money Services Businesses

30 (1) A money services business shall report the following transactions and information to the Centre:

(2) A money services business is not required to report the transaction and information under paragraph (1)(a) if the amount is received from a financial entity or public body or from a person who is acting on behalf of a client that is a financial entity or public body.

31 A money services business shall keep a large cash transaction record in respect of every amount of $10,000 or more in cash that they receive from a person or entity in a single transaction, unless the amount is received from a financial entity or public body or from a person who is acting on behalf of a client that is a financial entity or public body.

32 A money services business shall keep a large virtual currency transaction record in respect of every amount of $10,000 or more in virtual currency that they receive from a person or entity in a single transaction, unless the amount is received from a financial entity or public body or from a person who is acting on behalf of a client that is a financial entity or public body.

33 (1) A foreign money services business shall report the following transactions and information to the Centre:

(2) A foreign money services business is not required to report the transaction and information under paragraph (1)(a) if the amount is received from a financial entity or public body or from a person who is acting on behalf of a client that is a financial entity or public body.

34 A foreign money services business shall keep a large cash transaction record in respect of every amount of $10,000 or more in cash that they receive from a person or entity in Canada in a single transaction, unless the amount is received from a financial entity or public body or from a person who is acting on behalf of a client that is a financial entity or public body.

35 A foreign money services business shall keep a large virtual currency transaction record in respect of every amount of $10,000 or more in virtual currency that they receive from a person or entity in Canada in a single transaction, unless the amount is received from a financial entity or public body or from a person who is acting on behalf of a client that is a financial entity or public body.

36 A money services business shall keep the following records in connection with a service referred to in any of subparagraphs 5(h)(i) to (v) of the Act that they provide, and a foreign money services business shall keep the following records in connection with a service referred to in any of subparagraphs 5(h.1)(i) to (v) of the Act that they provide to persons or entities in Canada:

37 A money services business that enters into an agreement with an entity to provide a service referred to in any of subparagraphs 5(h)(i) to (v) of the Act to that entity — and a foreign money services business that enters into an agreement with an entity in Canada to provide a service referred to in any of subparagraphs 5(h.1)(i) to (v) of the Act to that entity — shall keep

British Columbia Notaries Public and British Columbia Notary Corporations

38 (1) A British Columbia notary public or British Columbia notary corporation is engaged in a business or profession for the purposes of paragraph 5(j) of the Act when, on behalf of a person or entity, they

(2) Subsection (1) does not apply to a British Columbia notary public who is acting in the capacity of an employee.

39 A British Columbia notary public or British Columbia notary corporation that receives an amount of $10,000 or more in cash in a single transaction in connection with an activity referred to in section 38 shall report the transaction to the Centre, together with the information set out in Schedule 1, unless the amount is received from a financial entity or public body or from a person who is acting on behalf of a client that is a financial entity or public body.

40 A British Columbia notary public or British Columbia notary corporation that receives an amount of $10,000 or more in virtual currency in a single transaction in connection with an activity referred to in section 38 shall report the transaction to the Centre, together with the information set out in Schedule 4.

41 A British Columbia notary public or British Columbia notary corporation shall keep a large cash transaction record in respect of every amount of $10,000 or more in cash that they receive in a single transaction in connection with an activity referred to in section 38, unless the amount is received from a financial entity or public body or from a person who is acting on behalf of a client that is a financial entity or public body.

42 A British Columbia notary public or British Columbia notary corporation shall keep a large virtual currency transaction record in respect of every amount of $10,000 or more in virtual currency that they receive in a single transaction in connection with an activity referred to in section 38, unless the amount is received from a financial entity or public body or from a person who is acting on behalf of a client that is a financial entity or public body.

29 Section 33.3 of the Regulations is renumbered as section 44 and that section 44 and the heading before it are repositioned accordingly.

30 Sections 33.4 and 33.5 of the Regulations are renumbered as sections 45 and 46, respectively, and are repositioned accordingly.

31 Section 34 of the Regulations and the heading before it are replaced by the following:

43 A British Columbia notary public or British Columbia notary corporation shall keep the following records in connection with an activity referred to in section 38:

32 Section 35 of the Regulations, as enacted by SOR/2002-184, is repealed.

33 (1) The portion of subsection 36(1) of the Regulations before paragraph (a), as enacted by section 15 of the Regulations Amending Certain Regulations Made Under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (2007-2), SOR/2007-293, is repealed.

(2) Paragraphs 36(1)(a) and (b) of the Regulations, as enacted by section 40 of the Regulations Amending Certain Regulations Made Under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (2007-1), SOR/2007-122, are repealed.

(3) Subsections 36(2) and (3) of the Regulations, as enacted by section 40 of the Regulations Amending Certain Regulations Made Under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (2007-1), SOR/2007-122, are repealed.

34 The heading before section 37 of the Regulations, as enacted by SOR/2002-184, is repealed.

35 Section 37 of the Regulations, as enacted by section 41 of the Regulations Amending Certain Regulations Made Under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (2007-1), SOR/2007-122, is repealed.

36 Sections 38 to 59.32 of the Regulations are replaced by the following:

Accountants and Accounting Firms

47 (1) An accountant or accounting firm is engaged in a business or profession for the purposes of paragraph 5(j) of the Act when, on behalf of a person or entity, they

(2) For greater certainty, the activities in subsection (1) do not include activities that are carried out in the course of an audit, a review or a compilation engagement within the meaning of the CPA Canada Handbook prepared and published by the Chartered Professional Accountants of Canada, as amended from time to time.

(3) Subsection (1) does not apply to an accountant who is acting in the capacity of an employee or of a person who either is authorized by law to carry on the business of — or to monitor the business or financial affairs of — an insolvent or bankrupt person or entity or is authorized to act under a security agreement.

48 An accountant or accounting firm that receives an amount of $10,000 or more in cash in a single transaction in connection with an activity referred to in section 47 shall report the transaction to the Centre, together with the information set out in Schedule 1, unless the amount is received from a financial entity or public body or from a person who is acting on behalf of a client that is a financial entity or public body.

49 An accountant or accounting firm that receives an amount of $10,000 or more in virtual currency in a single transaction in connection with an activity referred to in section 47 shall report the transaction to the Centre, together with the information set out in Schedule 4.

50 An accountant or accounting firm shall keep a large cash transaction record in respect of every amount of $10,000 or more in cash that they receive in a single transaction in connection with an activity referred to in section 47, unless the amount is received from a financial entity or public body or from a person who is acting on behalf of a client that is a financial entity or public body.

51 An accountant or accounting firm shall keep a large virtual currency transaction record in respect of every amount of $10,000 or more in virtual currency that they receive in a single transaction in connection with an activity referred to in section 47, unless the amount is received from a financial entity or public body or from a person who is acting on behalf of a client that is a financial entity or public body.

52 An accountant or accounting firm shall keep the following records in connection with an activity referred to in section 47:

Real Estate Brokers or Sales Representatives

53 A real estate broker or sales representative is engaged in a business or profession for the purposes of paragraph 5(j) of the Act when they act as an agent or mandatary for a purchaser or vendor in respect of the purchase or sale of real property or immovables.

54 A real estate broker or sales representative that receives an amount of $10,000 or more in cash in a single transaction in connection with an activity referred to in section 53 shall report the transaction to the Centre, together with the information set out in Schedule 1, unless the amount is received from a financial entity or public body or from a person who is acting on behalf of a client that is a financial entity or public body.

55 A real estate broker or sales representative that receives an amount of $10,000 or more in virtual currency in a single transaction in connection with an activity referred to in section 53 shall report the transaction to the Centre, together with the information set out in Schedule 4.

56 A real estate broker or sales representative shall keep a large cash transaction record in respect of every amount of $10,000 or more in cash that they receive in a single transaction in connection with an activity referred to in section 53, unless the amount is received from a financial entity or public body or from a person who is acting on behalf of a client that is a financial entity or public body.

57 A real estate broker or sales representative shall keep a large virtual currency transaction record in respect of every amount of $10,000 or more in virtual currency that they receive in a single transaction in connection with an activity referred to in section 53, unless the amount is received from a financial entity or public body or from a person who is acting on behalf of a client that is a financial entity or public body.

58 (1) A real estate broker or sales representative shall keep the following records in connection with an activity referred to in section 53:

(2) If two or more of the parties to a transaction are represented by a real estate broker or sales representative and one of those real estate brokers or sales representatives receives funds in respect of the transaction from a party that is represented by another real estate broker or sales representative, the real estate broker or sales representative that represents the party from which the funds are received is responsible for keeping the receipt of funds record referred to in paragraph (1)(a) and, if applicable, the copy referred to in paragraph (1)(c).

(3) A real estate broker or sales representative that is responsible under subsection (2) for keeping a receipt of funds record is not required to include in that record any of the following information if, after taking reasonable measures to do so, they are unable to obtain it:

(4) A real estate broker or sales representative that is responsible under subsection (2) for keeping a receipt of funds record and that determines that the transaction affects a trust account held by another real estate broker or sales representative shall include that information in the record but is not required to include

Real Estate Developers

59 A real estate developer is engaged in a business or profession for the purposes of paragraph 5(j) of the Act when they sell a new house, new condominium unit, new commercial or industrial building or new multi-unit residential building to the public, including, if they are a corporation, when they do so on behalf of a subsidiary or affiliate.

60 A real estate developer that receives an amount of $10,000 or more in cash in a single transaction in connection with an activity referred to in section 59 shall report the transaction to the Centre, together with the information set out in Schedule 1, unless the amount is received from a financial entity or public body or from a person who is acting on behalf of a client that is a financial entity or public body.

61 A real estate developer that receives an amount of $10,000 or more in virtual currency in a single transaction in connection with an activity referred to in section 59 shall report the transaction to the Centre, together with the information set out in Schedule 4.

62 A real estate developer shall keep a large cash transaction record in respect of every amount of $10,000 or more in cash that they receive in a single transaction in connection with an activity referred to in section 59, unless the amount is received from a financial entity or public body or from a person who is acting on behalf of a client that is a financial entity or public body.

63 A real estate developer shall keep a large virtual currency transaction record in respect of every amount of $10,000 or more in virtual currency that they receive in a single transaction in connection with an activity referred to in section 59, unless the amount is received from a financial entity or public body or from a person who is acting on behalf of a client that is a financial entity or public body.

64 A real estate developer shall keep the following records in connection with an activity referred to in section 59:

Dealers in Precious Metals and Precious Stones

65 (1) A dealer in precious metals and precious stones, other than a department or an agent of Her Majesty in right of Canada or an agent or mandatary of Her Majesty in right of a province, that buys or sells precious metals, precious stones or jewellery, for an amount of $10,000 or more is engaged in an activity for the purposes of paragraph 5(i) of the Act. A department or an agent of Her Majesty in right of Canada or an agent or mandatary of Her Majesty in right of a province carries out an activity for the purposes of paragraph 5(l) of the Act when they sell precious metals to the public for an amount of $10,000 or more.

(2) The activities referred to in subsection (1) do not include a purchase or sale that is carried out in the course of or in connection with manufacturing a product that contains precious metals or precious stones, extracting precious metals or precious stones from a mine or polishing or cutting precious stones.

(3) For greater certainty, the activities referred to in subsection (1) include the sale of precious metals, precious stones or jewellery that are left on consignment with a dealer in precious metals and precious stones. Goods left with an auctioneer for sale at auction are not considered to be left on consignment.

66 A dealer in precious metals and precious stones that receives an amount of $10,000 or more in cash in a single transaction in connection with an activity referred to in section 65 shall report the transaction to the Centre, together with the information set out in Schedule 1, unless the amount is received from a financial entity or public body or from a person who is acting on behalf of a client that is a financial entity or public body.

67 A dealer in precious metals and precious stones that receives an amount of $10,000 or more in virtual currency in a single transaction in connection with an activity referred to in section 65 shall report the transaction to the Centre, together with the information set out in Schedule 4.

68 A dealer in precious metals and precious stones shall keep a large cash transaction record in respect of every amount of $10,000 or more in cash that they receive in a single transaction in connection with an activity referred to in section 65, unless the amount is received from a financial entity or public body or from a person who is acting on behalf of a client that is a financial entity or public body.

69 A dealer in precious metals and precious stones shall keep a large virtual currency transaction record in respect of every amount of $10,000 or more in virtual currency that they receive in a single transaction in connection with an activity referred to in section 65, unless the amount is received from a financial entity or public body or from a person who is acting on behalf of a client that is a financial entity or public body.

Casinos

70 (1) A casino shall report the following transactions and information to the Centre:

(2) A casino is not required to report the transaction and information under paragraph (1)(a) if the amount is received from a financial entity or public body or from a person who is acting on behalf of a client that is a financial entity or public body.

71 A casino shall report to the Centre the disbursement, in any of the following transactions, of $10,000 or more in a single transaction, together with the information set out in Schedule 6:

72 (1) A casino shall keep a large cash transaction record in respect of every amount of $10,000 or more in cash that the casino receives from a person or entity in a single transaction, unless the amount is received from a financial entity or public body or from a person who is acting on behalf of a client that is a financial entity or public body.

(2) For greater certainty, the transactions referred to in subsection (1) include the following:

73 A casino shall keep a large virtual currency transaction record in respect of every amount of $10,000 or more in virtual currency that the casino receives from a person or entity in a single transaction, unless the amount is received from a financial entity or public body or from a person who is acting on behalf of a client that is a financial entity or public body.

74 (1) A casino shall keep the following records in respect of every account that the casino opens:

(2) A casino shall keep the following records in respect of every transaction that is conducted with it:

75 For the purposes of sections 70 to 74, if a registered charity, as defined in subsection 248(1) of the Income Tax Act, conducts and manages, in a permanent establishment of a casino, for a period of not more than two consecutive days at a time, a lottery scheme that includes games of roulette or card games and, in doing so, acts under the supervision of the government of a province that is referred to in paragraph 5(k) of the Act, or of an organization that is referred to in paragraph 5(k.2) of the Act, that conducts and manages such a lottery scheme in the same establishment, the lottery scheme that is conducted and managed by the registered charity is considered to be conducted and managed by the supervising government or organization.

Departments and Agents or Mandataries of Her Majesty in Right of Canada or of a Province

76 A department or an agent of Her Majesty in right of Canada or an agent or mandatary of Her Majesty in right of a province carries out an activity for the purposes of paragraph 5(l) of the Act when they accept deposit liabilities in the course of providing financial services to the public.

77 A department or an agent of Her Majesty in right of Canada or an agent or mandatary of Her Majesty in right of a province carries out an activity for the purposes of paragraph 5(l) of the Act when they issue, sell or redeem money orders in the course of providing financial services to the public.

37 Sections 59.4, 59.41 and 59.42 of the Regulations are renumbered as sections 97, 98 and 99, respectively, and the heading before section 97 and sections 97 to 99 are repositioned accordingly.

38 The heading before section 59.5 and sections 59.5 to 66.1 of the Regulations are replaced by the following:

78 A department or an agent of Her Majesty in right of Canada or an agent or mandatary of Her Majesty in right of a province that receives an amount of $10,000 or more in cash in a single transaction in connection with an activity referred to in section 77 shall report the transaction to the Centre, together with the information set out in Schedule 1, unless the amount is received from a financial entity or public body or from a person who is acting on behalf of a client that is a financial entity or public body.

79 A department or an agent of Her Majesty in right of Canada or an agent or mandatary of Her Majesty in right of a province that receives an amount of $10,000 or more in virtual currency in a single transaction in connection with an activity referred to in section 77 shall report the transaction to the Centre, together with the information set out in Schedule 4.

80 A department or an agent of Her Majesty in right of Canada or an agent or mandatary of Her Majesty in right of a province shall keep a large cash transaction record in respect of every amount of $10,000 or more in cash that they receive in a single transaction in connection with an activity referred to in section 77, unless the amount is received from a financial entity or public body or from a person who is acting on behalf of a client that is a financial entity or public body.

81 A department or an agent of Her Majesty in right of Canada or an agent or mandatary of Her Majesty in right of a province shall keep a large virtual currency transaction record in respect of every amount of $10,000 or more in virtual currency that they receive in a single transaction in connection with an activity referred to in section 77, unless the amount is received from a financial entity or public body or from a person who is acting on behalf of a client that is a financial entity or public body.

