Regulations Amending Certain Regulations Made Under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act: SOR/2024-266

Canada Gazette, Part II, Volume 159, Number 1

Registration
SOR/2024-266 December 16, 2024

PROCEEDS OF CRIME (MONEY LAUNDERING) AND TERRORIST FINANCING ACT

P.C. 2024-1322 December 16, 2024

Her Excellency the Governor General in Council, on the recommendation of the Minister of Finance, makes the annexed Regulations Amending Certain Regulations Made Under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act under subsections 9.93(4)^{footnote a} and 11.12(1)^{footnote b} and paragraphs 73(1)(f)^{footnote c}, (j)^{footnote c} and (l)^{footnote c} and 73.1(1)(a)^{footnote d} and (b)^{footnote d} of the Proceeds of Crime (Money Laundering) and Terrorist Financing Act ^{footnote e}.

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

Proceeds of Crime (Money Laundering) and Terrorist Financing Regulations

1 The Proceeds of Crime (Money Laundering) and Terrorist Financing Regulations ^{footnote 1} are amended by adding the following after section 37:

37.1 (1) The documents referred to in subsection 9.93(2) of the Act must be issued no more than six months before the day on which they are reviewed under subsection 9.93(1) of the Act.

(2) For the purposes of subsection 9.93(4) of the Act, a money services business must retain the documents that it obtains under subsection 9.93(1) of the Act for a period of five years after the day on which the records are obtained.

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

2 The Proceeds of Crime (Money Laundering) and Terrorist Financing Registration Regulations ^{footnote 2} are amended by adding the following after section 6.01:

6.02 (1) For the purposes of paragraph 11.12(1)(c.2) of the Act, an applicant that is a corporation must include with its application the following documents:

• (a) a certificate of incorporation or 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; and
• (b) a document that sets out the ownership, control and structure of the corporation.

(2) For the purposes of paragraph 11.12(1)(c.2) of the Act, an applicant that is an entity other than a corporation must include with its application the following documents:

• (a) the partnership agreement, articles of association or the most recent version of any other record that confirms its existence and contains its name and address; and
• (b) a document that sets out the ownership, control and structure of the entity.

6.03 (1) The documents referred to in paragraphs 11.12(1)(b) and (c) of the Act must be issued no more than six months before the application for registration is submitted.

(2) A money services business or foreign money services business must keep the documents referred to in paragraphs 11.12(1)(b) and (c) and subsection 11.12(1.1) of the Act for a period of five years after the day on which it submits to the Centre the application for registration that includes the records or, if the records are submitted with a notification sent under subsection 11.13(1) of the Act, five years after the day on which the notification is sent.

3 Item 8.1 of Part B of Schedule 1 to the Regulations is replaced by the following:

8.1 If applicant is a foreign money services business, telephone number and email address of person who resides in Canada and who is authorized to accept, on applicant’s behalf, notices that are served or caused to be served by the Centre under the Act

8.2 If document that sets out applicant’s record of criminal convictions — or, if applicant is an entity, record of criminal convictions of applicant’s chief executive officer, president and directors and persons who own or control, directly or indirectly, 20% or more of entity or shares of entity — or that states that applicant or those persons do not have record is made in language other than English or French,

• (a) country, political subdivision or territory and city where document issued
• (b) name of authority or entity that issued document
• (c) language in which document made
• (d) name of organization that issued translator’s certification and name of translator

4 Part C of Schedule 1 to the Regulations is amended by adding the following after item 5:

6 Date of issuance of documents obtained and reviewed under subsection 9.93(1) of the Act, country, political subdivision or territory and city where they were issued and name of authority or entity that issued them

7 Date on which applicant is to carry out next review under paragraph 9.93(1)(b) of the Act

8 If agent or mandatary is a person, their date of birth and country and political subdivision or territory of birth and of residence

9 If agent or mandatary is a corporation, name, date of birth and country and political subdivision or territory of birth and of residence of its chief executive officer, its president, each of its directors and every person who owns or controls, directly or indirectly, 20% or more of its shares

10 If agent or mandatary is an entity other than a corporation, name, date of birth and country and political subdivision or territory of birth and of residence of its chief executive officer, its president, each of its directors and every person who owns or controls, directly or indirectly, 20% or more of entity

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

5 Part 1 of the schedule to the Proceeds of Crime (Money Laundering) and Terrorist Financing Administrative Monetary Penalties Regulations ^{footnote 3} is amended by adding the following after item 14:

Item	Column 1 Provision of Act	Column 2 Classification of Violation
14.1	9.91	Serious
14.2	9.92(a)	Serious
14.3	9.92(b)	Serious
14.4	9.93(1)(a)	Serious
14.5	9.93(1)(b)	Serious
14.6	9.93(3)	Serious
14.7	9.93(4)	Minor

6 Part 1 of the schedule to the Regulations is amended by adding the following after item 16:

Item	Column 1 Provision of Act	Column 2 Classification of Violation
16.1	11.12(1.1)	Serious

Coming into Force

7 These Regulations come into force on the day on which section 182 of the Budget Implementation Act, 2023, No. 1, chapter 26 of the Statutes of Canada, 2023, comes into force, but if they are registered after that day, they come into force on the day on which they are registered.

REGULATORY IMPACT ANALYSIS STATEMENT

(This statement is not part of the regulations.)