82 A department or an agent of Her Majesty in right of Canada or an agent or mandatary of Her Majesty in right of a province shall keep the following records in connection with an activity referred to in section 77:

PART 2

Requirement To Verify Identity

Application of Parts 5 and 6

83 The provisions of this Part are subject to the provisions of Parts 5 and 6.

Persons and Entities Required To Keep Large Cash Transaction Record or Large Virtual Currency Transaction Record

84 A person or entity shall verify, in accordance with section 105, 109 or 112, the identity of a person or entity from which they receive an amount

Suspicious Transactions

85 (1) A person or entity that is subject to these Regulations shall take reasonable measures to verify, in accordance with section 105, 109 or 112, the identity of a person or entity that conducts or attempts to conduct a transaction with them that is required to be reported to the Centre under section 7 of the Act.

(2) If the person or entity believes that taking the reasonable measures would inform the person or entity that conducts or attempts to conduct a transaction with them that the transaction and related information will be reported under section 7 of the Act, they are not required to comply with subsection (1).

Financial Entities

86 A financial entity shall

39 Subsection 64(1.4) of the Regulations is replaced by the following:

(1.4) If a document is used to ascertain identity under subsection (1), it must be authentic, valid and current. Other information that is used for that purpose must be valid and current.

40 The heading before section 67.1 and sections 67.1 to 76 of the Regulations are replaced by the following:

87 A financial entity shall

88 A financial entity shall

89 A trust company shall also

90 A financial entity that enters into a correspondent banking relationship

91 If a client of a foreign financial institution has direct access to services provided by the financial entity under a correspondent banking relationship, the financial entity shall take reasonable measures to ascertain whether the foreign financial institution

Life Insurance Companies and Life Insurance Brokers or Agents

92 A life insurance company or life insurance broker or agent shall

93 Section 92 does not apply to a life insurance company or a life insurance broker or agent when they are dealing in reinsurance.

Securities Dealers

94 A securities dealer shall

Money Services Businesses and Foreign Money Services Businesses

95 (1) A money services business — or a foreign money services business in connection with services that they provide in Canada — shall, in accordance with section 105, verify the identity of a person who

(2) Paragraphs (1)(a) to (e) do not apply if an employee who is authorized to order transactions under an agreement referred to in section 37 conducts the transaction on behalf of their employer under the agreement.

(3) A money services business or foreign money services business shall, in accordance with section 109, verify the identity of a corporation in respect of which they are required to keep an information record under section 37.

(4) A money services business or foreign money services business shall, in accordance with section 112, verify the identity of an entity, other than a corporation, in respect of which they are required to keep an information record under section 37.

(5) Subsections (3) and (4) do not apply if the entity is

British Columbia Notaries Public and British Columbia Notary Corporations

96 A British Columbia notary public or British Columbia notary corporation shall

41 Section 77 of the Regulations and the heading before it, as enacted by SOR/2002-184, are repealed.

42 The heading before section 78 of the Regulations, as enacted by SOR/2002-184, is repealed.

43 (1) Subsection 78(1) of the Regulations, as enacted by SOR/2002-184, is repealed.

(2) Subsection 78(2) of the Regulations, as enacted by section 1 of the Regulations Amending the Proceeds of Crime (Money Laundering) and Terrorist Financing Regulations, SOR/2002-413, is repealed.

44 The Regulations are amended by adding the following after section 99:

Accountants and Accounting Firms

100 An accountant or accounting firm shall

Real Estate Brokers or Sales Representatives

101 (1) A real estate broker or sales representative shall

(2) If every party to a transaction is represented by a real estate broker or sales representative, each real estate broker or sales representative is required only to verify the identity of the party or parties that they represent.

(3) If one or more but not all of the parties to a transaction are represented by a real estate broker or sales representative, each real estate broker or sales representative shall take reasonable measures to verify the identity of the party or parties that are not represented.

(4) If a real estate broker or sales representative is unable to verify the identity of a party under subsection (3), they shall keep a record that sets out the measures taken, the date on which each measure was taken and the reasons why the measures were unsuccessful.

Real Estate Developers

102 A real estate developer shall

Casinos

103 A casino shall

Departments and Agents or Mandataries of Her Majesty in Right of Canada or of a Province That Issue, Sell or Redeem Money Orders

104 A department or an agent of Her Majesty in right of Canada or an agent or mandatary of Her Majesty in right of a province shall

PART 3

Measures for Verifying Identity

105 (1) A person or entity that is required to verify a person’s identity shall do so

(2) The identity of a person who is under 12 years of age shall be verified for the purposes of subsection (1) by verifying the identity of one of their parents or their guardian or tutor.

(3) The identity of a person who is at least 12 years of age but not more than 15 years of age may be verified by referring under subparagraph (1)(d)(i) to information that includes the name and address of one of the person’s parents or their guardian or tutor, and by confirming that the address is that of the person.

(4) For the purposes of subparagraphs (1)(d)(i) to (iii), the information that is referred to must not be from, or derived from, the same source and neither the person whose identity is being verified nor the person or entity that is verifying their identity can be a source. If information in a credit file is referred to, the credit file must have been in existence for at least six months.

(5) A document that is used by a person or entity to verify identity under subsection (1) must be authentic, valid and current. Other information that is used for that purpose must be valid and current.

(6) In the case of a retail deposit account referred to in subsection 448.1(1) of the Bank Act, if a person or entity cannot verify a person’s identity in accordance with one of paragraphs (1)(a) to (e) of this section, they are deemed to comply with subsection (1) if the person who requests that the account be opened meets the conditions set out in subsection 4(1) or (2) of the Access to Basic Banking Services Regulations.

(7) The identity shall be verified

106 (1) A person or entity that is required to verify a person’s identity in accordance with subsection 105(1) may rely on an agent or mandatary to take the measures to do so.

(2) The person or entity may rely on measures that were previously taken by an agent or mandatary to verify the person’s identity if the agent or mandatary was, at the time they took the measures,

(3) In order to rely, under subsection (1) or (2), on measures taken by an agent or mandatary, the person or entity shall

107 (1) A person or entity that is required to verify a person’s identity in accordance with subsection 105(1) may rely on measures that were previously taken by another person or entity if

(2) The person or entity that is required to verify a person’s identity shall not rely on measures that were previously taken by an entity referred to in paragraph (1)(b) unless they are satisfied, after taking into account the risk of money laundering or terrorist activity financing offences in the foreign state in which that entity carries out the activities, that

(3) In order to rely, under subsection (1), on measures taken by another person or entity, the person or entity that is required to verify a person’s identity shall

108 A person or entity that is required to verify a person’s identity under these Regulations shall keep a record that sets out the person’s name and the following information:

109 (1) A person or entity that is required to verify a corporation’s identity shall do so by referring to its certificate of incorporation, to a record that it is required to file annually under applicable provincial securities legislation or to the most recent version of any other record that confirms its existence as a corporation and contains its name and address and the names of its directors.

(2) A record that is used to verify identity under subsection (1) must be authentic, valid and current.

(3) The names of a corporation’s directors do not need to be confirmed if the corporation is a securities dealer.

(4) The corporation’s identity shall be verified

(5) If a person or entity that is required to verify a corporation’s identity does so by referring to an electronic version of a record that is contained in a database that is accessible to the public, they shall keep a record that sets out the corporation’s registration number, the type of record referred to and the source of the electronic version of the record. In any other case, they shall keep the record or a copy of it.

110 (1) A person or entity that is required to verify a corporation’s identity in accordance with subsection 109(1) may rely on measures that were previously taken by another person or entity if

(2) The person or entity that is required to verify a corporation’s identity shall not rely on measures that were previously taken by an entity referred to in paragraph (1)(b) unless they are satisfied, after taking into account the risk of money laundering or terrorist activity financing offences in the foreign state in which that entity carries out the activities, that

(3) In order to rely, under subsection (1), on measures taken by another person or entity, the person or entity that is required to verify a corporation’s identity shall

111 (1) If a person or entity that is referred to in any of paragraphs 5(a) to (g) of the Act and that is required to verify a corporation’s identity in accordance with subsection 109(1) considers, based on an assessment of the risk referred to in subsection 9.6(2) of the Act, that there is a low risk of a money laundering offence or terrorist activity financing offence, they are deemed to comply with subsection 109(1) if

(2) If the person or entity subsequently considers, based on an assessment of the risk referred to in subsection 9.6(2) of the Act, that the risk of a money laundering offence or terrorist activity financing offence has increased and is no longer low, they shall verify the corporation’s identity in accordance with subsection 109(1) as soon as feasible.

112 (1) A person or entity that is required to verify the identity of an entity other than a corporation shall do so by referring to a partnership agreement, to articles of association or to the most recent version of any other record that confirms its existence and contains its name and address.

(2) A record that is used to verify identity under subsection (1) must be authentic, valid and current.

(3) The entity’s identity shall be verified

(4) If the person or entity that is required to verify an entity’s identity does so by referring to an electronic version of a record that is contained in a database that is accessible to the public, they shall keep a record that sets out the entity’s registration number, the type of record referred to and the source of the electronic version of the record. In any other case, they shall keep the record or a copy of it.

113 (1) A person or entity that is required to verify an entity’s identity in accordance with subsection 112(1) may rely on measures that were previously taken by another person or entity if

(2) The person or entity that is required to verify an entity’s identity shall not rely on measures that were previously taken by an entity referred to in paragraph (1)(b) unless they are satisfied, after taking into account the risk of money laundering or terrorist activity financing offences in the foreign state in which that entity carries out the activities, that

(3) In order to rely, under subsection (1), on measures taken by another person or entity, the person or entity that is required to verify an entity’s identity shall

114 (1) If a person or entity that is referred to in any of paragraphs 5(a) to (g) of the Act and that is required to verify an entity’s identity in accordance with subsection 112(1) considers, based on an assessment of the risk referred to in subsection 9.6(2) of the Act, that there is a low risk of a money laundering offence or terrorist activity financing offence, they are deemed to comply with subsection 112(1) if

(2) If the person or entity subsequently considers, based on an assessment of the risk referred to in subsection 9.6(2) of the Act, that the risk of a money laundering offence or terrorist activity financing offence has increased and is no longer low, they shall verify the entity’s identity in accordance with subsection 112(1) as soon as feasible.

PART 4

Requirements with Respect to Persons Referred to in Subsection 9.3(1) of the Act

Application of Parts 5 and 6

115 The provisions of this Part are subject to the provisions of Parts 5 and 6.

Financial Entities

116 (1) A financial entity shall take reasonable measures to determine whether

(2) A financial entity shall take reasonable measures on a periodic basis to determine whether either of the following persons is a politically exposed foreign person, a politically exposed domestic person, a head of an international organization, a family member — referred to in subsection 2(1) — of one of those persons or a person who is closely associated with a politically exposed foreign person:

(3) If a financial entity or any of its employees or officers detects a fact that constitutes reasonable grounds to suspect that a person referred to in paragraph (2)(a) or (b) is a politically exposed foreign person, a politically exposed domestic person or a head of an international organization, or a family member — referred to in subsection 2(1) — of, or a person who is closely associated with, one of those persons, the financial entity shall take reasonable measures to determine whether they are such a person.

Life Insurance Companies and Life Insurance Brokers or Agents

117 A life insurance company or life insurance broker or agent shall take reasonable measures to determine whether either of the following persons is a politically exposed foreign person, a politically exposed domestic person or a head of an international organization, or a family member — referred to in subsection 2(1) — of, or a person who is closely associated with, one of those persons:

118 Section 117 does not apply to a life insurance company or a life insurance broker or agent when they are dealing in reinsurance.

Securities Dealers

119 (1) A securities dealer shall take reasonable measures to determine whether a person for whom they open an account is a politically exposed foreign person, a politically exposed domestic person, a head of an international organization, a family member — referred to in subsection 2(1) — of one of those persons or a person who is closely associated with a politically exposed foreign person.

(2) A securities dealer shall take reasonable measures on a periodic basis to determine whether an account holder is a politically exposed foreign person, a politically exposed domestic person, a head of an international organization, a family member — referred to in subsection 2(1) — of one of those persons or a person who is closely associated with a politically exposed foreign person.

(3) If a securities dealer or any of their employees or officers detects a fact that constitutes reasonable grounds to suspect that an account holder is a politically exposed foreign person, a politically exposed domestic person or a head of an international organization, or a family member — referred to in subsection 2(1) — of, or a person who is closely associated with, one of those persons, the securities dealer shall take reasonable measures to determine whether the account holder is such a person.

Money Services Businesses and Foreign Money Services Businesses

120 (1) A money services business shall take reasonable measures to determine whether any of the following persons is a politically exposed foreign person, a politically exposed domestic person or a head of an international organization, or a family member — referred to in subsection 2(1) — of, or a person who is closely associated with, one of those persons:

(2) A foreign money services business shall take reasonable measures to determine whether any of the following persons is a politically exposed foreign person, a politically exposed domestic person or a head of an international organization, or a family member — referred to in subsection 2(1) — of, or a person who is closely associated with, one of those persons:

Required Measures

121 (1) A financial entity or securities dealer that determines under paragraph 116(1)(a), subsection 116(2) or (3) or section 119 that a person is a politically exposed foreign person or a family member — referred to in subsection 2(1) — of, or a person who is closely associated with, such a person shall

(2) A financial entity or securities dealer shall also take the measures referred to in paragraphs (1)(a) to (c) if

(3) A financial entity or securities dealer shall take the reasonable measures referred to in paragraph 116(1)(a) and subsections 116(3) and 119(1) and (3) — and, if applicable, shall take the measures referred to in paragraphs (1)(a) and (b) — within 30 days after the day on which the account is opened or the fact is detected, as the case may be.

122 (1) A financial entity, life insurance company, life insurance broker or agent, money services business or foreign money services business that determines under subparagraph 116(1)(b)(i) or (iii), paragraph 117(a) or 120(1)(a) or (2)(a) that a person is a politically exposed foreign person or a family member — referred to in subsection 2(1) — of, or a person who is closely associated with, such a person shall

(2) A financial entity, money services business or foreign money services business that determines under subparagraph 116(1)(b)(iv) or paragraph 120(1)(c) or (2)(c) that a person is a politically exposed foreign person or a family member — referred to in subsection 2(1) — of, or a person who is closely associated with, such a person shall

(3) A financial entity, money services business or foreign money services business that determines under subparagraph 116(1)(b)(ii) or (v) or paragraph 120(1)(b) or (d) or (2)(b) or (d) that a beneficiary is a politically exposed foreign person or a family member — referred to in subsection 2(1) — of, or a person who is closely associated with, such a person shall ensure that a member of senior management reviews the transaction.

(4) A life insurance company or life insurance broker or agent that determines under paragraph 117(b) that a beneficiary is a politically exposed foreign person or a family member — referred to in subsection 2(1) — of, or a person who is closely associated with, such a person shall

(5) A financial entity, life insurance company, life insurance broker or agent, money services business or foreign money services business shall also take the measures referred to in paragraphs (1)(a) and (b) if

(6) A financial entity, money services business or foreign money services business shall also take the measures referred to in paragraphs (2)(a) and (b) if

(7) A financial entity, money services business or foreign money services business shall also take the measure referred to in subsection (3) if

(8) A life insurance company or life insurance broker or agent shall also take the measures referred to in paragraphs (4)(a) and (b) if

(9) A financial entity, life insurance company, life insurance broker or agent, money services business or foreign money services business shall take the reasonable measures referred to in paragraphs 116(1)(b) and 117(a) and subsections 120(1) and (2) — and, if applicable, shall take the measures referred to in paragraphs (1)(a) and (b), (2)(a) and (b) or subsection (3), as the case may be — within 30 days after the day on which the transaction is conducted.

(10) A life insurance company or life insurance broker or agent shall take the reasonable measures referred to in paragraph 117(b) before they first remit funds to the beneficiary under the annuity or policy and, if applicable, shall take the measures referred to in paragraphs (4)(a) and (b) before the transaction is conducted.

Requirements To Keep Records

123 (1) If a financial entity or securities dealer obtains approval under subsection 121(1) or (2) to keep an account open, they shall keep a record of

(2) If a transaction that is conducted with a financial entity, money services business or foreign money services business is reviewed under any of subsections 122(1) to (3) and (5) to (7), the financial entity, money services business or foreign money services business shall keep a record of

(3) If a transaction that is conducted with a life insurance company or life insurance broker or agent is reviewed under any of subsections 122(1), (4), (5) and (8), the life insurance company or life insurance broker or agent shall keep a record of

PART 5

General Provisions

Electronic Funds Transfers

124 (1) For the purposes of section 9.5 of the Act, the prescribed persons or entities are the financial entities, money services businesses, foreign money services businesses and casinos that are required to keep a record under these Regulations in respect of an electronic funds transfer.