Executive summary

Issues

To remain relevant and effective, Canada’s anti-money laundering and anti-terrorist financing (AML/ATF) Regime must continuously monitor and adapt to new risks and threats, which, if left unchecked, can undermine the safety of Canadians, integrity of the financial system, and national security. AML/ATF Regime partners require the appropriate authorities, resources, tools, and expertise to carry out their roles to prevent, detect, and disrupt money laundering and terrorist financing. This can include new measures to amend the suite of AML/ATF requirements applicable to reporting entities, bring new sectors within the scope of AML/ATF regulation, and improve the Financial Transactions and Reports Analysis Centre of Canada’s (FINTRAC’s) operations. Measures to enhance Canada’s AML/ATF legislative framework must also balance the need to address identified AML/ATF risks against the costs and regulatory burden imposed on businesses, which includes applying a risk-based approach wherever possible to maximize the Regime’s effectiveness while minimizing burden.

To support a more effective federal AML/ATF Regime, the Department of Finance has identified the need to make regulatory amendments to implement measures announced in previous Budgets and the 2023 Fall Economic Statement, strengthen the AML/ATF legislative and regulatory framework, address recommendations of the last Parliamentary Review of the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA) in 2018, respond to criticisms of the Regime, such as the 2022 Commission of Inquiry into Money Laundering in British Columbia, known as the “Cullen Commission” and implement international standards under the Financial Action Task Force (FATF), the international AML/ATF standard-setting body, which will situate Canada positively for its next mutual evaluation by the FATF in 2025–26.

Sanctioned property reporting

Prior to the invasion of Ukraine, sanctions were primarily imposed against individuals, entities, and countries with relatively small economic and financial links to Canada. The situation presented by Russia creates a need to have more robust systems in place to both utilize sanctions and address sanctions evasion, including through clear and effective reporting on sanctioned property in Canada. The sanctioned property regime was announced in Budget 2023 obligating the financial sector to report sanctioned property-related information to FINTRAC and the Regulatory Amendments will operationalize legislative amendments in the Budget Implementation Act, 2023, No. 1, and in the Fall Economic Statement Act, 2023.

In addition to strengthening measures to combat sanctions evasion of Canada’s autonomous sanctions under the Special Economic Measures Act, the Department of Finance has identified the need to make regulatory amendments to respond to international obligations. Pursuant to Recommendation 6 on financial sanctions related to terrorism and terrorist financing and Recommendation 7 on targeted financial sanctions related to proliferation, the FATF requires that all member countries have legislation or regulations in place to ensure that financial institutions and certain professions are implementing United Nations (UN) mandated lists. Reporting on sanctioned property is an important element of implementing UN mandated sanctions lists, as well as implementing Canada’s other targeted sanctions provisions, as it ensures that reporting entities are implementing and reporting on sanctions effectively. Canada does not currently have a standardized process built into the AML/ATF framework for sanctioned property reporting, and the Department of Finance has assessed that regulatory amendments are needed to close this gap in Canada’s compliance with FATF obligations.

Money services business (MSB) registration framework

Under the PCMLTFA, MSBs are persons or entities that offer one or more of the following services: foreign exchange dealing, remitting, or transmitting funds, issuing or redeeming money orders or other similar instruments, dealing in virtual currency, offering crowdfunding platform services, or transporting currency, money orders, traveller’s cheques or other negotiable instruments. The Updated Assessment of Inherent Risks of Money Laundering and Terrorist Financing in Canada notes that the MSB sector is inherently susceptible to money laundering risks due to the array of products and services it offers, its integration with the financial system, and its wide geographic reach across Canada and internationally. This risk is heightened where a criminal actor is able to infiltrate the corporate structure of an MSB. Upon registration with FINTRAC, foreign MSBs are required to provide FINTRAC with a criminal record check of their chief executive officer, president, directors, and every person who controls directly or indirectly 20% or more of the entity or shares of the entity. Budget 2023 announced measures to further strengthen the MSB registration framework, including through criminal record checks, to prevent the abuse of MSBs for money laundering purposes. Regulations are needed before the legislative amendments to strengthen the MSB registration framework contained in the Budget Implementation Act, 2023, No. 1, and legislative amendments that make references to criminal offences if requirements are violated contained in the Budget Implementation Act, 2024, No. 1, can be brought into force.

White-label ATMs (WLATMs)

WLATMs are privately owned and operated cash machines, often located in retail locations. WLATMs connect to payment networks by linking with intermediary companies known as “acquirers.” Canada’s 2023 Updated Assessment of Inherent Risks of Money Laundering and Terrorist Financing in Canada found that WLATMs are highly vulnerable to money laundering and can be owned and operated directly by criminals or by legitimate businesses that may be criminally controlled. A 2008 RCMP Strategic Intelligence Assessment concluded that organized crime groups had infiltrated the WLATM industry and estimated that $315 million a year could be laundered through WLATMs, and potentially up to $1 billion a year. In 2008, the Department of Finance worked with representatives from the Canadian payment networks to develop a set of voluntary and self-enforced industry rules to address money laundering and terrorist financing risks posed by WLATMs. However, the RCMP continues to report that WLATMs are suspected of being associated with criminality. In 2018, the House of Commons Standing Committee on Finance (FINA) recommended WLATMs be subject to regulation under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA). In 2022, the Commission of Inquiry into Money Laundering in British Columbia, known as the “Cullen Commission,” also examined WLATMs, but ultimately recommended against provincial regulation, noting that WLATM regulation would be more appropriate at the federal level by subjecting them to the PCMLTFA.