(2) For the purposes of section 9.5 of the Act, the prescribed electronic funds transfers are international electronic funds transfers, as well as other electronic funds transfers within the meaning of subsection 1(2) that are SWIFT MT-103 messages or their equivalent.

(3) For the purposes of paragraph 9.5(a) of the Act, the prescribed information is

(4) Every person or entity referred in subsection (1) must develop and apply written risk-based policies and procedures for determining, in the case of an electronic funds transfer received by them that, despite reasonable measures taken under paragraph 9.5(b) of the Act, does not have included with it any of the information required under paragraph 9.5(a) of the Act, whether they should suspend or reject the electronic funds transfer and any follow-up measures to be taken.

Foreign Currency or Virtual Currency

125 If a transaction is conducted in a foreign currency or virtual currency, the amount of the transaction shall be converted into Canadian dollars using

Transactions That Are Deemed To Be Single

126 If a person or entity that is required under these Regulations to report the receipt from a person or entity of an amount in cash or to keep a large cash transaction record receives amounts in cash that total $10,000 or more in two or more transactions that are made within 24 consecutive hours, those transactions are deemed to be a single transaction of $10,000 or more if that person or entity knows that

127 (1) If a person or entity that is required to report the initiation of an international electronic funds transfer under these Regulations initiates two or more international electronic funds transfers that total $10,000 or more within 24 consecutive hours, those transactions are deemed to be a single transaction of $10,000 or more if that person or entity knows that

(2) Paragraphs (1)(a) and (b) do not apply if the requests to initiate the electronic funds transfers are made by or on behalf of

128 (1) If a person or entity that is required to report the final receipt of an electronic funds transfer under these Regulations finally receives two or more electronic funds transfers that total $10,000 or more within 24 consecutive hours, those transactions are deemed to be a single transaction of $10,000 or more if that person or entity knows that

(2) Paragraph (1)(b) does not apply if the beneficiary is

129 (1) If a person or entity that is required under these Regulations to report the receipt from a person or entity of an amount in virtual currency or to keep a large virtual currency transaction record receives amounts in virtual currency that total $10,000 or more in two or more transactions that are made within 24 consecutive hours, those transactions are deemed to be a single transaction of $10,000 or more if that person or entity knows that

(2) Paragraph (1)(c) does not apply if the beneficiary is

130 If, within 24 consecutive hours, a casino makes two or more disbursements that total $10,000 or more in any of the transactions referred to in paragraphs 71(a) to (h), those disbursements are deemed to be a single disbursement of $10,000 or more if the casino knows that

Reports

131 (1) A report that is required to be made to the Centre under these Regulations shall be sent electronically in accordance with guidelines that are prepared by the Centre, if the sender has the technical capabilities to do so.

(2) The report shall be sent in paper format in accordance with guidelines that are prepared by the Centre, if the sender does not have the technical capabilities to send the report electronically.

(3) For greater certainty, although items in Schedules 1 to 6 are described in the singular, a person or entity shall report all known information that falls within an item.

132 (1) A report that is required to be made under these Regulations in respect of an electronic funds transfer shall be sent to the Centre within five working days after the day on which the person or entity initiates or finally receives the electronic funds transfer, as the case may be.

(2) A report that is required to be made under these Regulations in respect of a receipt of an amount in virtual currency shall be sent to the Centre within five working days after the day on which the person or entity transfers or receives the amount, as the case may be.

(3) A report that is required to be made under these Regulations in respect of a receipt of an amount in cash or in respect of a disbursement referred to in section 71 shall be sent to the Centre within 15 days after the day on which the person or entity receives the amount or makes the disbursement, as the case may be.

Transactions Conducted by Employees and Authorized Persons and Entities

133 (1) For greater certainty, if a person who is subject to these Regulations is an employee of a person or entity referred to in any of paragraphs 5(a) to (l) of the Act, it is the employer rather than the employee that is responsible for complying with these Regulations.

(2) For greater certainty, if a person or entity that is subject to these Regulations, other than a life insurance broker or agent, is authorized to act on behalf of another person or entity referred to in any of paragraphs 5(a) to (l) of the Act in any capacity, including as an agent or mandatary, it is that other person or entity rather than the authorized person or entity that is responsible for complying with these Regulations.

Third-Party Determination

134 (1) A person or entity that is required under these Regulations to report the receipt from a person or entity of an amount of $10,000 or more in cash or in virtual currency or to keep a large cash transaction record or a large virtual currency transaction record shall, when they receive the amount in cash or virtual currency, take reasonable measures to determine whether the person from whom the cash or virtual currency is received is acting on behalf of a third party.

(2) If the person or entity determines that the person from whom the cash or virtual currency is received is acting on behalf of a third party, the person or entity shall take reasonable measures to obtain the following information and shall keep a record of the information obtained:

(3) If the person or entity is not able to determine whether the person from whom the cash or virtual currency is received is acting on behalf of a third party but there are reasonable grounds to suspect that they are, the person or entity shall keep a record that

45 The Regulations are amended by adding the following after section 135:

136 (1) A person or entity that is required to keep an information record under these Regulations — other than one in connection with a life insurance policy referred to in paragraph 22(1)(b) — shall, when they create the information record, take reasonable measures to determine whether the person or entity to which it pertains is acting on behalf of a third party.

(2) If the person or entity determines that the person or entity to which the information record pertains is acting on behalf of a third party, the person or entity shall take reasonable measures to obtain the following information and shall keep a record of the information obtained:

(3) If the person or entity is not able to determine whether the person or entity to which the information record pertains is acting on behalf of a third party but there are reasonable grounds to suspect that they are, the person or entity shall keep a record that

137 (1) A casino that is required to report a disbursement under section 71 shall, when the casino makes the disbursement, take reasonable measures to determine whether the person or entity that requests that the disbursement be made is acting on behalf of a third party.

(2) If the casino determines that the person or entity that makes the request is acting on behalf of a third party, the casino shall take reasonable measures to obtain the following information and shall keep a record of the information obtained:

(3) If the casino is not able to determine whether the person or entity that makes the request is acting on behalf of a third party but there are reasonable grounds to suspect that they are, the casino shall keep a record that

46 The Regulations are amended by adding the following after section 138:

139 A trust company that is required to keep a record in respect of an inter vivos trust under these Regulations shall keep a record that sets out the name, address and telephone number of each beneficiary that is known when the trust company becomes a trustee for the inter vivos trust and

Deemed Receipt of Funds and Virtual Currency

140 (1) For the purposes of paragraph 7(1)(a), section 18 or 25 or paragraph 30(1)(a) or 70(1)(a), if the person or entity that has the obligation to report authorizes another person or entity to receive funds on their behalf, and that other person or entity receives an amount of $10,000 or more in cash in a single transaction in accordance with the authorization, the person or entity that has the obligation to report is deemed to have received the amount when it is received by the other person or entity.

(2) For the purposes of paragraph 33(1)(a), if the foreign money services business authorizes another person or entity to receive funds on their behalf from a person or entity in Canada, and that other person or entity receives an amount of $10,000 or more in cash in a single transaction in accordance with the authorization, the foreign money services business is deemed to have received the amount when it is received by the other person or entity.

(3) For the purposes of section 39, 48, 54, 60, 66 or 78, if the person or entity that has the obligation to report authorizes another person or entity to receive funds on their behalf in connection with the activity referred to in that section, and that other person or entity receives an amount of $10,000 or more in cash in a single transaction in accordance with the authorization, the person or entity that has the obligation to report is deemed to have received the amount when it is received by the other person or entity.

141 (1) For the purposes of paragraph 7(1)(d), section 19 or 26 or paragraph 30(1)(f) or 70(1)(d), if the person or entity that has the obligation to report authorizes another person or entity to receive virtual currency on their behalf, and that other person or entity receives an amount of $10,000 or more in virtual currency in a single transaction in accordance with the authorization, the person or entity that has the obligation to report is deemed to have received the amount when it is received by the other person or entity.

(2) For the purposes of paragraph 33(1)(f), if the foreign money services business authorizes another person or entity to receive virtual currency on their behalf from a person or entity in Canada, and that other person or entity receives an amount of $10,000 or more in virtual currency in a single transaction in accordance with the authorization, the foreign money services business is deemed to have received the amount when it is received by the other person or entity.

(3) For the purposes of section 40, 49, 55, 61, 67 or 79, if the person or entity that has the obligation to report authorizes another person or entity to receive virtual currency on their behalf in connection with the activity referred to in that section, and that other person or entity receives an amount of $10,000 or more in virtual currency in a single transaction in accordance with the authorization, the person or entity that has the obligation to report is deemed to have received the amount when it is received by the other person or entity.

142 (1) For the purposes of section 10, 20, 27 or 31 or subsection 72(1), if the person or entity that has the obligation to keep a large cash transaction record authorizes another person or entity to receive funds on their behalf, and that other person or entity receives an amount of $10,000 or more in cash in a single transaction in accordance with the authorization, the person or entity that has the obligation to keep the large cash transaction record is deemed to have received the amount when it is received by the other person or entity.

(2) For the purposes of section 34, if the foreign money services business authorizes another person or entity to receive funds on their behalf from a person or entity in Canada, and that other person or entity receives an amount of $10,000 or more in cash in a single transaction in accordance with the authorization, the foreign money services business is deemed to have received the amount when it is received by the other person or entity.

(3) For the purposes of section 41, 50, 56, 62, 68 or 80, if the person or entity that has the obligation to keep a large cash transaction record authorizes another person or entity to receive funds on their behalf in connection with the activity referred to in that section, and that other person or entity receives an amount of $10,000 or more in cash in a single transaction in accordance with the authorization, the person or entity that has the obligation to keep the large cash transaction record is deemed to have received the amount when it is received by the other person or entity.

143 (1) For the purposes of section 11, 21, 28, 32 or 73, if the person or entity that has the obligation to keep a large virtual currency transaction record authorizes another person or entity to receive virtual currency on their behalf, and that other person or entity receives an amount of $10,000 or more in virtual currency in a single transaction in accordance with the authorization, the person or entity that has the obligation to keep the large virtual currency transaction record is deemed to have received the amount when it is received by the other person or entity.

(2) For the purposes of section 35, if the foreign money services business authorizes another person or entity to receive virtual currency on their behalf from a person or entity in Canada, and that other person or entity receives an amount of $10,000 or more in virtual currency in a single transaction in accordance with the authorization, the foreign money services business is deemed to have received the amount when it is received by the other person or entity.

(3) For the purposes of section 42, 51, 57, 63, 69 or 81, if the person or entity that has the obligation to keep a large virtual currency transaction record authorizes another person or entity to receive virtual currency on their behalf in connection with the activity referred to in that section, and that other person or entity receives an amount of $10,000 or more in virtual currency in a single transaction in accordance with the authorization, the person or entity that has the obligation to keep the large virtual currency transaction record is deemed to have received the amount when it is received by the other person or entity.

Record-keeping

144 A person or entity that sends a report to the Centre shall keep a copy of the report.

145 Every person and entity that enters into a business relationship shall keep a record that sets out the purpose and intended nature of the business relationship.

146 (1) A person or entity that is required to verify the identity of another person or entity shall keep a record of the measures taken when they conduct ongoing monitoring of their business relationship with that person or entity and of the information obtained from that ongoing monitoring.

(2) Subsection (1) does not apply

147 If a record is required to be kept under these Regulations, the record or a copy of it may be kept in a machine-readable or electronic form if a paper copy can readily be produced from it.

148 (1) A person or entity that is required to keep records under these Regulations shall keep those records for a period of at least five years after

(2) For greater certainty, if a record that is kept under these Regulations is the property of a person’s employer or of a person or entity with which the person is in a contractual relationship, the person is not required to keep the record after the end of their employment or the contractual relationship.

149 Every record that is required to be kept under these Regulations shall be kept in such a way that it can be provided to an authorized person within 30 days after the day on which a request is made to examine it under section 62 of the Act.

PART 6

Exceptions

Payment Card Processing Activities

150 Sections 7, 10 to 14, 16, 85 to 88 and 116, subsections 123(1) and (2), sections 135, 138 and 145 and subsection 148(1) do not apply to the activities of a financial entity in respect of the processing for a merchant of payments by credit card or prepaid payment product.

Requirements with Respect to Virtual Currency

151 (1) For greater certainty, paragraphs 7(1)(d), section 11, paragraphs 12(r) to (t), 13(h) and 14(1)(j) to (l), sections 19, 21, 26 and 28, paragraphs 30(1)(f), section 32, paragraph 33(1)(f), section 35, paragraphs 36(g), (h) and (j), sections 40, 42, 49, 51, 55, 57, 61, 63, 67 and 69, paragraph 70(1)(d) and sections 73, 79 and 81 do not apply to

(2) In this section, distributed ledger means a digital ledger that is maintained by multiple persons or entities and that can only be modified by a consensus of those persons or entities.

Requirement To Report Information

152 (1) The requirement to report information set out in any of Schedules 1 to 6 does not apply in respect of information set out in an item of that Schedule that is not marked with an asterisk if, after taking reasonable measures to do so, the person or entity is unable to obtain the information.

(2) The requirement to report information set out in any of Schedules 1 to 4 and 6 does not apply in respect of information set out in an item of that Schedule that is marked with an asterisk if

(3) For greater certainty, a person or entity is not required to report information set out in any item of Schedules 1 to 6 that is not applicable in the circumstances.

Requirement To Include Information in a Record

153 A person or entity that is required to keep a record under these Regulations is not required to include information in that record that is readily obtainable from other records that they are required to keep under these Regulations.

Other Requirements

154 (1) Subparagraphs 86(a)(i) and (ii), paragraphs 87(a), 89(a) and (d), 94(a), 103(a) and 116(1)(a) and subsections 116(2) and (3) and 119(1) to (3) do not apply in respect of

(2) Sections 12 to 14, 22, 29, 43, 45 and 52, subsection 58(1), sections 64, 74, 82, 86 to 89, 92, 94, 96, 97 and 100, subsection 101(1) and sections 102 to 104, 116, 117, 119 and 123 do not apply in respect of

(3) A financial entity, securities dealer, life insurance company or life insurance broker or agent is not required to verify the identity of, or to keep a signature card for, a person who is a member of a group plan account or to determine whether they are a politically exposed foreign person, a politically exposed domestic person or a head of an international organization, or a family member — referred to in subsection 2(1) — of, or a person who is closely associated with, one of those persons if

(4) Subsections (1) to (3) do not apply if a person or entity conducts or attempts to conduct a transaction that is required to be reported to the Centre under section 7 of the Act.

155 (1) If a person or entity verifies a person’s identity in accordance with subsection 105(1) and complies with section 108 — or if, before the coming into force of this subsection, they ascertained a person’s identity in accordance with these Regulations, and complied with the related record-keeping provisions, as they read at the time — they are not required to verify the person’s identity again unless they have doubts about the information that was used for that purpose.

(2) If a person or entity verifies a corporation’s identity in accordance with subsection 109(1) — or if, before the coming into force of this subsection, they confirmed the corporation’s existence and ascertained its name and address and the names of its directors in accordance with these Regulations, and complied with the related record-keeping provisions, as they read at the time — they are not required to verify it again unless they have doubts about the information that was used for that purpose.

(3) If a person or entity verifies the identity of an entity other than a corporation in accordance with subsection 112(1) — or if, before the coming into force of this subsection, they confirmed the entity’s existence in accordance with these Regulations, and complied with the related record-keeping provisions, as they read at the time — they are not required to verify it again unless they have doubts about the information that was used for that purpose.

(4) If a person or entity determines that a person is a politically exposed foreign person or a family member, referred to in subsection 2(1), of such a person — or if, before the coming into force of this subsection, they determined that a person is a politically exposed foreign person, as defined in subsection 9.3(3) of the Act as it read at the time the determination was made — they are not required to make the determination again.

PART 7

Compliance Programs and Special Measures

156 (1) For the purposes of subsection 9.6(1) of the Act, a person or entity referred to in that subsection shall implement the compliance program referred to in that subsection by

(2) If the person or entity intends to carry out a new development or introduce a new technology that may have an impact on their clients, business relationships, products or delivery channels or the geographic location of their activities, they shall, in accordance with paragraph (1)(c), assess and document the risk referred to in subsection 9.6(2) of the Act before doing so.