The Government announced its intention to regulate WLATM acquirers under the PCMLTFA in the 2023 Fall Economic Statement. Legislative amendments to regulate WLATM acquirers as MSBs were then introduced in the Fall Economic Statement Act, 2023. Regulations are required to clarify the registration information to be provided to FINTRAC, as well as requirements related to record keeping and identity verification to bring the regulatory framework for WLATMs acquirers into force.

Amendments to the regulations are also required to bring Canada into compliance with FATF standards. FATF Recommendation 1 requires countries to assess their money laundering and terrorist financing risks and to take action to ensure risks are effectively mitigated. During the last FATF mutual evaluation of Canada in 2016, the FATF highlighted the lack of AML requirements for WLATMs as a gap in Canada’s AML/ATF Regime. The Regulatory Amendments are needed to address this gap.

Real estate (title insurers and unrepresented parties)

The Canadian real estate market has been identified as a sector highly vulnerable to money laundering, including by the “Cullen Commission,” the FATF, and in the 2023 Updated Assessment of Inherent Risks of Money Laundering and Terrorist Financing in Canada.

Title insurers provide specialized insurance policies that insure residential or commercial property owners and/or their lenders against losses related to the property’s title or ownership. Although title insurance is not mandatory, many lenders require its purchase as part of the mortgage agreement and therefore title insurers are involved in most residential real estate transactions in Canada. Fraud, a well-known predicate crime to money laundering, is on the rise in the real estate sector, with increased reporting of criminals using title fraud to steal ownership of a home to benefit from its value. Successive reviews of Canada’s AML/ATF Regime, including the 2018 Parliamentary Review of the PCMLTFA, have supported title insurers being subject to formal obligations under the PCMLTFA.

Currently, real estate representatives are only required to take “reasonable measures” to identify unrepresented parties (i.e., parties to a real estate transaction that are not represented by a real estate agent). Despite the reasonable measures approach, money laundering risks in the real estate sector continue to increase, as do reports relating to criminal’s use of the real estate sector for money laundering. Given these factors, the “reasonable measures” approach needs to be strengthened to better detect and deter money laundering in the real estate sector.

The 2023 Fall Economic Statement announced the government’s intention to address fraud and money laundering risks in the real estate sector by extending requirements under the PCMLTFA to title insurers and by requiring real estate representatives to identify unrepresented parties and third parties in real estate transactions. The Department of Finance assessed that only regulatory changes were needed to implement these commitments and thus no legislation to implement the real estate proposals announced in the 2023 Fall Economic Statement were included in the Fall Economic Statement Act, 2023.

The Regulatory Amendments are required for Canada to comply with its international AML/ATF obligations. FATF Recommendation 22 requires all designated non-financial businesses and professions, including real estate professionals, to apply customer due diligence and record-keeping requirements. The FATF notes that real estate professionals include real estate agents as well as those professionals that may carry out or prepare transactions for clients involving the buying and selling of real estate, such as lawyers, real estate developers, title insurers, and other independent legal professionals and accountants.

Casino disbursement reporting

Casinos are a high-risk sector for money laundering and terrorist financing. For this reason, casinos are currently required to report to FINTRAC disbursements that are over $10,000. However, the lack of a requirement for casinos to report on the ultimate recipient of a disbursement in the event the disbursement is collected by another party was a gap in the framework, which could be exposed by money launderers. The Department of Finance has therefore identified the need to make regulatory amendments to address this gap in casino disbursement reporting.

FATF Recommendations 24 and 25 require countries to assess the risk of the misuse of legal persons and arrangements for money laundering or terrorist financing and take measures to prevent their misuse. Canada’s last mutual evaluation in 2016 as well as FATF’s Follow-Up Report on Canada in 2021 found Canada to be partially compliant with Recommendation 24 and non-compliant with Recommendation 25 (non-compliant being the lowest assessment result possible). Increasing transparency regarding the ultimate beneficiary of casino disbursements ensures that this sector is not being misused to obfuscate money laundering and will support Canada’s adherence to FATF Recommendations 24 and 25.

Background

Money laundering is the process used to conceal or disguise the origin of proceeds of crime to make it appear as if it originated from legitimate sources, which benefits domestic and international criminals and organized crime groups. Terrorist financing is the collection and provision of funds from legitimate or illegitimate sources for terrorist activity. It supports and sustains the activities of domestic and international terrorists that can result in terrorist attacks in Canada or abroad, causing loss of life and destruction.

Money laundering and terrorist financing are serious threats to the safety and security of Canadians, as well as the integrity of Canada’s financial system. These crimes affect our society by supporting, rewarding, and perpetuating broader criminal and terrorist activities. The proceeds of crime being laundered in Canada are often generated at the direct expense of and harm to innocent Canadians, through crimes such as fraud, theft, drug trafficking, human trafficking for sexual exploitation, and online child sexual exploitation. Terrorist financing supports the activities of domestic and international terrorists, including deadly and destructive attacks in Canada or abroad.

Canada’s Anti-Money Laundering and Anti-Terrorist Financing (AML/ATF) Regime

Canada’s AML/ATF Regime helps to protect the integrity of Canada’s financial system and the safety and security of Canadians by detecting, deterring, and disrupting money laundering and terrorist financing, as well as helping to disincentivize the predicate criminal offences that generate proceeds of crime.

Canada’s AML/ATF Regime consists of 13 federal departments and agencies, each with their respective mandates, led by the Department of Finance. The Regime is established by federal statutes, including the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA) and the Criminal Code.

The PCMLTFA, first implemented in 2000, is a key statute in Canada’s AML/ATF Regime. Its objectives are to: facilitate the deterrence, detection, investigation and prosecution of money laundering and terrorism financing offences; counter organized crime by providing law enforcement officers with the information they need while putting appropriate privacy safeguards in place; assist in fulfilling Canada’s international commitments, including under the FATF, to the global fight against transnational financial crime; and to protect Canada’s financial system from misuse. To these ends, the PCMLTFA obligates businesses and professionals regulated by the Act (i.e., “reporting entities”) to develop and implement compliance programs to identify clients, monitor business relationships, keep records, and report certain types of financial transactions. It further establishes FINTRAC as Canada’s AML/ATF regulator and financial intelligence unit. Several regulations support the PCMLTFA.

In recent years, the government has made a series of statutory changes and investments to strengthen and modernize the AML/ATF legislative and regulatory framework, including announcements in Budget 2022, Budget 2023, and the 2023 Fall Economic Statement. The Regulatory Amendments will implement, streamline, and address gaps in policies that were already approved and announced in various vehicles, including previous Budgets and the 2023 Fall Economic Statement. More specifically regulations are required to:

• implement the sanctioned property reporting regime announced in Budget 2023 and bring into force associated legislative amendments in the Budget Implementation Act, 2023, No. 1, and the Fall Economic Statement Act, 2023;
• implement measures to strengthen the MSB registration framework announced in Budget 2023 and bring into force associated legislative amendments in the Budget Implementation Act, 2023, No. 1, as well as a subsequent amendment related to criminal offences in the Budget Implementation Act, 2024, No. 1;
• implement the regulatory regime for acquirers providing services for WLATMs that was announced in the 2023 Fall Economic Statement with coordinating amendments to bring into force associated legislative provisions in the Fall Economic Statement Act, 2023;
• implement the regulatory regime for title insurers and the requirement for real estate representatives to identify unrepresented parties and third parties in real estate transactions, both of which were announced in the 2023 Fall Economic Statement; and
• close a gap in the casino disbursement reporting regime that was published in the Canada Gazette, Part II, Volume 136: Proceeds of Crime (Money Laundering) and Terrorist Financing Regulations (PDF).

Objective

The objective of the Regulatory Amendments is to strengthen Canada’s AML/ATF framework, respond to criticisms of the “Cullen Commission,” address recommendations from the 2018 Parliamentary Review of the PCMLTFA, and help Canada maintain its current rating in the context of its mutual evaluation by FATF in 2025-26.

Description

Sanctioned property reporting

Regulatory Amendments to the Proceeds of Crime (Money Laundering) and Terrorist Financing Suspicious Transactions Reporting Regulations under the PCMLTFA create a new sanctioned property report, which reporting entities will need to report to FINTRAC. Previously, the regulations contained provisions that required reporting entities to submit a terrorist property report to FINTRAC when they are required to make a disclosure under the Criminal Code or the Regulations Implementing the United Nations Resolutions on the Suppression of Terrorism. In addition to these Acts, the Regulatory Amendments will require reporting entities to also report to FINTRAC on the sanctioned property of entities listed under the Special Economic Measures Act, the Justice for Victims of Corrupt Foreign Officials Act, and the United Nations Act. The information that is contained in the new report will closely mirror information that was already being captured under the previous terrorist property reporting requirements (for example, requiring identifying and transactional information). The specific information that is required in the new sanctioned property report is described in an amended schedule under the Regulatory Amendments. Some new fields include an indication of how a reporting entity came to know that the property in question is owned, held, or controlled by or on behalf of the listed person or entity and an indication of how a reporting entity identified the listed person or entity.

The reporting obligations for sanctioned property apply to property held by reporting entities at the time the Regulatory Amendments come into force. There is a non-mandatory requirement in the reporting form that seeks information on transactions involving the property for six months before it was sanctioned. Furthermore, the obligation to report on sanctioned property only applies to when the property is sanctioned, and not to when the property is released pursuant to a legally permissible reason.

MSB registration framework

Various regulations under the PCMLTFA are being amended to bring into force the strengthened MSB registration framework announced in Budget 2023. Under the PCMLTFA, both foreign and domestic MSBs must register with FINTRAC and renew that registration every two years. Foreign MSBs are already required to submit criminal record checks of their chief executive officer, president, directors, and every person who controls directly or indirectly 20% or more of the entity or shares of the entity in the context of their registration (and re-registration) every two years. The Regulatory Amendments support the legislative framework announced in Budget 2023, which requires domestic MSBs to similarly submit criminal record checks of their chief executive officer, president, directors, and every person who controls directly or indirectly 20% or more of the MSB or shares of the MSB to FINTRAC during registration (and re-registration) every two years.

The legislation announced in Budget 2023 include requirements for MSBs to obtain and review criminal record checks of their agents and to submit information related to these criminal record checks upon registration (and re-registration) every two years with FINTRAC. In addition, for agents of MSBs that are “entities” (i.e. corporations), the chief executive officer, the president, the directors and any person who owns or controls, directly or indirectly, 20% or more of the entity or the shares of the entity, must also undertake a criminal record check and the MSB must submit information related to these checks to FINTRAC during registration (and re-registration) every two years. All information related to the criminal record checks must have been obtained from the relevant authority within the last six months (relative to the time of registration of reregistration), meaning that MSBs need to conduct the obligatory criminal record checks in advance of their registration (and re-registration) every two years. Through the submission of these criminal record checks and information related to criminal record checks, the MSB must ensure that the designated individuals do not trigger ineligibility requirements related to past criminal behaviours set out in the PCMLTFA.