(3) A review referred to in paragraph (1)(f) shall be carried out and the results documented every two years by an internal or external auditor of the person or entity, or by the person or entity if they do not have an auditor.

(4) An entity shall report the findings of the review, any updates made to the policies and procedures within the reporting period and the status of the implementation of those updates in writing to a senior officer within 30 days after the day on which the review is completed.

157 The prescribed special measures that are required to be taken by a person or entity referred to in subsection 9.6(1) of the Act for the purposes of subsection 9.6(3) of the Act are the development and application of written policies and procedures for

47 Schedules 1 to 3 to the Regulations are replaced by the Schedules 1 to 4 set out in the schedule to these Regulations.

48 (1) Schedule 4 to the Regulations is renumbered as Schedule 5.

(2) Schedule 5 to the Regulations is amended by replacing the references after the heading “SCHEDULE 5” with the following:

(Paragraph 8(1)(g) and subsections 131(3) and 152(1) and (3))

49 Schedules 5 to 8 to the Regulations, as enacted by SOR/2002-184 are replaced by the Schedule 6 set out in the schedule to these Regulations.

Cross-border Currency and Monetary Instruments Reporting Regulations

50 (1) Paragraph (b) of the definition effets in subsection 1(1) of the French version of the Cross-border Currency and Monetary Instruments Reporting Regulations footnote 3 is replaced by the following:

(2) The definitions agent de transfert and moyen de transport non commercial de passagers in subsection 1(2) of the French version of the Regulations are replaced by the following:

agent de transfert Personne ou entité nommée par une personne morale pour tenir les comptes en ce qui a trait aux détenteurs d’actions, de débentures et de bons, annuler et émettre des certificats et expédier les chèques de dividendes. (transfer agent)

moyen de transport non commercial de passagers S’entend du moyen de transport qui ne transporte pas de passagers moyennant paiement, y compris l’aéronef d’affaires, l’aéronef privé et l’embarcation de plaisance. (non-commercial passenger conveyance)

(3) Subsection 1(2) of the Regulations is amended by adding the following in alphabetical order:

currency means coins referred to in section 7 of the Currency Act, notes issued by the Bank of Canada under the Bank of Canada Act that are intended for circulation in Canada or coins or bank notes of countries other than Canada. (espèces)

51 Section 2 of the Regulations is replaced by the following:

2 (1) For the purposes of subsection 12(1) of the Act, the prescribed amount is $10,000.

(2) The amount is in Canadian dollars, or in its equivalent in a foreign currency using

52 The heading before section 3 of the English version of the Regulations is replaced by the following:

Manner of Reporting

53 (1) The portion of paragraph 3(b) of the French version of the Regulations before subparagraph (i) is replaced by the following:

(2) Subparagraphs 3(b)(i) to (iv) of the Regulations are replaced by the following:

54 The Regulations are amended by adding the following after section 3:

3.1 For greater certainty, although items in Schedules 1 to 3 are described in the singular, a person or entity shall report all known information that falls within an item.

55 Schedule 1 to the Regulations is amended by replacing the references after the heading “SCHEDULE 1” with the following:

(Subparagraph 3(b)(i), section 3.1 and paragraphs 4(3)(a) and (3.1)(a))

56 The heading of Part A of Schedule 1 to the Regulations is replaced by the following:

Information with Respect to Person Described in Paragraph 12(3)(a) of Act

57 Items 1 and 2 of Part A of Schedule 1 to the Regulations are replaced by the following:

58 Items 5 to 7 of Part A of Schedule 1 to the Regulations are replaced by the following:

59 Part B of Schedule 1 to the Regulations is amended by adding the following after item 2:

60 Part C of Schedule 1 to the Regulations is replaced by the following:

PART C

Information with Respect to Each Currency That Is Imported or Exported

PART D

Information with Respect to Each Monetary Instrument That Is Imported or Exported

61 Schedule 2 to the Regulations is amended by replacing the references after the heading “SCHEDULE 2” with the following:

(Subparagraphs 3(b)(ii) and (iii), section 3.1 and paragraphs 4(3)(a) and (3.1)(a))

62 The heading of Schedule 2 to the French version of the Regulations is replaced by the following:

Renseignements à fournir par la personne visée à l’alinéa 12(3)a) de la Loi (si elle transporte les espèces ou les effets pour le compte d’une entité ou d’une autre personne) ou par la personne ou entité visée aux alinéas 12(3)b), c) ou e) de la Loi

63 The heading of Part A of Schedule 2 to the Regulations is replaced by the following:

Information with Respect to Person on Whose Behalf Person Described in Paragraph 12(3)(a) of Act Is Transporting or with Respect to Person Described in Paragraph 12(3)(b), (c) or (e) of Act

64 Items 1 and 2 of Part A of Schedule 2 to the Regulations are replaced by the following:

65 Items 5 to 7 of Part A of Schedule 2 to the Regulations are replaced by the following:

66 The heading of Part B of Schedule 2 to the Regulations is replaced by the following:

Information with Respect to Entity on Whose Behalf Person Described in Paragraph 12(3)(a) of Act Is Transporting or with Respect to Entity Described in Paragraph 12(3)(b) or (c) of Act

67 Items 1 and 2 of Part B of Schedule 2 to the Regulations are replaced by the following:

68 Items 4 and 5 of Part B of Schedule 2 to the Regulations are replaced by the following:

69 The heading of Part C of Schedule 2 to the Regulations is replaced by the following:

Information with Respect to Importation or Exportation

70 Items 3 to 7 of Part C of Schedule 2 to the Regulations are replaced by the following:

71 The heading of Part D of Schedule 2 to the Regulations is replaced by the following:

Information with Respect to Person Described in Paragraph 12(3)(a) of Act or with Respect to Person Acting on Behalf of Person or Entity Described in Paragraph 12(3)(b), (c) or (e) of Act

72 Items 1 and 2 of Part D of Schedule 2 to the Regulations are replaced by the following:

73 Items 5 to 7 of Part D of Schedule 2 to the Regulations are replaced by the following:

74 Part E of Schedule 2 to the Regulations is replaced by the following:

PART E

Information with Respect to Each Currency That Is Imported or Exported

PART F

Information with Respect to Each Monetary Instrument That Is Imported or Exported

75 Schedule 3 to the Regulations is amended by replacing the references after the heading “SCHEDULE 3” with the following:

(Subparagraph 3(b)(iv), section 3.1 and paragraphs 4(3)(a) and (3.1)(a))

76 The heading of Part A of Schedule 3 to the Regulations is replaced by the following:

Information with Respect to Person Described in Paragraph 12(3)(d) of Act

77 Items 1 and 2 of Part A of Schedule 3 to the Regulations are replaced by the following:

78 Items 5 to 10 of Part A of Schedule 3 to the Regulations are replaced by the following:

79 Item 11 of Part A of Schedule 3 to the French version of the Regulations is replaced by the following:

80 Part B of Schedule 3 of the Regulations is amended by adding the following after item 3:

Proceeds of Crime (Money Laundering) and Terrorist Financing Registration Regulations

81 The heading before section 1 of the French version of the Proceeds of Crime (Money Laundering) and Terrorist Financing Registration Regulations footnote 4 is replaced by the following:

Définitions et interprétation

82 Section 1 of the Regulations is amended by adding the following in alphabetical order:

financial entity has the same meaning as in subsection 1(2) of the Proceeds of Crime (Money Laundering) and Terrorist Financing Regulations. (entité financière)

foreign money services business means a person or entity referred to in paragraph 5(h.1) of the Act. (entreprise de services monétaires étrangère)

83 Section 2 of the Regulations is replaced by the following:

2 For the purposes of subsection 54.1(3) of the Act, identifying information means the information set out in Part A of Schedule 1 and in items 1 to 5 of Part C of that Schedule and the dates on which a person’s or entity’s registration is revoked or expires and on which a registered person or entity ceases an activity.

84 Section 3 of the Regulations is replaced by the following:

3 (1) A corporation is not eligible for registration with the Centre if its chief executive officer, its president or one of its directors or a person or entity that owns or controls, directly or indirectly, 20% or more of the shares of the corporation is referred to in any of paragraphs 11.11(1)(a) to (d), (e.1) and (f) of the Act.

(2) An entity that is not a corporation is not eligible for registration with the Centre if its chief executive officer, its president or one of its directors or a person or entity that owns or controls, directly or indirectly, 20% or more of the entity is referred to in any of paragraphs 11.11(1)(a) to (d), (e.1) and (f) of the Act.

85 (1) The portion of section 4 of the Regulations before paragraph (d) is replaced by the following:

4 An applicant or a registered person or entity must submit the following information to the Centre, in accordance with guidelines that are prepared by the Centre, electronically if they have the technical capability to do so or by telephone if they do not:

(2) Paragraph 4(d) of the French version of the Regulations is replaced by the following:

(3) Paragraphs 4(e) and (f) of the Regulations is replaced by the following:

86 Sections 5 and 6 of the Regulations are replaced by the following:

5 An application referred to in paragraph 4(a) or (e), a notification referred to in paragraph 4(b) and a clarification referred to in paragraph 4(d) must contain the information set out in Schedule 1.

6 A notification referred to in paragraph 4(f) must contain the information set out in Schedule 2.

6.01 For greater certainty, although items in Schedules 1 and 2 are described in the singular, a person or entity must report all known information that falls within an item.

87 Sections 6.1 and 7 of the Regulations are replaced by the following:

6.1 For the purposes of section 11.19 of the Act, when a person or entity that is referred to in paragraph 5(h) of the Act and that is engaged in the business of providing the service referred to in subparagraph 5(h)(iv) of the Act, or a person or entity that is referred to in paragraph 5(h.1) of the Act, renews their registration for the first time, they must do so no later than

88 Schedule 1 to the Regulations is amended by replacing the references after the heading “SCHEDULE 1” with the following:

(Sections 2, 5 and 6.01)

89 The heading of Schedule 1 to the French version of the Regulations is replaced by the following:

Renseignements devant être inclus dans la demande d’inscription ou de renouvellement d’inscription, dans la communication de modification de renseignements dans la demande existante, dans la communication de nouveaux renseignements obtenus et dans les précisions de renseignements dans la demande existante

90 The heading of Part A of Schedule 1 to the Regulations is replaced by the following:

Identifying Information with Respect to Applicant

91 Item 1 of Part A of Schedule 1 to the Regulations is replaced by the following:

92 Items 3 and 4 of Part A of Schedule 1 to the Regulations are replaced by the following:

93 Items 6 to 11 of Part A of Schedule 1 to the Regulations are replaced by the following:

94 The heading of Part B of Schedule 1 to the Regulations is replaced by the following:

Information with Respect to Applicant

95 Item 1 of Part B of Schedule 1 to the Regulations is replaced by the following:

96 Item 2 of Part B of Schedule 1 to the French version of the Regulations is replaced by the following:

97 Item 3 of Part B of Schedule 1 to the Regulations is repealed.

98 Items 5 to 17 of Part B of Schedule 1 to the Regulations are replaced by the following:

99 Item 11 of Part B of Schedule 1 is replaced by the following:

100 Item 18 of Part B of Schedule 1 to the English version of the Regulations is replaced by the following:

101 Parts C and D of Schedule 1 to the Regulations are replaced by the following:

PART C

Information with Respect to Applicant’s Agents or Mandataries and Branches

102 Schedule 2 to the Regulations is amended by replacing the references after the heading “SCHEDULE 2” with the following:

(Sections 6 and 6.01)

103 Item 1 of Schedule 2 to the Regulations is replaced by the following:

104 Item 2 of Schedule 2 to the French version of the Regulations is replaced by the following:

105 Items 3 to 5 of Schedule 2 to the Regulations are replaced by the following:

Proceeds of Crime (Money Laundering) and Terrorist Financing Administrative Monetary Penalties Regulations

106 Section 2 of the Proceeds of Crime (Money Laundering) and Terrorist Financing Administrative Monetary Penalties Regulations footnote 5 is replaced by the following:

2 The short-form descriptions that are set out in column 2 of Part 1 of the schedule, and column 3 of Parts 2 and 3 of the schedule, form no part of these Regulations and are inserted for convenience of reference only.

107 Section 3 of the Regulations is amended by adding “and” at the end of paragraph (b), by striking out “and” at the end of paragraph (c) and by repealing paragraph (d).

108 Subsection 4(1) of the Regulations is replaced by the following:

4 (1) Each violation is classified as a minor, serious or very serious violation, as set out in column 3 of Part 1 of the schedule and column 4 of Parts 2 and 3 of the schedule.

109 Section 6 of the French version of the Regulations is replaced by the following:

6 Pour l’application de l’article 73.11 de la Loi, le montant de la pénalité est déterminé compte tenu des antécédents de conformité de la personne ou entité avec la Loi — à l’exception de la partie 2 —, le Règlement sur le recyclage des produits de la criminalité et le financement des activités terroristes, le Règlement sur la déclaration des opérations douteuses — recyclage des produits de la criminalité et financement des activités terroristes et le Règlement sur l’inscription — recyclage des produits de la criminalité et financement des activités terroristes.

110 Section 10 of the Regulations and the heading before it are repealed.

111 Item 1 of Part I of the schedule to the Regulations is renumbered as item 1.6.

112 Part 1 of the schedule to the Regulations is amended by adding the following before item 1.6:

Item

Column 1

Provision of Proceeds of Crime (Money Laundering) and Terrorist Financing Act

Column 2

Short-form Description

Column 3

Classification of Violation

1

7

Failure of the specified person or entity to report the transaction as required

very serious

1.1

9(3)

Failure of the specified person or entity to establish and maintain the specified list

serious

1.2

9.2

Opening an account for a client by the specified person or entity in the prescribed circumstances if the identity of the client cannot be verified in accordance with the prescribed measures

serious

1.3

9.31(1)

Opening or maintaining an account by the specified entity for, or having a correspondent banking relationship with, the specified person or entity

serious

1.4

9.4(1)(c)

Failure of the specified entity to obtain the approval of senior management in respect of the correspondent banking services

serious

1.5

9.4(1)(d)

Failure of the specified entity to set out in writing its obligations and those of the foreign entity in respect of the correspondent banking services

serious

113 Part 1 of the schedule to the Regulations is amended by adding the following after item 1.6:

Item

Column 1

Provision of Proceeds of Crime (Money Laundering) and Terrorist Financing Act

Column 2

Short-form Description

Column 3

Classification of Violation

1.7

9.5(a)

Failure of the specified person or entity to include the required information with the electronic funds transfer

minor

1.8

9.5(b)

Failure of the specified person or entity to take reasonable measures to ensure that any electronic funds transfer that the person or entity receives includes the required information

minor

1.9

9.6(3)

Failure of the specified person or entity to take the specified special measures

serious

114 Part 1 of the schedule to the Regulations is amended by adding the following after item 5:

Item

Column 1

Provision of Proceeds of Crime (Money Laundering) and Terrorist Financing Act

Column 2

Short-form Description

Column 3

Classification of Violation

5.01

11.12(1)

Failure of an applicant to submit the specified application for registration in the prescribed manner together with the prescribed information

serious

5.02

11.13(1)

Failure of an applicant or a registered person or entity to submit a notification of a change to the information contained in the application or of newly obtained information in the prescribed manner

serious

5.03

11.14(1)

Failure of an applicant to submit a requested clarification within the prescribed time and in the prescribed manner, together with the required information

serious

5.04

11.17(1)

Failure of a registered person or entity to submit a requested clarification within the prescribed time and in the prescribed manner, together with the prescribed information

serious

5.05

11.19

Failure of a registered person or entity to renew their registration in the prescribed manner and within the prescribed time

serious

5.06

11.2

Failure of a registered person or entity to submit a notification of the cessation of an activity for which they are registered, within the prescribed time and in the prescribed manner, together with the prescribed information

serious

115 Part 2 of the schedule to the Regulations is replaced by the following:

PART 2

Proceeds of Crime (Money Laundering) and Terrorist Financing Act and Proceeds of Crime (Money Laundering) and Terrorist Financing Regulations

Item

Column 1


Provision of Proceeds of Crime (Money Laundering) and Terrorist Financing Act

Column 2


Provision of Proceeds of Crime (Money Laundering) and Terrorist Financing Regulations

Column 3




Short-form Description

Column 4



Classification of Violation

1

9(1)

7(1)(a)

Failure of a financial entity to report the receipt of $10,000 or more in cash, together with the required information

minor

2

9(1)

7(1)(b)