The Regulatory Amendments provide further detail in support of the legislative amendments. For example, by requiring: the provision of documents that set out the ownership and structure of the MSB; the submission of contact and other personal information relating to the individuals for which a criminal record check must be undertaken; other information, such as the date and location, that must be included when submitting information related to criminal record checks; and records relating to criminal record checks to be kept for five years.

Corresponding penalties for non-compliance with these obligations are set out in the Proceeds of Crime (Money Laundering) and Terrorist Financing Administrative Monetary Penalties Regulations. These violations are categorized by degree of importance, from minor, to serious and very serious, and assign corresponding penalty ranges from a maximum of $1,000 per minor violation, $100,000 per serious violation, and $500,000 per very serious violation committed by an entity. The violations associated with failing to verify whether an agent or mandatory is ineligible to register with FINTRAC or failing to obtain and review a criminal record for an agent or mandatory are classified as serious and therefore subject to a maximum penalty of $100,000 per violation, while the violation for failing to keep a record of the criminal record in the prescribed manner is classified as minor are therefore subject to a maximum penalty of $1,000 per violation.

Other than the Regulatory Amendments described here, there will be no impact on current obligations for MSBs and foreign MSBs, including obligations related to politically exposed persons and heads of international organizations.

White-label ATMs (WLATMs)

The Regulatory Amendments amend the Proceeds of Crime (Money Laundering) and Terrorist Financing Regulations and the Proceeds of Crime (Money Laundering) and Terrorist Financing Registration Regulations to require acquirers offering cash withdrawal services for WLATMs to meet the following obligations:

• Register with FINTRAC and include information with respect to WLATMs serviced (e.g., information on the owner, lessor and operator of WLATMs; information on the owner of the cash that is loaded into WLATMs; information on the WLATM settlement accounts; information on the WLATM; as well as the source and method used to transport cash loaded into a WLATM);
• “Know your client” (e.g., verify the identity of the owner, lessor and operator of WLATMs; owner of the cash that is loaded into WLATMs; and owner of WLATM settlement account);
• Keep records (e.g., information on the owner, lessor and operator of WLATMs; information on the owner of the cash that is loaded into WLATMs; information on the WLATM settlement accounts; information on the WLATM; as well as the source and method used to transport cash loaded into a WLATM);
• Develop and maintain a compliance program;
• Report certain transactions (e.g., suspicious transactions) to FINTRAC; and
• Follow ministerial directives, such as requiring reporting entities to apply countermeasures to transactions, or to restrict reporting entities from entering into a financial transaction, coming from or going to designated foreign jurisdictions or entities.

Real estate (title insurers and unrepresented parties)

Regulatory Amendments to the Proceeds of Crime (Money Laundering) and Terrorist Financing Regulations will make title insurers reporting entities under Canada’s AML/ATF Regime. Specifically, title insurers will be required to: develop an AML/ATF compliance program; meet identity verification and record keeping requirements; submit required reporting to FINTRAC, including suspicious transaction reports and terrorist property reports; and follow ministerial directives.

Corresponding penalties for non-compliance with these obligations are set out in the Proceeds of Crime (Money Laundering) and Terrorist Financing Administrative Monetary Penalties Regulations. These violations are categorized by degree of importance, from minor, to serious and very serious, and assign corresponding penalty ranges from a maximum of $1,000 per minor violation, $100,000 per serious violation, and $500,000 per very serious violation committed by an entity. As the record keeping obligations have been tailored to title insurers, a unique penalty for violations associated with failing to verify client identity or failing to keep records (i.e., record of the name, address and date of birth of the purchaser, the legal description and address of the property, the closing date, the purchase price, the mortgage amount and name of lender, the name of the seller [if known], and the title information obtained from the land registry) are included in the Regulatory Amendments and are all classified as minor.

In addition, the Regulatory Amendments strengthen obligations for real estate representatives to identify unrepresented parties and determine whether third parties are involved in these transactions and keep the associated information record.

Casino disbursement reporting

The Regulatory Amendments clarify that casinos must report on the beneficiary of casino disbursements of $10,000 or more. Previously, there was no requirement for casinos to report if the disbursement was received on behalf of a third party. The reporting is under a new part of the existing casino disbursement reporting form.

Regulatory development

Consultation

Publication in the Canada Gazette, Part I

The Regulatory Amendments were published in the Canada Gazette, Part I, on July 6, 2024, followed by a 30-day comment period that ended on August 5, 2024.