Failure of a financial entity to report the initiation of an electronic funds transfer of $10,000 or more, together with the required information

minor

3

9(1)

7(1)(c)

Failure of a financial entity to report the final receipt of an electronic funds transfer of $10,000 or more, together with the required information

minor

4

9(1)

7(1)(d)

Failure of a financial entity to report the receipt of $10,000 or more in virtual currency, together with the required information

minor

5

9(1)

8(3)(a)

Failure of a financial entity to report a change to the required information within the prescribed period

minor

6

9(1)

8(3)(b)(i)

Failure of a financial entity to verify, in accordance with the prescribed frequency, that the prescribed conditions continue to be met

minor

7

9(1)

8(3)(b)(ii)

Failure of a financial entity to ensure, in accordance with the prescribed frequency, that a senior officer of the financial entity confirms that the conditions continue to be met

minor

8

9(1)

8(3)(b)(iii)

Failure of a financial entity to send a report containing the required information in accordance with the prescribed frequency

minor

9

9(3)

9(a)

Failure of a financial entity to include on the specified list the name and address of each client

minor

10

9(3)

9(b)

Failure of a financial entity to maintain the specified list in the required manner

minor

11

6

10

Failure of a financial entity to keep a large cash transaction record in respect of the receipt of $10,000 or more in cash

minor

12

6

11

Failure of a financial entity to keep a large virtual currency transaction record in respect of the receipt of $10,000 or more in virtual currency

minor

13

6

12

Failure of a financial entity to keep the required records in respect of every account that it opens or transaction that is conducted with it

minor

14

6

13

Failure of a financial entity to keep the required records in respect of every credit card account that it opens and every transaction connected to that account

minor

15

6

14

Failure of a financial entity to keep the required records in respect of every prepaid payment product account that it opens and every transaction made by means of a prepaid payment product connected to that account

minor

16

6

15(1)

Failure of a trust company to keep the required records in respect of a trust for which it is trustee

minor

17

9.4(1)(a)

16(2)

Failure of the specified financial entity to keep the required records

minor

18

9.4(1)(e)

16(3)

Failure of the specified financial entity to take reasonable measures to ascertain whether the specified foreign financial institution has in place the prescribed policies and procedures and, if not, to take the required measures

serious

19

9(1)

18

Failure of the specified life insurance company or life insurance broker or agent to report the receipt of $10,000 or more in cash, together with the required information

minor

20

9(1)

19

Failure of the specified life insurance company or life insurance broker or agent to report the receipt of $10,000 or more in virtual currency, together with the required information

minor

21

6

20

Failure of the specified life insurance company or life insurance broker or agent to keep a large cash transaction record in respect of the receipt of $10,000 or more in cash

minor

22

6

21

Failure of a life insurance company or life insurance broker or agent to keep a large virtual currency transaction record in respect of the receipt of $10,000 or more in virtual currency

minor

23

6

22

Failure of a life insurance company or life insurance broker or agent to keep an information record in connection with the specified sale at the prescribed time

minor

24

6

23

Failure of the specified life insurance company or life insurance broker or agent to keep the required record in respect of a corporation

minor

25

9(1)

25

Failure of the specified securities dealer to report the receipt of $10,000 or more in cash, together with the required information

minor

26

9(1)

26

Failure of the specified securities dealer to report the receipt of $10,000 or more in virtual currency, together with the required information

minor

27

6

27

Failure of a securities dealer to keep a large cash transaction record in respect of the receipt of $10,000 or more in cash

minor

28

6

28

Failure of a securities dealer to keep a large virtual currency transaction record in respect of the receipt of $10,000 or more in virtual currency

minor

29

6

29

Failure of a securities dealer to keep the required records in respect of every account they open

minor

30

9(1)

30(1)(a)

Failure of a money services business to report the receipt of $10,000 or more in cash, together with the required information

minor

31

9(1)

30(1)(b)

Failure of a money services business to report the initiation of an electronic funds transfer of $10,000 or more, together with the required information

minor

32

9(1)

30(1)(c)

Failure of a money services business to report the final receipt of an electronic funds transfer of $10,000 or more, together with the required information

minor

33

9(1)

30(1)(d)

Failure of a money services business to report the initiation of an electronic funds transfer of $10,000 or more, together with the required information, if the electronic funds transfer is finally received by the same money services business

minor

34

9(1)

30(1)(e)

Failure of a money services business to report the final receipt of an electronic funds transfer of $10,000 or more, together with the required information, if the electronic funds transfer was initiated by the same money services business

minor

35

9(1)

30(1)(f)

Failure of a money services business to report the receipt of $10,000 or more in virtual currency, together with the required information

minor

36

6

31

Failure of a money services business to keep a large cash transaction record in respect of the receipt of $10,000 or more in cash

minor

37

6

32

Failure of a money services business to keep a large virtual currency transaction record in respect of the receipt of $10,000 or more in virtual currency

minor

38

9(1)

33(1)(a)

Failure of a foreign money services business to report the receipt of $10,000 or more in cash, together with the required information

minor

39

9(1)

33(1)(b)

Failure of a foreign money services business to report the initiation of an electronic funds transfer of $10,000 or more, together with the required information

minor

40

9(1)

33(1)(c)

Failure of a foreign money services business to report the final receipt of an electronic funds transfer of $10,000 or more, together with the required information

minor

41

9(1)

33(1)(d)

Failure of a foreign money services business to report the initiation of an electronic funds transfer of $10,000 or more, together with the required information, if the electronic funds transfer is finally received by the same foreign money services business

minor

42

9(1)

33(1)(e)

Failure of a foreign money services business to report the final receipt of an electronic funds transfer of $10,000 or more, together with the required information, if the electronic funds transfer was initiated by the same foreign money services business

minor

43

9(1)

33(1)(f)

Failure of a foreign money services business to report the receipt of $10,000 or more in virtual currency, together with the required information

minor

44

6

34

Failure of a foreign money services business to keep a large cash transaction record in respect of the receipt of $10,000 or more in cash

minor

45

6

35

Failure of foreign money services business to keep a large virtual currency transaction record in respect of the receipt of $10,000 or more in virtual currency

minor

46

6

36

Failure of a money services business or foreign money services business to keep the required records

minor

47

6

37

Failure of the specified money services business or foreign money services business to keep the required records

minor

48

9(1)

39

Failure of a British Columbia notary public or British Columbia notary corporation to report the receipt of $10,000 or more in cash, together with the required information

minor

49

9(1)

40

Failure of a British Columbia notary public or British Columbia notary corporation to report the receipt of $10,000 or more in virtual currency, together with the required information

minor

50

6

41

Failure of a British Columbia notary public or British Columbia notary corporation to keep a large cash transaction record in respect of the receipt of $10,000 or more in cash

minor

51

6

42

Failure of a British Columbia notary public or British Columbia notary corporation to keep a large virtual currency transaction record in respect of the receipt of $10,000 or more in virtual currency

minor

52

6

43

Failure of a British Columbia notary public or British Columbia notary corporation to keep the required records

minor

53

9(1)

48

Failure of the specified accountant or accounting firm to report the receipt of $10,000 or more in cash, together with the required information

minor

54

9(1)

49

Failure of the specified accountant or accounting firm to report the receipt of $10,000 or more in virtual currency, together with the required information

minor

55

6

50

Failure of an accountant or accounting firm to keep a large cash transaction record in respect of the receipt of $10,000 or more in cash

minor

56

6

51

Failure of an accountant or accounting firm to keep a large virtual currency transaction record in respect of the receipt of $10,000 or more in virtual currency

minor

57

6

52

Failure of an accountant or accounting firm to keep the required records

minor

58

9(1)

54

Failure of the specified real estate broker or sales representative to report the receipt of $10,000 or more in cash, together with the required information

minor

59

9(1)

55

Failure of the specified real estate broker or sales representative to report the receipt of $10,000 or more in virtual currency, together with the required information

minor

60

6

56

Failure of a real estate broker or sales representative to keep a large cash transaction record in respect of the receipt of $10,000 or more in cash

minor

61

6

57

Failure of a real estate broker or sales representative to keep a large virtual currency transaction record in respect of the receipt of $10,000 or more in virtual currency

minor

62

6

58(1)

Failure of a real estate broker or sales representative to keep the required records

minor

63

9(1)

60

Failure of the specified real estate developer to report the receipt of $10,000 or more in cash, together with the required information

minor

64

9(1)

61

Failure of the specified real estate developer to report the receipt of $10,000 or more in virtual currency, together with the required information

minor

65

6

62

Failure of a real estate developer to keep a large cash transaction record in respect of the receipt of $10,000 or more in cash

minor

66

6

63

Failure of a real estate developer to keep a large virtual currency transaction record in respect of the receipt of $10,000 or more in virtual currency

minor

67

6

64

Failure of a real estate developer to keep the required records

minor

68

9(1)

66

Failure of the specified dealer in precious metals and precious stones to report the receipt of $10,000 or more in cash, together with the required information

minor

69

9(1)

67

Failure of the specified dealer in precious metals and precious stones to report the receipt of $10,000 or more in virtual currency, together with the required information

minor

70

6

68

Failure of a dealer in precious metals and precious stones to keep a large cash transaction record in respect of the receipt of $10,000 or more in cash

minor

71

6

69

Failure of a dealer of precious metals and precious stones to keep a large virtual currency transaction record in respect of the receipt of $10,000 or more in virtual currency

minor

72

9(1)

70(1)(a)

Failure of a casino to report the receipt of $10,000 or more in cash, together with the required information

minor

73

9(1)

70(1)(b)

Failure of a casino to report the initiation of an electronic funds transfer of $10,000 or more, together with the required information

minor

74

9(1)

70(1)(c)

Failure of a casino to report the final receipt of an electronic funds transfer of $10,000 or more, together with the required information

minor

75

9(1)

70(1)(d)

Failure of a casino to report the receipt of $10,000 or more in virtual currency, together with the required information

minor

76

9(1)

71

Failure of a casino to report the disbursement of $10,000 or more in the specified transactions, together with the required information

minor

77

6

72(1)

Failure of a casino to keep a large cash transaction record in respect of the receipt of $10,000 or more in cash

minor

78

6

73

Failure of a casino to keep a large virtual currency transaction record in respect of the receipt of $10,000 or more in virtual currency

minor

79

6

74

Failure of a casino to keep the required records

minor

80

9(1)

78

Failure of the specified department or agent or mandatary of Her Majesty in right of Canada or of a province to report the receipt of $10,000 or more in cash, together with the required information

minor

81

9(1)

79

Failure of the specified department or agent or mandatary of Her Majesty in right of Canada or of a province to report the receipt of $10,000 or more in virtual currency, together with the required information

minor

82

6

80

Failure of a department or agent or mandatary of Her Majesty in right of Canada or of a province to keep a large cash transaction record in respect of the receipt of $10,000 or more in cash

minor

83

6

81

Failure of a department or agent or mandatary of Her Majesty in right of Canada or of a province to keep a large virtual currency transaction record in respect of the receipt of $10,000 or more in virtual currency

minor

84

6

82

Failure of a department or agent or mandatary of Her Majesty in right of Canada or of a province to keep the required records

minor

85

6.1

84

Failure of a person or entity to verify in the prescribed manner and within the prescribed period the identity of the specified person or entity

minor

86

6.1

85(1)

Failure of the specified person or entity to take reasonable measures to verify in the prescribed manner and within the prescribed period the identity of the specified person or entity

minor

87

6

85(2)

Failure of the specified person or entity to keep the required record

minor

88

6.1

86

Failure of a financial entity to verify in the prescribed manner and within the prescribed period the identity of the specified person or entity

minor

89

6.1

87

Failure of a financial entity to verify in the prescribed manner and within the prescribed period the identity of the specified person or entity

minor

90

6.1

88

Failure of a financial entity to verify in the prescribed manner and within the prescribed period the identity of the specified person or entity

minor

91

6.1

89

Failure of a trust company to verify in the prescribed manner and within the prescribed period the identity of the specified person or entity

minor

92

9.4(1)(a)

90(a)

Failure of the specified financial entity to ascertain, in the prescribed manner, the required information

minor

93

9.4(1)(a)

90(b)

Failure of the specified financial entity to take reasonable measures to ascertain, in the prescribed manner, the required information and to conduct required monitoring

minor

94

9.4(1)(a)

91(a)

Failure of the specified financial entity to take reasonable measures to ascertain whether the foreign financial institution has met the prescribed requirements

minor

95

9.4(1)(a)

91(b)

Failure of the specified financial entity to take reasonable measures to ascertain whether the foreign financial institution has agreed to provide the relevant client identification information

minor

96

6.1

92

Failure of a life insurance company or life insurance broker or agent to verify in the prescribed manner and within the prescribed period the identity of the specified person or entity

minor

97

6.1

94

Failure of a securities dealer to verify in the prescribed manner and within the prescribed period the identity of the specified person or entity

minor

98

6.1

95(1), (3) or (4)

Failure of a money services business or foreign money services business to verify in the prescribed manner and within the prescribed period the identity of the specified person or entity

minor

99

6.1

96

Failure of a British Columbia notary public or British Columbia notary corporation to verify in the prescribed manner and within the prescribed period the identity of the specified person or entity

minor

100

6.1

100

Failure of an accountant or accounting firm to verify in the prescribed manner and within the prescribed period the identity of the specified person or entity

minor

101

6.1

101(1)

Failure of a real estate broker or sales representative to verify in the prescribed manner and within the prescribed period the identity of the specified person or entity

minor

102

6.1

101(3)

Failure of a real estate broker or sales representative to take reasonable measures to verify the identity of an unrepresented party

minor

103

6

101(4)

Failure of a real estate broker or sales representative to keep the required record

minor

104

6.1

102

Failure of a real estate developer to verify in the prescribed manner and within the prescribed period the identity of the specified person or entity

minor

105

6.1

103

Failure of a casino to verify in the prescribed manner and within the prescribed period the identity of the specified person or entity

minor

106

6.1

104

Failure of a department or agent or mandatary of Her Majesty in right of Canada or of a province to verify in the prescribed manner and within the prescribed period the identity of the specified person or entity

minor

107

6

108

Failure of a person or entity required to verify a person’s identity to keep the required record

minor

108

6

109(5)

Failure of a person or entity required to verify a corporation’s identity to keep the required record

minor

109

6.1

111(2)

Failure of the specified person or entity to verify the corporation’s identity as soon as feasible

minor

110

6

112(4)

Failure of a person or entity required to verify the identity of an entity other than a corporation to keep the required record

minor

111

6.1

114(2)

Failure of the specified person or entity to verify the identity of an entity other than a corporation as soon as feasible

minor

112

9.3(1)

116(1)(a)

Failure of a financial entity to take reasonable measures to determine whether the specified person is a politically exposed foreign person, a politically exposed domestic person, a head of an international organization, a family member of one of those persons or a person who is closely associated with a politically exposed foreign person

minor

113

9.3(1)

116(1)(b)

Failure of a financial entity to take reasonable measures to determine whether the specified person is a politically exposed foreign person, a politically exposed domestic person or a head of an international organization, or a family member of, or a person who is closely associated with, one of those persons

minor

114

9.3(1)

116(2)

Failure of a financial entity to take reasonable measures on a periodic basis to determine whether the specified person is a politically exposed foreign person, a politically exposed domestic person, a head of an international organization, a family member of one of those persons or a person who is closely associated with a politically exposed foreign person

minor

115

9.3(1)

116(3)

Failure of a financial entity to take reasonable measures to determine whether the specified person is a politically exposed foreign person, a politically exposed domestic person or a head of an international organization, or a family member of, or a person who is closely associated with, one of those persons

minor

116

9.3(1)

117

Failure of a life insurance company or life insurance broker or agent to take reasonable measures to determine whether the specified person is a politically exposed foreign person, a politically exposed domestic person or a head of an international organization, or a family member of, or a person who is closely associated with, one of those persons

minor

117

9.3(1)

119(1)

Failure of a securities dealer to take reasonable measures to determine whether a person for whom they open an accountis a politically exposed foreign person, a politically exposed domestic person, a head of an international organization, a family member of one of those persons or a person who is closely associated with a politically exposed foreign person

minor

118

9.3(1)

119(2)

Failure of a securities dealer to take reasonable measures on a periodic basis to determine whether an account holder is a politically exposed foreign person, a politically exposed domestic person, a head of an international organization, a family member of one of those persons or a person who is closely associated with a politically exposed foreign person

minor

119

9.3(1)