The Department of Finance received comments through the Online Regulatory Consultative System (ORCS) and by email. The Department received 16 submissions in total (ten from industry associations and six from individuals), including

• five (three from individuals and two from industry associations) through ORCS on Regulations Amending Certain Regulations Made Under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (Property Reporting, Title Insurers, Private Automated Banking Machines, Unrepresented Parties in Real Property or Immovables Transactions and Casino Disbursement Reporting);
• five (three from industry associations and two from individuals) through ORCs on Regulations Amending Certain Regulations Made Under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (Money Services Business Registration); and
• six (five from industry associations and one from an individual) received by email, five (four from industry associations and one individual) of which related to Regulations Amending Certain Regulations Made Under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (Property Reporting, Title Insurers, Private Automated Banking Machines, Unrepresented Parties in Real Property or Immovables Transactions and Casino Disbursement Reporting). One submission from an industry association received by email relating to both proposed sets of regulatory Amendments was requested to remain confidential, and one submission received from an industry association by email relating to title insurers was received after the comments were already published and thus could not be uploaded. The other four submissions (three from private industry associations and one from an individual) received by email were uploaded and published through the ORCS.

Overall, stakeholders expressed support for the objective of the Regulatory Amendments, which seek to strengthen certain elements of Canada’s AML/ATF legislative and regulatory framework. Most of the comments were to seek clarification and make suggestions to better achieve the policy intent of the Regulatory Amendments. Some changes were suggested on the Regulatory Amendments relating to sanctioned property reporting, the MSB registration framework, and real estate, including to address perceived regulatory burdens, potential gaps, inconsistencies, and business realities in the context of applying AML/ATF regulation to new sectors, and to provide greater flexibility in the coming-into-force dates to allow industry to adjust to the Regulatory Amendments. Some comments also sought to emphasize broader issues out of the scope of the Regulatory Amendments and/or to emphasize submissions to the 2023 public Consultation on Strengthening Canada’s Anti-Money Laundering and Anti-Terrorist Financing Regime. These comments will be considered by the Department of Finance in the context of future legislative and/or regulatory amendments. No comments were received on the Regulatory Amendments relating to white-label ATMs and casino disbursement reporting.

The engagement from industry during the prepublication consultations has enabled the Department of Finance to better understand the practical implications of the Regulatory Amendments. The Department of Finance, in collaboration with FINTRAC, has made changes to address feedback received from stakeholders as outlined below.

Sanctioned property reporting

The Regulatory Amendments were informed by engagement sessions the Department of Finance undertook with Canada’s major banks during an outreach visit in May 2023, which focused on the implementation of Canada’s autonomous sanctions. The Amendments were also developed in consultation with FINTRAC, the Royal Canadian Mounted Police (RCMP), and the Canadian Security Intelligence Service. During consultations, Canadian banks expressed challenges regarding ambiguity in the informational reporting requirements for sanctioned property and inconsistencies in the approach to submitting reports on sanctioned property. This feedback informed the Regulatory Amendments, which help to ensure clarity on informational requirements and a basis for more consistent reporting on sanctioned property.

Changes following prepublication

1. Changes to coming into force

The Department of Finance received requests from two industry associations for extensions for the coming into force for the proposed Amendments relating to sanctioned property reporting; one noted that it would take six months to implement and suggested a 12-month delay in coming into force and the other noting that it would need to develop updated internal guidance, asking for FINTRAC guidance to be published before coming into force, and seeking a delay of coming into force commensurate with the other measures relating to MSBs and WLATMs. Due to Canada’s international obligations under the FATF, the coming into force for reporting of sanctioned property under the United Nations Act will remain (60 days). The amount of sanctioned property, and subsequent sanctioned property reporting under the United Nations Act is expected to be very low and should not necessitate immediate changes to the information technology systems of reporting entities. Canada’s sanctions under the Special Economic Measures Act and the Justice for Victims of Corrupt Foreign Officials Act are likely to result in a higher volume of reporting. To provide industry greater time to adapt, the Department of Finance is extending the coming into force for reporting of sanctioned property under these Acts, which comprise the vast majority of expected reporting, and thus the majority of regulatory burden for reporting entities.

Change: The coming into force for reporting on sanctioned property under the Special Economic Measures Act and the Justice for Victims of Corrupt Foreign Officials Act is extended from 8 months to October 1, 2025.

2. Changes to description to clarify reporting obligations

The Department of Finance received questions from an industry association regarding whether the obligations for sanctioned property reporting only applies to future sanctioned property and whether reporting must be undertaken when sanctioned property is released pursuant to a legally permissible reason. The reporting obligation applies to property that is held at the time of the coming into force of the reporting obligations. The obligation to report on sanctioned property only applies to when the property is sanctioned, and not to when the property is released.

Change: The description section of the Regulatory Impact Analysis Statement has been updated to clarify sanctioned property reporting obligations.

3. Changes to draft regulatory amendments

The Department of Finance received two questions from an industry association regarding the draft regulatory amendments pertaining to sanctioned property reporting; specifically: 1) whether the Regulations Implementing the United Nations Resolutions on the Suppression of Terrorism will be updated to reflect the new definition for “listed person” adopted in the proposed Amendments; and 2) whether the wording in Part C.1, item 6, regarding the “nature of principal business of listed person or entity or their occupation” could better align with other parts of the draft Amendments by referring to “occupation or nature of principal business of listed person or entity.” The proposed definition of “listed person” for sanctioned property reporting needs to be broader than the definition in Regulations Implementing the United Nations Resolutions on the Suppression of Terrorism, which only pertains to specific sanctions under the United Nations Act, as it needs to cover sanctions under the Special Economic Measures Act, the Justice for Victims of Corrupt Foreign Officials Act, and additional sanctions under the United Nations Act. Therefore, it would not be appropriate to align the definition in these regulations with only the definition under the United Nations Act.

For this reason, the definitions should be different and there are no plans to amend the definition of “listed person” under the Regulations Implementing the United Nations Resolutions on the Suppression of Terrorism. However, the Department sees merit in the proposed change relating to how the nature of the principal business is characterized in the proposed Amendments.

Change: To improve internal consistency, part C.1, item 6, of the proposed Amendments has been modified to make reference to ’occupation or nature of principal business of listed person or entity.’

No changes following prepublication

1. Request to streamline existing reporting obligations

The Department of Finance received a request from two industry associations to eliminate existing reporting related to sanctioned property to the Office of the Superintendent of Financial Institutions, the Canada Security Intelligence Service, and the Royal Canadian Mounted Police. Streamlining the reporting obligations to these other government bodies would require legislative amendments, which is outside the scope of what is possible in these Regulatory Amendments. However, the Department of Finance is committed to limiting the regulatory burden on industry and is engaging with these government bodies regarding a possible streamlining of reporting obligations relating to sanctioned property, noting as well that the coming into force for obligations to report on the vast amount sanctioned property has been extended to October 1, 2025.

2. Request for FINTRAC guidance

The Department of Finance received a request from an industry association for FINTRAC to issue guidance related to sanctioned property reporting. FINTRAC is planning to issue such guidance before the proposed regulatory Amendments related to sanctioned property come into force.

MSB registration framework

The Department of Finance consulted specifically on the issue of further strengthening the MSB registration framework in its Consultation on Strengthening Canada’s Anti-Money Laundering and Anti-Terrorist Financing Regime, which was launched in summer 2023. Key stakeholders, including the Canadian MSB Association, responded to this consultation indicating that they concur with the overall objective of deterring undesirable applicants from registering as domestic or foreign MSBs with FINTRAC as it would help to reduce the overall risk profile for the sector. In addition to this specific consultation on strengthening the MSB registration framework, the Department of Finance also regularly engages with the MSB sector on a variety of matters, typically through the Canadian MSB Association. The MSB sector is aware of proposed regulatory changes to bring the Budget 2023 legislative Amendments into force. The Regulatory Amendments were also developed in consultation with FINTRAC.

Changes following prepublication

1. Changes to description to clarify obligations

The Department of Finance received a question from one individual regarding whether the proposed regulatory Amendments would impact current obligations for MSBs and foreign MSBs to determine that a person with whom they have established a business relationship is a politically exposed person or a head of international organization (PEP/HIO), or a family member, or close associate of a PEP/HIO. Nothing in the Regulatory Amendments impact current obligations under the PCMLTFA related to PEP/HIOs.

Change: The description section of the Regulatory Impact Analysis Statement has been updated to clarify that the Regulatory Amendments have no impact on the obligations for MSBs and foreign MSBs related to PEP/HIOs.

No changes following prepublication

1. Request to exempt agents of MSBs that are federally regulated financial institutions

The Department of Finance received a request from one industry association to exempt federally regulated financial institutions that are also agents of MSBs from the requirement to conduct criminal record checks for its chief executive officer, president, directors, and every person who controls directly or indirectly 20% or more of the entity or shares of the entity as a similar requirement exists under the Office of the Superintendent of Financial Institutions Guideline E-17. Such an exemption would require a legislative change to the PCMLTFA, which is out of the scope of the Regulatory Amendments. However, the Department will consider this request, in coordination with the Office of the Superintendent of Financial Institutions, as part of a possible future legislative change. Such consideration would include whether the requirements in Guideline E-17, which is not a legally binding instrument, refers to information that could include criminal records and requires ongoing criminal record checks (as would be required in the context of the re-registration of an MSB every two years), are comparable, maintain a level playing field, and support a strong and effective AML/ATF regulatory framework.

2. Request to increase ownership or control threshold for criminal record checks

One industry association noted that the requirement to provide criminal record checks for every person who controls directly or indirectly 20% or more of an MSB, or shares of an MSB, should be aligned with existing beneficial ownership requirements that are triggered for individuals who own or control 25% or more of an entity. This stakeholder suggested that aligning these thresholds would be beneficial as it would standardize compliance requirements. The Department of Finance considered this comment and weighed the benefit of aligning the thresholds against the importance of ensuring that persons able to exercise influence or control over an MSB not have a criminal record. Ultimately, the Department determined that the 20% threshold is already as high as possible to limit administrative burden and accommodate industry practices, while still addressing money laundering and terrorist financing risks in the MSB sector.

3. Request for guidance

The Department of Finance received one submission from an industry association that noted that, while the criminal record check requirements apply to individuals that hold certain positions within an MSB, including the chief executive officer, president, and directors, these titles may not be used for equivalent roles in all MSBs. This stakeholder requested that guidance be issued to clarify functionally which role should be subject to criminal record checks and provide alternative titles that are commonly used. FINTRAC is will issue guidance prior to the coming into force of this measure that will, inter alia, clarify the application of the requirement to MSBs that may have officers performing similar tasks to the chief executive officer, president, and directors but under different titles before the Regulatory Amendments related to the MSB registration framework come into force.

White-label ATMs (WLATMs)

This proposal was developed in consultation with key AML/ATF Regime partners, including FINTRAC and the RCMP. In June 2023, the government launched a public Consultation on Strengthening Canada’s Anti-Money Laundering and Anti-Terrorist Financing Regime. The consultation posed a specific question regarding whether to expand the AML/ATF framework to WLATMs, and if so, what obligations should apply. The consultation received 129 submissions from a wide range of stakeholders. Most feedback received on WLATMs was supportive of expanding Canada’s AML/ATF framework to include the sector. Stakeholders from the WLATM sector, however, were generally opposed to expanding AML/ATF coverage of WLATMs, arguing that the industry already has robust internal requirements and procedures.