119(3)

Failure of a securities dealer to take reasonable measures to determine whether an account holder is a politically exposed foreign person, a politically exposed domestic person or a head of an international organization, or a family member of, or person who is closely associated with, one of those persons

minor

120

9.3(1)

120(1)

Failure of a money services business to take reasonable measures to determine whether the specified person is a politically exposed foreign person, a politically exposed domestic person or a head of an international organization, or a family member of, or a person who is closely associated with, one of those persons

minor

121

9.3(1)

120(2)

Failure of a foreign money services business to take reasonable measures to determine whether the specified person is a politically exposed foreign person, a politically exposed domestic person or a head of an international organization, or a family member of, or person who is closely associated with, one of those persons

minor

122

9.3(2)

121(1)(a)

Failure of the specified financial entity or securities dealer to take reasonable measures to establish the source of funds or virtual currency that have been, will be or are expected to be deposited into an account and the source of the person’s wealth

minor

123

9.3(2)

121(1)(b)

Failure of the specified financial entity or securities dealer to obtain the required approval

minor

124

9.3(2)

121(1)(c)

Failure of the specified financial entity or securities dealer to take the special measures

minor

125

9.3(2.1)

121(2)

Failure of the specified financial entity or securities dealer to take the required measures

minor

126

9.3

121(3)

Failure of the specified financial entity or securities dealer to take the required measures within the prescribed period

minor

127

9.3(2)

122(1)(a)

Failure of the specified financial entity, life insurance company, life insurance broker or agent, money services business or foreign money services business to take reasonable measures to establish the source of funds or virtual currency used for the specified transaction and the source of the person’s wealth

minor

128

9.3(2)

122(1)(b)

Failure of the specified financial entity, life insurance company, life insurance broker or agent, money services business or foreign money services business to ensure that a member of senior management reviews the specified transaction

minor

129

9.3(2)

122(2)(a)

Failure of the specified financial entity, money services business or foreign money services business to take reasonable measures to establish the source of the virtual currency used for the specified transaction and the source of the person’s wealth

minor

130

9.3(2)

122(2)(b)

Failure of the specified financial entity, money services business or foreign money services business to ensure that a member of senior management reviews the specified transaction

minor

131

9.3(2)

122(3)

Failure of the specified financial entity, money services business or foreign money services business to ensure that a member of senior management reviews the specified transaction

minor

132

9.3(2)

122(4)(a)

Failure of the specified life insurance company or life insurance broker or agent to take reasonable measures to establish the source of the funds or virtual currency received from the specified person and the source of the beneficiary’s wealth

minor

133

9.3(2)

122(4)(b)

Failure of the specified life insurance company or life insurance broker or agent to take the required measures to ensure that a member of senior management reviews the specified transaction

minor

134

9.3(2) and (2.1)

122(5)

Failure of the specified financial entity, life insurance company, life insurance broker or agent, money services business or foreign money services business to take the required measures

minor

135

9.3(2.1)

122(6)

Failure of the specified financial entity, money services business or foreign money services business to take the required measures

minor

136

9.3(2.1)

122(7)

Failure of the specified financial entity, money services business or foreign money services business to ensure that a member of senior management reviews the specified transaction

minor

137

9.3(2.1)

122(8)

Failure of the specified life insurance company or life insurance broker or agent to take the required measures

minor

138

9.3

122(9)

Failure of the financial entity, life insurance company or life insurance broker or agent, money services business or foreign money services business to take the required reasonable measures within the prescribed time

minor

139

9.3

122(10)

Failure of a life insurance company or life insurance broker or agent to take the required reasonable measures within the prescribed time

minor

140

6

123(1)

Failure of the specified financial entity or securities dealer to keep the required record

minor

141

6

123(2)

Failure of the specified financial entity, money services business or foreign money services business to keep the required record

minor

142

6

123(3)

Failure of the specified life insurance company or life insurance broker or agent to keep the required record

minor

143

9(1)

125

Failure to convert foreign currency or virtual currency transactions into Canadian dollars using the prescribed rate

minor

144

9(1)

131(1)

Failure to send a report electronically, if the sender has the technical capabilities to do so, in accordance with guidelines prepared by the Centre

minor

145

9(1)

131(2)

Failure to send a report in paper format, if the sender does not have the technical capabilities to send electronically, in accordance with guidelines prepared by the Centre

minor

146

9(1)

132(1)

Failure to report to the Centre an electronic funds transfer within the prescribed period

minor

147

9(1)

132(2)

Failure to report to the Centre a receipt of virtual currency within the prescribed period

minor

148

9(1)

132(3)

Failure to report to the Centre the receipt of $10,000 or more in cash the specified or disbursement within the prescribed period

minor

149

6

134(1)

Failure of the specified person or entity to take reasonable measures to determine whether the specified person is acting on behalf of a third party

minor

150

6.1

134(2)

Failure of the specified person or entity to take reasonable measures to obtain the required information and keep the required record

minor

151

6

134(3)

Failure of the specified person or entity to keep the required record

minor

152

6.1

135(1)

Failure of the specified person or entity to take reasonable measures when opening an account to determine whether the account is to be used by or on behalf of a third party

minor

153

6

135(2)

Failure of the specified person or entity to take reasonable measures to obtain the required information and keep the required record

minor

154

6

135(3)

Failure of the specified person or entity to keep the required record

minor

155

6.1

136(1)

Failure of the specified person or entity to take reasonable measures to determine whether the specified person or entity is acting on behalf of a third party

minor

156

6

136(2)

Failure of the specified person or entity to take reasonable measures to obtain the required information and keep the required record

minor

157

6

136(3)

Failure of the specified person or entity to keep the required record

minor

158

6.1

137(1)

Failure of the specified casino to take reasonable measures to determine whether the specified person or entity is acting on behalf of a third party

minor

159

6

137(2)

Failure of the specified casino to take reasonable measures to obtain the required information and keep the required record

minor

160

6

137(3)

Failure of the specified casino to keep the required record

minor

161

6.1

138(1) and (1.1)

Failure of the specified person or entity to obtain the required information

minor

162

6.1

138(2)

Failure of the specified person or entity to take reasonable measures to confirm the accuracy of the specified information

minor

163

6

138(3)

Failure of the specified person or entity to keep the required record

minor

164

6.1

138(4)(a)

Failure of the specified person or entity to take reasonable measures to verify the identity of the specified person

serious

165

9.6(3)

138(4)(b)

Failure of the specified person or entity to take the special measures

serious

166

6

138(5)

Failure of the specified person or entity to determine whether a not-for-profit organization is a prescribed entity and to keep the required record

minor

167

6

139

Failure of the specified trust company to keep the required record concerning an inter vivos trust

minor

168

6

144

Failure to keep a copy of the report sent to the Centre

minor

169

6

145

Failure of the specified person or entity to keep the required record

minor

170

6

146(1)

Failure of the specified person or entity to keep the required record

minor

171

6

148(1)

Failure of the specified person or entity to keep a required record for the prescribed period

minor

172

6

149

Failure to keep a record in the prescribed manner

minor

173

9.6(1)

156(1)(a)

Failure of the specified person or entity to appoint a person to be responsible for the implementation of a compliance program, or in the case of a person, taking the responsibility for implementing the program

serious

174

9.6(1)

156(1)(b)

Failure of the specified person or entity to develop and apply the specified compliance policies and procedures

serious

175

9.6(1)

156(1)(c) and (2)

Failure of the specified person or entity to assess and document the risk referred to in subsection 9.6(2) of the Act, taking into consideration prescribed factors

serious

176

9.6(1)

156(1)(d) and (e)

Failure of the specified person or entity to develop and maintain the specified program and to deliver training

serious

177

9.6(1)

156(1)(f) and (3)

Failure of the specified person or entity to institute and document the specified plan within the prescribed period

serious

178

9.6(1)

156(4)

Failure of the specified entity to report within the prescribed period

serious

116 The heading of Part 3 of the schedule to the French version of the Regulations is replaced by the following:

Loi sur le recyclage des produits de la criminalité et le financement des activités terroristes et Règlement sur la déclaration des opérations douteuses — recyclage des produits de la criminalité et financement des activités terroristes

117 Items 1 to 8 of Part 3 of the schedule to the Regulations are replaced by the following:

Item

Column 1


Provision of Proceeds of Crime (Money Laundering) and Terrorist Financing Act

Column 2

Provision of Proceeds of Crime (Money Laundering) and Terrorist Financing Suspicious Transaction Reporting Regulations

Column 3




Short-form Description

Column 4



Classification of Violation

1

7

9(1)

Failure to make the specified report containing the required information

serious

2

7

9(2)

Failure to send the report within the prescribed period

serious

3

7.1

10

Failure to make the specified report containing the required information and to send it immediately

very serious

4

7 and 7.1

12

Failure to send the specified report electronically, in accordance with guidelines prepared by the Centre

serious

5

6

12.1(1)

Failure to keep a copy of the report submitted to the Centre for the prescribed period

minor

118 Part 4 of the schedule to the Regulations is repealed.

Coming into Force

119 (1) Subject to subsections (2) and (3), these Regulations come into force on the day on which subsection 408(1) of the Budget Implementation Act, 2017, No. 1, chapter 20 of the Statutes of Canada, 2017, comes into force.

(2) Section 39 comes into force on the day on which these Regulations are registered.

(3) Section 3, subsections 6(1) to (3) and sections 50 to 98, 100 to 105, 111 and 112 come into force on the day on which subsection 256(2) of the Economic Action Plan 2014 Act, No. 1, chapter 20 of the Statutes of Canada, 2014, comes into force.

SCHEDULE

(Sections 47 and 49)

SCHEDULE 1

(Paragraph 7(1)(a), sections 18 and 25, paragraphs 30(1)(a) and 33(1)(a), sections 39, 48, 54, 60 and 66, paragraph 70(1)(a), section 78, subsection 131(3) and section 152)

Report with Respect to Receipt of Cash

PART A

Information with Respect to Reporting Person or Entity and Place of Business Where Cash Is Received

PART B

Information with Respect to Transaction

PART C

Account and Reference Number Information

PART D

Information with Respect to Person or Entity That Conducts Transaction That Does Not Involve Deposit into Business Account

PART E

Information with Respect to Person or Entity That Conducts Transaction That Involves Deposit into Business Account Other than Night Deposit or Quick Drop

PART F

Information with Respect to Person or Entity on Whose Behalf Transaction is Conducted

PART G

Information with Respect to Beneficiary

SCHEDULE 2

(Paragraphs 7(1)(b), 30(1)(b) and (d), 33(1)(b) and (d) and 70(1)(b), subsection 131(3) and section 152)

Report with Respect to Initiation of Electronic Funds Transfers

PART A

Information with Respect to Electronic Funds Transfer

PART B

Account and Reference Number Information

PART C

Information with Respect to Person Who Requests Initiation of Electronic Funds Transfer

PART D

Information with Respect to Entity That Requests Initiation of Electronic Funds Transfer

PART E

Information with Respect to Holder of Account From Which Funds are Withdrawn (if Different from Person or Entity in Part C or D)

PART F

Information with Respect to Person or Entity on Whose Behalf Initiation of Electronic Funds Transfer Is Requested

PART G

Information with Respect to Person or Entity That Initiates Electronic Funds Transfer

PART H

Information with Respect to Every Person or Entity That Sends or Is To Send Electronic Funds Transfer Initiated by Another Person or Entity

PART I

Information with Respect to Person or Entity That Finally Receives or Is To Finally Receive Electronic Funds Transfer

PART J

Information with Respect to Every Other Person or Entity That Is Involved in Effecting Electronic Funds Transfer That Is a SWIFT Message

PART K

Information with Respect to Beneficiary

PART L

Information with Respect to Person or Entity on Whose Behalf Beneficiary Is To Receive Remittance

SCHEDULE 3

(Paragraphs 7(1)(c), 30(1)(c) and (e), 33(1)(c) and (e) and 70(1)(c), subsection 131(3) and section 152)

Report with Respect to Final Receipt of Electronic Funds Transfers

PART A

Information with Respect to Electronic Funds Transfer

PART B

Account and Reference Number Information

PART C

Information with Respect to Person Who Requests Initiation of Electronic Funds Transfer

PART D

Information with Respect to Entity That Requests Initiation of Electronic Funds Transfer

PART E

Information with Respect to Holder of Account From Which Funds Are Withdrawn (if Different from Person or Entity in Part C or D)

PART F

Information with Respect to Person or Entity on Whose Behalf Initiation of Electronic Funds Transfer Is Requested

PART G

Information with Respect to Person or Entity That Initiates Electronic Funds Transfer

PART H

Information with Respect to Every Person or Entity That Sends Electronic Funds Transfer Initiated by Another Person or Entity

PART I

Information with Respect to Person or Entity That Finally Receives Electronic Funds Transfer

PART J

Information with Respect to Every Other Person or Entity That Is Involved in Effecting Electronic Funds Transfer That Is a SWIFT Message

PART K

Information with Respect to Beneficiary

PART L

Information with Respect to Person or Entity on Whose Behalf Beneficiary Is to Receive Remittance

SCHEDULE 4

(Paragraph 7(1)(d), sections 19 and 26, paragraphs 30(1)(f) and 33(1)(f), sections 40, 49, 55, 61 and 67, paragraph 70(1)(d), section 79, subsection 131(3) and section 152)

Report with Respect to Receipt of Virtual Currency

PART A

Information with Respect to Reporting Person or Entity and Place of Business Where Virtual Currency Is Received

PART B

Information with Respect to Transaction

PART C

Account and Reference Number Information

PART D

Information with Respect to Person Who Conducts Transaction and Who Is Client of Reporting Entity

PART E

Information with Respect to Person Who Conducts Transaction and Is Not Client of Reporting Entity

PART F

Information with Respect to Entity That Conducts Transaction and Is Client of Reporting Entity

PART G

Information with Respect to Entity That Conducts Transaction and Is Not Client of Reporting Entity

PART H

Information with Respect to Person or Entity on Whose Behalf Transaction Is Conducted

PART I

Information with Respect to Beneficiary

SCHEDULE 6

(Section 71, subsection 131(3) and section 152)

Report with Respect to Casino Disbursements

PART A

Information with Respect to Reporting Person or Entity and Place of Business Where Disbursement Is Made

PART B

Information with Respect to Disbursement

PART C

Account and Reference Number Information

PART D

Information with Respect to Person Who Requests Disbursement

PART E

Information with Respect to Entity That Requests Disbursement

PART F

Information with Respect to Person or Entity on Whose Behalf Disbursement Is Requested

PART G

Information with Respect to Person or Entity That Receives Disbursement (if Different from Person or Entity in Part D, E or F)

REGULATORY IMPACT ANALYSIS STATEMENT

(This statement is not part of the Regulations.)

Executive summary

Issues: In 2015–16, the Financial Action Task Force (FATF) evaluated Canada’s Anti-Money Laundering and Anti-Terrorist Financing (AML/ATF) Regime for compliance with its standards, and identified a number of deficiencies that Canada needs to address. In addition, in 2014 and 2017, the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (the Act) was amended through the Economic Action Plan 2014 Act, No. 1 and the Budget Implementation Act, 2017, No. 1 to strengthen the AML/ATF Regime. Regulatory changes are needed to operationalize some of the legislative changes, strengthen Canada’s AML/ATF Regime, and ensure its measures are aligned with the FATF standards.

Description: The amendments to the regulations footnote 6 strengthen Canada’s AML/ATF Regime by updating customer due diligence requirements; regulating businesses dealing in virtual currency; updating the schedules to the regulations; including foreign money service businesses (MSB) in Canada’s AML/ATF Regime; updating beneficial ownership reporting requirements in suspicious transaction reports; clarifying a number of existing requirements; and making minor technical amendments.

Cost-benefit statement: The amendments will result in an estimated $1,867,698 (present value [PV]) in benefits and $69,868,122 (PV) in costs, for a net cost of $68,000,424 (PV) over a 10-year period in 2012 dollars. There are substantial qualitative benefits associated with the amendments that cannot be monetized. The amendments strengthen Canada’s AML/ATF Regime and improve compliance with the FATF international standards. Meeting these standards improves the integrity of the global AML/ATF framework. Furthermore, the amendments will positively impact Canada’s international reputation, and will lead to regulatory efficiencies with other countries’ anti-money laundering and anti-terrorist financing regimes, making it easier for Canadian businesses to operate internationally.

“One-for-One” Rule and small business lens: The amendments will result in a total annualized administrative cost increase on businesses, estimated at $464,586. The annualized administrative cost increase per affected business is estimated at approximately $20. A majority of the amendments, costed at $463,098, are exempt from the requirement to offset under the “One-for-One” Rule, as they implement non-discretionary obligations. However, the amendments to the Cross-border Currency and Monetary Instruments Reporting Regulations will result in an estimated $1,488 total annualized administrative cost increase on businesses ($24 per business, for approximately 62 affected businesses) that will need to be offset under the “One-for-One” Rule.

The amendments impact small businesses; therefore, the small business lens applies.

Domestic and international coordination and cooperation: The amendments enhance the quality and scope of the Financial Transactions and Reports Analysis Centre of Canada’s (FINTRAC) disclosures of financial intelligence to law enforcement and other disclosure recipients, which will better assist them in their investigations.

Canada’s AML/ATF Regime is largely consistent with international standards set by the FATF. Although the standards set by the FATF are not legally binding, as a member, Canada is obligated to implement them and to submit to a peer evaluation of their effective implementation. Canada’s last mutual evaluation took place in 2015–16. The FATF’s report outlined a number of deficiencies, which some of the amendments will help to address.

Background

Canada’s AML/ATF Regime

The core elements of Canada’s AML/ATF Regime are set out in the Act. The Act applies to designated financial and non-financial entities (known as “reporting entities” footnote 7) that provide access to the financial system and may therefore be susceptible to abuse by criminals seeking to integrate the proceeds of their crimes into the legitimate economy.

The Act sets out obligations that broadly fall into the following four categories: record keeping; customer due diligence requirements, such as the verification of the identity of designated persons and entities (e.g. clients with whom the reporting entities conduct business); reporting of suspicious and other prescribed financial transactions (e.g. large cash transactions); and the establishment and implementation of an internal compliance program. The Proceeds of Crime (Money Laundering) and Terrorist Financing Regulations (the Regulations) set out how reporting entities are to fulfill these obligations.

FATF

Canada is a founding member of the FATF, an intergovernmental body that sets standards and promotes effective implementation of legal, regulatory and operational measures for combating money laundering, terrorist activity financing and other related threats to the integrity of the international financial system. Although the standards set by the FATF are not legally binding, as a member, Canada is obligated to implement them and to submit to a peer evaluation of their effective implementation.

Not meeting this commitment could lead to a number of sanctions, from enhanced scrutiny measures to public listing and, in the extreme, suspension of membership from the FATF. Furthermore, non-compliance could cause serious reputational harm to Canada’s financial sector and subject Canadian financial institutions to increased regulatory burden when dealing with foreign counterparts or when doing business overseas.

In 2012, the FATF took steps to enhance its standards. Canada’s last mutual evaluation took place in 2015–16. Although Canada’s AML/ATF Regime is largely consistent with the FATF’s standards, the evaluation report outlined a number of deficiencies that Canada needs to address. One of the deficiencies raised by FATF evaluators was compliance with “customer due diligence” requirements (e.g. no requirement to check the source of wealth, or to identify the beneficiary of a life insurance payout).

Customer due diligence measures require that a reporting entity verify the identity of their client, understand the nature of the business relationship, and conduct ongoing monitoring. Strong due diligence measures allow for more effective ongoing monitoring of clients, and help reporting entities to be satisfied that the transactions and/or activities are in line with what they know about their clients. Reporting entities who know their clients and their activities are better able to assess the money laundering and terrorist activity financing risk level of those clients, and to identify and report any suspicious transactions conducted by those clients.

Other deficiencies identified by the FATF include not having a requirement to assess new technologies before their launch and no coverage of open loop prepaid cards, of foreign MSBs, or of businesses dealing in virtual currencies.

The outcome of this evaluation was that Canada became subject to what is referred to as the “enhanced follow-up process.” This FATF process exists for countries with deficiencies in their AML/ATF regimes. Currently, Canada is required to report annually on its progress toward addressing the deficiencies identified in the 2015–16 mutual evaluation. A number of these deficiencies stem from Canada’s AML/ATF Regime not reflecting the ongoing modernization of the financial sector.

Modernization of the financial sector

Financial technology, or “FinTech,” refers to companies using technology to make financial services more effective and efficient. The various business models used to support or deliver new payment method services (e.g. prepaid cards, Internet and mobile payment services) have the advantage of helping people withdraw and convert funds more quickly than through traditional channels, including conducting international transactions in real time. While providing benefits to consumers, the new business models can complicate monitoring as well as make it difficult for authorities to follow the money trail. Also, transactions conducted through the Internet allow a certain degree of anonymity that can potentially be exploited by money launderers or terrorist activity financiers.

The Act and the associated regulations were originally intended for traditionally offered financial services, and “brick and mortar” institutions. With the financial industry increasingly moving to the digital world, it is necessary to update the legal framework to ensure no loopholes emerge (e.g. prepaid cards, virtual currency, foreign MSBs) that could be exploited by criminals without stifling innovation in the financial sector.

Prepaid cards

Open-loop prepaid cards (i.e. cards that run on a payment card network and are not restricted for use only at a particular merchant or a group of merchants, such as a shopping centre gift card) provide access to funds that are paid in advance by the cardholder or a third party. These cards are not necessarily connected to a bank account, and the verification of cardholder identity varies from one financial institution to another. The wide variety of funding options also means that the origins of funds are difficult to trace and it is difficult to ascertain whether or not the money is from a legitimate source (e.g. some cards can be anonymously loaded with cash at a third party reseller location, such as a Canada Post office).

Virtual currency

The evolving financial services landscape is further influenced by virtual currencies, especially decentralized digital payment systems, like Bitcoin, that operate outside the traditional financial system. A virtual currency is a medium of exchange that allows for value to be held and exchanged in an electronic, non-physical manner; is not a fiat currency (i.e. the official currency of a country); has the intended purpose of being exchanged for real and virtual goods and services; and allows peer-to-peer transfers.

Virtual currencies can be “centralized,” in that they are issued and controlled by a single company or entity, or “decentralized,” in that there is no central authority that creates or manages them (e.g. Bitcoin). Rather, these tasks are managed collectively by the network of some virtual currency users.

In addition, virtual currencies can be “convertible” or “non-convertible,” depending on whether they can be exchanged for funds. Convertible virtual currencies are vulnerable to abuse for money laundering and terrorist activity financing purposes because they allow greater levels of anonymity, or in some cases complete anonymity, when compared to traditional non-cash payment methods. Virtual currencies can be accessed globally via online or mobile systems. They allow for the rapid transfer of funds within or across borders, oftentimes without any intermediary; are generally characterized by non–face-to-face customer relationships; and can circumvent the physical “brick and mortar” financial system entirely. Due to these characteristics, virtual currencies are increasingly being used to facilitate fraud and cybercrime, and to purchase illicit goods and services on the dark Web.

Foreign MSBs

The Internet and new payment methods provide an opportunity for foreign entities without a place of business in Canada to offer MSB services in Canada. These businesses are at risk of being exploited by money launderers and/or terrorist financiers, but the current AML/ATF framework was not envisioned to capture transactions conducted using non-traditional, Internet-based methods. This represents a gap in Canada’s legal framework and an uneven playing field for Canadian domestic competitors, who are required to abide by the Act.

Issues

First established in 2000–01, Canada’s AML/ATF Regime must regularly adapt and evolve to changes in its operating environment (e.g. to account for technological advancements like virtual currency or in response to ongoing modernization of the financial sector).

The Act was amended through the Economic Action Plan 2014 Act, No. 1 and the Budget Implementation Act, 2017, No. 1 to strengthen the AML/ATF Regime and align it with international standards. In 2015–16, the FATF evaluated Canada’s AML/ATF Regime, and identified a number of deficiencies.

Regulatory changes are needed to operationalize some of the legislative changes, close loopholes in Canada’s AML/ATF Regime, and address a number of the deficiencies outlined by the FATF.

Objectives

The amendments will

Description

The amendments make the following changes:

The amendments help address and close the gaps that exist in Canada’s AML/ATF Regime, including regulating new business models and technologies and addressing new emerging risks.

Finally, the following technical amendments are also adopted:

Additional amendments (not part of the draft amendments published in the Canada Gazette, Part I) — Cross-border currency reporting

There are currently requirements to provide information (through declaration forms) on currency and monetary instruments (e.g. cash, cheques) crossing the border when the total amount equals or exceeds $10,000. Through the Department of Finance Canada’s internal review of the Cross-border Currency and Monetary Instruments Reporting Regulations (associated with the transportation of currency into and out of Canada), it was found that improvements could be made to the declaration forms to clarify the overall movement of currency. These amendments require that new information be provided by individuals, couriers, and companies (e.g. armoured car companies) involved in the transportation of currencies and monetary instruments across the border. Travellers will be required to fill out three out of four fields footnote 10 in the existing declaration forms, and courier and armoured car companies involved in the transportation of currencies and monetary instruments will be required to fill out seven out of nine additional fields with information that should already be known during their ordinary course of business. These changes would allow FINTRAC to receive and analyze additional information on the movement of currency across the border that would be validated at the border by the Canada Border Services Agency as delegated under Part II of the Act.

 

New Additional Information Requested

Individual travellers

Dates of travel; transit destinations; purpose of import; purpose of export

Couriers and armoured car companies

Full name and address of entity shipped to/from; ultimate origin of funds; transit points; ultimate destination of funds; purpose of import; purpose of export; nature of business; country of registration; full name and permanent address of person or entity shipped to/from including information on intermediaries where applicable

Regulatory and non-regulatory options considered

Maintain status quo

Maintaining the status quo was determined not to be viable, given that without these regulatory changes, deficiencies in Canada’s AML/ATF Regime would remain in place. This would compromise the integrity of Canada’s financial system and the security and safety of Canadians at home and abroad. Furthermore, not addressing deficiencies in compliance with FATF standards would have significant adverse consequences for Canada.

Non-regulatory options

Canada’s AML/ATF Regime is set in legislation and regulations. To close loopholes and address the deficiencies identified by the FATF, there is no other option available but to amend the regulations.

Benefits and costs

Costs, Benefits and Distribution

10-Year PV Total
2019–2028
(2012 Price Year)

Annualized Average

A. Quantified impacts

Benefits

Measure

Stakeholder

 

Simplified customer due diligence

Industry

$277,998

$39,581

Repeal of requirement to document reasonable measures taken

$1,413,701

$201,279

Low-risk customer due diligence for dealers in precious metals and stones and accountants

$175,999

$25,058

Total benefits

$1,867,698

$265,918

Costs

Measure

Stakeholder

 

24-hour rule

Industry

$8,285,547

$1,179,676

Verifying beneficial ownership information accuracy

$453,728

$64,601

CDD for life insurance companies with regard to loans

$1,051,261

$149,676

Assessing the risk of new developments before launch

$6,198,170

$882,480

Source of wealth of politically exposed persons

$2,183,778

$310,921

Customer due diligence for prepaid cards

$2,778,903

$395,653

Updated reporting schedules

$39,911,124

$5,682,446

Requirements for businesses dealing in virtual currency

$270,112

$38,458

Cross-border currency reporting

Industry

$16,784

$2,390

Individuals (travellers across the border)

$126,744

$18,046

Updates to IT systems and compliance program

Government (FINTRAC)

$8,591,971

$1,223,303

Total costs

$69,868,122

$9,947,650

Net costs

$68,000,424

$9,681,732

B. Qualitative impacts

Positive impacts

A strong and effective AML/ATF Regime acts as a deterrent to crime and therefore improves the safety of Canadians and the integrity of Canada’s financial system. In turn, this increases confidence in Canada’s financial system, making it an attractive place to invest and do business. Investors seek investment opportunities in locations that have a relatively low crime environment and that are politically and economically stable, among other factors. The willingness of businesses and individuals to invest in Canada could be negatively affected if Canada were viewed as weak on combating money laundering and terrorist activity financing or if Canada were to have a reputation for being a safe haven for raising terrorist funds.

A strong reputation with regards to an effective AML/ATF Regime helps Canadian financial institutions avoid burdensome regulatory hurdles and additional costs when dealing with their foreign counterparts or doing business overseas.

Costs

As a result of these amendments, reporting entities are expected to carry an estimated $54 million (PV) in compliance costs and $7.1 million (PV) in administrative costs for an estimated $61.1 million (PV) in total costs over a 10-year period (or $8.7 million annually). There are approximately 30 000 reporting entities, all of which are businesses. Non-reporting entities (i.e. armoured truck companies) impacted by the amendments to the Cross-border Currency and Monetary Instruments Reporting Regulations will see an increase in administrative costs in the amount of $16,784 (PV), while individuals travelling across the border will face a $126,744 (PV) cost.

These costs primarily stem from internal information management and information technology (IM/IT) system changes that would be required to support the implementation of these amendments (e.g. to account for the changes to the 24-hour rule); the associated updates that would be required to reporting entities’ internal policies and procedures (e.g. to improve the accuracy of beneficial ownership information); and the provision of additional documents to FINTRAC if asked in a compliance examination (e.g. to fulfill the changes being made to the schedules to the Regulations).

While there have been a number of changes between the draft and final versions of the Regulations, this variance does not affect the costing estimates. This is because much of the relief provided by the changes to the draft amendments alleviates compliance burden stemming from the Act, and was therefore not monetized (e.g. the time no longer required to determine and input “purpose of transfer” for EFTs) nor included in the cost-benefit analysis presented at the prepublication stage. Furthermore, stakeholders have informed Department of Finance Canada officials that the costs associated with updating IM/IT systems and internal procedures are the same despite any reductions in reporting requirements reflected in the final version of the amendments. Reporting entities advised that the costs are generally fixed for large IM/IT updates that serve to map the various elements of the amendments, and that reducing the number of mandatory fields might only marginally reduce the costs. While implementation of the amendments will be phased in, reporting entities will begin assuming costs immediately in preparation for their coming into force one or two years later.

Resource implications for the Government of Canada

Additional costs will be incurred by FINTRAC to operationalize and enforce these amendments in order to adapt FINTRAC’s IT systems and enhance its compliance program. Budget 2019 provided FINTRAC with $9.7 million (2019 dollars) over 5 years and $0.5 million (2019 dollars) per year ongoing to implement the regulatory amendments, covering all of the systems-related costs. FINTRAC will be re-allocating $15.9 million over 4 years beginning in 2019–2020 from existing reference levels in support of this initiative. This translates to $8,591,971 (PV) of costs over 10 years (2012 dollars, PV).

Benefits

The Department of Finance Canada has estimated that the amendments will introduce $1.9 million (PV) in total cost savings to business over 10 years. The majority of other benefits, however, cannot be quantified. These include reputational, economic and national security benefits.

The amendments strengthen Canada’s AML/ATF Regime and enhance its effectiveness by improving customer due diligence standards; closing loopholes; improving compliance, monitoring and enforcement; and strengthening information sharing. The amendments also enhance the quality and scope of FINTRAC disclosures of financial intelligence to law enforcement and disclosure recipients, which should better assist them in their investigations. Strong AML/ATF policies help to deter and detect money laundering and terrorist activity financing offences.

The amendments also improve compliance with the FATF international standards and help Canada meet the necessary requirements to exit the enhanced follow-up process. Meeting these standards improves the integrity of the global AML/ATF framework, positively impacts Canada’s international reputation, and can lead to regulatory efficiencies with other countries’ AML/ATF regimes, making it easier for Canadian businesses to operate internationally. The methodology and assumptions used to calculate the costing estimates are available upon request.

“One-for-One” Rule

Canada’s obligations to meet the FATF’s international standards are non-discretionary in nature (due to the potential for punitive consequences in the event Canada fails to meet them). Other jurisdictions’ perception of Canada has tangible impacts on Canadian businesses. If Canada is not aligned with the FATF standards or is perceived by its international peers as making insufficient progress on its AML/ATF Regime generally, there could be negative reputational consequences for Canada’s financial sector, as well as increased costs for Canadian financial institutions.

By its nature, including the need to be aligned with FATF standards and effectively detecting and deterring crimes, Canada’s legislative and regulatory framework for combating money laundering and terrorist activity financing imposes an unavoidable burden on reporting entities.

The total net annualized administrative cost increase for affected businesses is estimated at $464,586. The annualized administrative cost increase per affected business is estimated to be $20. As Canada is required to make the majority of these amendments, costed at $463,098, in order to comply with FATF standards, they are considered non-discretionary in nature and are therefore exempt from the requirement to offset under the “One-for-One” Rule. This means that an equal amount of administrative burden would not have to be offset two years after these amendments are made.

However, the amendments to the Cross-border Currency and Monetary Instruments Reporting Regulations, which are not related to Canada complying with its international obligations, will result in an estimated $1,488 total annualized administrative cost increase on businesses ($24 per business, for approximately 62 affected businesses) and are therefore considered an IN under the “One-for-One” Rule. Therefore, these amounts will need to be offset within two years under the “One-for-One” Rule. The impacted businesses have not been consulted on the “One-for-One” Rule calculations, beyond the scope of the consultation that occurred during the prepublication comment period.

These costs were estimated by using the Treasury Board Secretariat’s Regulatory Cost Calculator and the relevant monetization parameters for “One-for-One” Rule reporting.

Small business lens

The amendments impact small businesses; therefore, the small business lens applies. It is assumed that roughly 24 000 small businesses are impacted by this proposal. The total incremental administrative and compliance costs imposed on small businesses are estimated at $54,088,046 ([PV], $7,700,922 annualized average), which is equivalent to $326 per small business impacted (PV).

These costs stem from internal IM/IT systems changes required to support the implementation of these amendments; the associated updates to reporting entities’ internal policies and procedures; and the additional reporting of information and provision of documents to FINTRAC.

Finance Canada is not able to provide a flexibility analysis for small businesses because the amendments are being made to comply with FATF standards, which, while not legally binding, Canada is expected to follow. Finance Canada recognizes that businesses, irrespective of size, will require time to implement these changes and will therefore provide a phased implementation approach for compliance with the new requirements. While this does not constitute a special consideration for small businesses alone, it should be noted that impacts on business, of which small businesses constitute approximately 80%, have been considered in establishing compliance requirements.

Furthermore, a number of amendments are being introduced to reduce regulatory burden on all businesses. Only a fraction of the burden relief has been quantified, as most of the burden being offset stems from requirements that are in the Act and not directly in the regulations.

Consultation

In December 2011, Finance Canada released a formal consultation paper on its website. The paper covered a wide range of proposed measures that serve to strengthen Canada’s AML/ATF framework, and was open for public comment for a period of 71 days. Over 50 submissions were received from a wide range of reporting sectors and industry associations representing financial entities (banks, credit unions and trust companies), life insurance companies, securities dealers, MSBs, accountants, lawyers, casinos, real estate agents and dealers in precious metals and stones. A large majority of the submissions were supportive of the proposed measures, and some submissions included additional proposals. Finance Canada had follow-up meetings with private sector representatives to discuss their submissions.

Due to the high volume of measures proposed in the consultation paper, implementation of the required changes was divided into two sets of regulatory amendments. The first set of amendments was made to the regulations in 2016, and was published in the Canada Gazette, Part II, on June 29, 2016. This proposal represents the second set of amendments to the Regulations.

From 2013 to 2015, Finance Canada implemented a targeted consultation strategy on both sets of the proposed amendments, which was supported by the use of discussion papers and informal discussions with key reporting entities (e.g. financial entities) impacted by the proposed amendments. In 2015–16, additional consultations were undertaken with financial institutions regarding virtual currency regulatory policy proposals.

In 2018–2019, proposed amendments to the three schedules of the Cross-border Currency and Monetary Instruments Reporting Regulations were broadly discussed at the Advisory Committee on Money Laundering and Terrorist Financing. footnote 11 Financial institutions and armoured car companies who are involved in the courier and shipping of currency were also invited to comment on the proposed changes. The feedback received indicated support for these changes, or were neutral.

Publication in the Canada Gazette, Part I

The amendments were published in the Canada Gazette, Part I, on June 9, 2018, followed by a 90-day comment period that ended on September 7, 2018. Finance Canada used the prepublication consultation period as an opportunity to engage stakeholders, address their questions and concerns regarding the amendments, and gather preliminary feedback. This process allowed stakeholders to provide more in-depth submissions at the end of the consultation period.

Finance Canada, in collaboration with FINTRAC and the Office of the Superintendent of Financial Institutions, hosted more than 30 meetings over 90 days with all reporting entity sectors. At the end of the consultation period, Finance Canada received 48 unique submissions from a diverse range of stakeholders, including law enforcement agencies, and reporting entities (i.e. financial entities, life insurance companies, securities dealers, money services businesses, accountants).

The policy intent of the amendments was generally well received by stakeholders, who expressed support for strengthening Canada’s anti-money laundering and anti-terrorist financing regime. Stakeholders also expressed concerns related to implementation, with respect to privacy rights, administrative burden, the balance between prescriptive and risk-based regulatory requirements, as well as the potential for negative impacts to Canadian consumers and Canada’s competitiveness. These are outlined below.

The constructive engagement from industry during the prepublication consultations has enabled Finance Canada and FINTRAC to better understand the practical implications of the amendments. As a result of this engagement and the formal submissions received, Finance Canada, in collaboration with FINTRAC, has made a number of changes to the draft version of the amendments to address concerns raised by stakeholders.

Changes following prepublication

1. Single transaction definition

2. Electronic funds transfers

a. Purpose of transaction

Comments from financial entities, MSBs: The draft amendments introduced a requirement for reporting entities to provide a “purpose of transaction” for prescribed EFTs. Reporting entities indicated that a blanket requirement to collect information on the reason the EFT was being sent at the $1,000 threshold was too burdensome. It was also noted that asking this question could raise privacy concerns from clients, impact timely service quality, and potentially have adverse effects on Canada’s competitiveness in the payments sector.

Change: Following in-depth consultations with industry, the requirement to determine the purpose of all international and threshold EFTs has been removed, as it would be too onerous for reporting entities to comply with.

b. SWIFT MT-103

Comments from banks: The draft amendments removed the reference to “SWIFT MT-103 messages” footnote 12 from the definition of an EFT to make the Regulations more technologically neutral. The change was flagged as a concern by stakeholders because it was perceived as an expansion of the types of transfers that would be subject to AML/ATF obligations.

Change: The reference to “SWIFT MT-103 messages” has been re-introduced to provide clarity for stakeholders and the term “and their equivalent” was added to provide regulatory flexibility as SWIFT transitions to adopt the ISO 20022 standard footnote 13 and replace the MT-103 message type.

3. Life insurance companies

a. Loan products

Comments from life insurance companies: Stakeholders noted that some products that are commonly referred to as “policy loans” and “advance death benefits” could inadvertently be interpreted to mean a loan product under the proposed amendments. While the industry uses the term loan, these products are not actually loans, but merely advances on life insurance policies which clients are contractually entitled to.

Change: In response to stakeholder feedback and to clarify the policy intent, the amendments were changed to exclude non-collateralized loans, as well as low-risk collateralized loans (i.e. loans secured by the value of an insurance policy), such as those issued for the sole purpose of funding treatment of a terminal illness or those that are used for the sole purpose of funding the life insurance policy.

b. Third parties

Comments from life insurance companies: Stakeholders expressed concern with the draft amendments that require an insurer to keep an information record in respect of the “person or entity that makes or is to make the payment and every person or entity on whose behalf the payment is made.” Life insurance companies noted that this proposed language could require identity verification and other obligations with respect to a third party with whom they did not have a business relationship (e.g. the payor of a policy who is not the policy holder).

Change: As a result of stakeholder feedback, the amendments were modified to clarify that the information record be created for the applicant or policy holder, who has a business relationship with the life insurance company. Accordingly, reporting entities would be required to keep an information record related to the applicant/policy holder and not the third party payor (unless the payor is also the applicant/policy holder).

c. Beneficiaries

Comments from life insurance companies: Stakeholders were concerned that the proposed requirement to identify the beneficiary prior to issuing the life insurance payout would conflict with other statutes (e.g. at the provincial/territorial level).

Change: The requirement was amended to exclude circumstances beyond the reporting entity’s control, due to which they cannot identify the beneficiary in the prescribed time period, to avoid any potential conflict between the Regulations and the requirements set out in provincial or territorial insurance legislation. For example, provincial insurance legislation requires the payment of a claim within 30 days after the insurer receives proof of the right of the claimant to receive payment. The changes would allow life insurance companies to issue the payment while they continue to identify the beneficiary.

4. Prepaid payment products and accounts

Comments from financial entities, MSBs, prepaid service providers: Stakeholders indicated that certain prepaid cards, such as those that are issued under corporate rebate programs, government, or emergency relief programs, and where the general public cannot load or reload funds onto the prepaid payment account themselves, should not be subject to the AML/ATF requirements because they do not represent a high risk for money laundering. The proposed requirements to complete identity verification for each individual authorized user would significantly increase costs to employers and retailers, and reduce cardholders’ ability to reload and reuse their prepaid card in an efficient and convenient way.

Change: The burden has been mitigated by exempting low-risk products as suggested by industry stakeholders. The amendments have been modified to exclude prepaid payment products that are part of a corporate retail rebate program, that can only be funded or reloaded by a public body, or that can only be funded or reloaded by a non-profit agency or registered charity for the purposes of humanitarian aid relief.

5. Records and reporting schedules

Comments from financial entities, MSBs, payment service providers, casinos: The feedback received expressed concern with the breadth of information required to be kept or reported. Stakeholders asked that the scope of the information be scaled back to reduce burden and costs. Specifically:

Change: The amendments have been modified to remove items from both record keeping and reporting obligations to reduce burden and reverted, in most cases, to pre-existing obligations. For example, the following items have been removed:

6. Suspicious transaction and terrorist property reports

Comments from financial entities, MSBs, payment service providers, securities dealers, real estate sector: The feedback received indicated that the requirement for reporting entities to send a suspicious transaction report within three days after the day on which measures were taken to establish that there were reasonable grounds to suspect that the transaction or attempted transaction was related to the commission of a money laundering offence or a terrorist activity financing offence would not be feasible. Stakeholders recommended that the timing be changed to account for different contexts (e.g. “as soon as practicable” or “promptly”) and that language be clarified to state “measures completed” instead of “measures taken.”

Change: To meet the requirements of the FATF and to balance stakeholder concerns, the timing has been changed to “as soon as practicable” and the language has been clarified. In addition, the Terrorist Property Report requirement in the Proceeds of Crime (Money Laundering) and Terrorist Financing Suspicious Transaction Reporting Regulations was also amended to describe a time period rather than prescribe a set number of days (i.e. “immediately”).

7. Confirming the existence of an entity

Comments from financial entities, life insurance companies, real estate sector: The feedback received indicated that obtaining certificates of corporate status and other records issued within the previous year in order to confirm the existence of an entity is overly restrictive. It was recommended that the requirement that a document be less than a year old be repealed and allow for reporting entities to rely on authentic, valid and current documents. Stakeholders also indicated that the requirement to “prove” the existence of a corporation that is being identified is problematic as it is a higher standard to meet, and recommended that the word “confirm” be used instead.

Change: The amendments have been modified to remove the requirement for documents to be less than a year old, and allow for reporting entities to rely on authentic, valid and current records. In addition, the requirement to “prove” the existence of a corporation that is being identified has been changed to the requirement to “confirm” existence.

8. Virtual currency

a. Definition

Comment from virtual currency businesses and financial entities: The feedback received indicated that the proposed definition for virtual currency was too vague and that it should align more closely to FATF standards. According to the FATF Interpretive Note for Recommendation 15, footnote 14 “for the purposes of applying the FATF Recommendations, countries should consider virtual assets as ‘property,’ ‘proceeds,’ ‘funds,’ ‘funds or other assets,’ or other ‘corresponding value.’ Countries should apply the relevant measures under the FATF Recommendations to virtual assets and virtual asset service providers.”

Change: Based on stakeholder recommendations, the regulations were amended to clarify the definition as it relates to crypto-specific technology, mirroring language from FATF’s recent work. The amendments were modified to define virtual currency as “(a) a digital representation of value that can be used for payment or investment purposes, that is not a fiat currency and that can be readily exchanged for funds or for another virtual currency that can be readily exchanged for funds; (b) or a private key of a cryptographic system that enables a person or entity to have access to a digital representation of value referred to in paragraph (a).”

9. Scope of activities

Comment from financial entities, money services businesses, payment service providers and virtual currency exchanges: The feedback received indicated that the scope of the activities captured by the draft amendments would be cumbersome. Consequently, stakeholders recommended that “transfer” reporting obligations (the requirement to file a report every time a transfer of virtual currency occurs) be repealed while maintaining some form of record keeping for these transactions.

Change: While all reporting entities will need to report the receipt of Can$10,000 of virtual currency, similar to large cash transactions, the amendments were modified to repeal the mandatory reporting obligations for virtual currency transfers that total Can$10,000 equivalent or more while Finance Canada officials are awaiting the completion of the changes to the FATF guidance. This will allow Finance to assess the best approach to mitigate the risks posed by virtual currency transactions to be aligned with the FATF standards as they relate to EFTs and wire-like transactions (like virtual currency).

Summary: While reporting entities have expressed concern with the implementation costs associated with the proposed amendments (e.g. those associated with updating their procedures, policies and systems and training their staff), overall, they are supportive of the intent and need for these changes.

Rationale

Money laundering and terrorist activity financing are a threat to the integrity of Canada’s financial system and the security and safety of Canadians at home and abroad. Money laundering supports and perpetuates criminal activity by legitimizing the proceeds of crime. It can help criminals to harness more economic and social power, creating the right incentives for criminals to engage in more criminal activity.

Terrorist activity financing can pose a serious threat to Canada’s national security and to Canada’s domestic and international interests. Terrorist activity financing supports and sustains the activities of domestic and international terrorists that can result in terrorist attacks in Canada or abroad, causing destruction and loss of life. Furthermore, the economic consequences to Canada of terrorist activity financing can be significant if the funds raised are used to carry out a terrorist attack in Canada or against Canada’s interests abroad.

A robust legislative and regulatory framework helps to prevent and deter money laundering and terrorist activity financing by ensuring that entities that provide access to the financial system know their customers and are vigilant. For example, the records that are kept by reporting entities, as required by the Act and its regulations, are available to police forces (upon procurement of a proper warrant) when investigating money laundering offences or to police forces and law enforcement and national security agencies when investigating terrorist activity financing offences. Such information could assist in the investigation, apprehension, and prosecution of money launderers and terrorist financiers.

The amendments strengthen Canada’s AML/ATF Regime by aligning it with international standards, closing loopholes and ensuring it reflects ongoing changes in the operating environment (i.e. in response to FinTech and the ongoing modernization of the financial sector). They also help to address the deficiencies identified by the FATF.

Implementation, enforcement and service standards

Under the Act, FINTRAC is designated as Canada’s financial intelligence unit and the regulator responsible for administering and enforcing the Act and regulations.

FINTRAC’s responsibilities include the overall supervision of reporting entities to determine compliance with the Act and regulations. Under the Act, reporting entities are required to comply with FINTRAC’s information demands and to give all reasonable assistance when FINTRAC carries out its compliance responsibilities.

FINTRAC has developed preliminary guidance for the amendments, and has undertaken preliminary consultations on them. Upon coming into force of the amendments, FINTRAC will update its guidance documents (existing and new) and policy interpretations to set out its expectations for how obligations are to be met as well as undertake outreach activities to ensure that new and current reporting entities are aware of the new requirements. FINTRAC’s guidance documents are available on its website. FINTRAC would be responsible for enforcing the obligations and would scope them into their compliance examinations and processes. Should non-compliance be identified, FINTRAC could impose administrative monetary penalties or take other enforcement actions.

Coming into force

During the prepublication consultation period, stakeholders notified Finance Canada officials that a 12-month delay in the coming into force of the amendments would be insufficient to comply with given the scope of the new requirements and changes required to IT systems.

Stakeholders suggested a phased implementation strategy, similar to the 2016 amendments to the Regulations, where measures that were relieving in nature were brought into force first, followed by those which increased obligations for reporting entities at a later date. Reporting entities have identified a number of implementation challenges, notably related to reporting and record keeping information systems that will drive up internal costs due to the changes they must adopt to their IT systems.

To respond to these concerns, the amendments will take effect in three phases to reduce the compliance burden on reporting entities, as follows:

The amendments to the Cross Border Currency and Monetary Instruments Reporting Regulations will come into force on June 1, 2020.

Contact

Lynn Hemmings
Acting Director General
Financial Systems Division
Financial Sector Policy Branch
Department of Finance
90 Elgin Street
Ottawa, Ontario
K1A 0G5
Email: fin.fc-cf.fin@canada.ca