Following the release of the 2023 Fall Economic Statement, which announced the government’s intention to broaden the PCMLTFA framework to apply to WLATM acquirers, the Department of Finance held bilateral and group engagement sessions with several members of the WLATM acquirer sector. These engagement sessions focused on introducing the sector to the AML/ATF Regime, the PCMLTFA, and its regulatory framework, followed by more detailed sessions providing an overview of potential AML/ATF requirements under consideration. This approach permitted the Department of Finance to refine its regulatory policy to ensure that it was responsive to the risks posed by the sector as well as responsive to the business practices of WLATM acquirers. As a result, the Regulatory Amendments largely formalize existing practices of the industry, including as outlined in Interac’s internal Requirements for White Label ABM Cash Owners.

No changes following prepublication

The Regulatory Amendments were published in the Canada Gazette, Part I, on July 6, 2024. No comments were received on the Amendments relating to WLATM acquirers during the 30-day consultation period. Therefore, no changes are made to the Regulatory Amendments relating to WLATM acquirers.

Real estate (title insurers and unrepresented parties)

The Department of Finance sought stakeholder views on potentially expanding AML/ATF coverage in the real estate sector through its 2023 public Consultation on Strengthening Canada’s Anti-Money Laundering and Anti-Terrorist Financing Regime. Most stakeholders that responded to the consultation supported expanding Canada’s AML/ATF framework to include title insurers and to strengthen obligations to identify unrepresented parties in real estate transactions. Title insurers and the Canadian Real Estate Association (CREA) opposed the proposals. The Department of Finance conducted three additional targeted consultations with title insurers (December 2023, January, and March 2024) and one targeted consultation with CREA (December 2023). FINTRAC was also consulted in the development of these two real estate proposals. The Regulatory Amendments take into consideration feedback from stakeholders on alignment with industry practices, such as the use of a third party for identity verification and flexibility on the types of records to keep.

Title Insurers

Changes following prepublication

1. Changes to record keeping information

The Department of Finance received two submissions from an industry association and an individual that suggested changes to the proposed record-keeping requirements to better reflect information that is and can be obtained by title insurers (for example, removing the proposed requirement to obtain and keep a record of the source of funds used since title insurers do not obtain any information on the source of funds).

Change: Refinements have been made to the Regulatory Amendments relating to record keeping requirements to balance the value of information for AML/ATF purposes with the title insurers’ ability to obtain information under their current business model. Title insurers will only be required to keep records of information that is obtained for the sale of title insurance. Changes were made to remove record-keeping requirements on the source of funds, information record, mortgage term and lender address, name and address of any real estate broker that represented the purchaser, and the name and address of the holder of any lien on the property and the type and amount of the lien.). The change that focuses only on information already received and stored also removes the cost of record-keeping requirements for title insurers that was estimated at prepublication, and the cost-benefit analysis has been updated accordingly.

Changes to requirements two submissions from industry associations that requested the ability to use an agent to verify the identity of a corporation should be extended to enable the ability for the agent to also verify of entities that are not corporations. An agent is a person or entity that acts on behalf of another person or entity. With respect to AML/ATF, an agent could be a specialized business that carries out certain functions on behalf of a reporting entity. It was always the policy intent that the flexibility to use an agent to verify identities should apply not only to corporations.

Change: The Regulatory Amendments have been updated to allow the ability to use an agent to verify the identity of entities other than corporations (i.e., partnerships, etc.).

2. Changes to beneficial ownership requirements

The Department of Finance received one submission from an industry association that raised concerns with requiring title insurers to obtain beneficial ownership information of clients that are corporations as this information is not currently being collected since title insurance policy does not insure beneficial owners whose interest is not registered on the title, they only insure the corporation.

Change: The Regulatory Amendments have been updated to remove beneficial ownership requirements for title insurers. This requirement was removed due to title insurers’ unique business model, where they do not have direct contact with the purchasers of title insurance and therefore cannot directly obtain beneficial ownership information. The removal of the beneficial ownership requirements reduces the cost of developing and maintaining a compliance program for title insurers that was estimated at publication, and removes the costs associated with home purchasers providing beneficial ownership information to title insurers. The cost-benefit analysis has been updated accordingly.

3. Request to exempt from third party determination and politically exposed person (PEP) requirements

The Department of Finance received a submission from an industry association that suggested that title insurers should be exempt from third party determination requirements and only make a PEP determination for transactions that result in a suspicious transaction report being filed as title insurers do not currently have access to such information. Following further consultations with industry, Finance recognizes that title insurers’ unique business model does not allow them to have direct access to the purchasers of title insurance. This model makes it extremely challenging for title insurers to ask and obtain third party and PEP information. In general terms exempting title insurers from requirements that they are unable to meet given their business model is consistent with the approach taken for other reporting entities, where exemptions have been made from AML/ATF requirements to reflect their business models.

Change: The Regulatory Amendments have been updated to exempt title insurers from third party determination and PEP requirements. The removal of these requirements reduces the cost of developing and maintaining a compliance program for title insurers, and the cost-benefit analysis has been updated accordingly.

No changes following prepublication

4. Request to amend the definition of title insurer

The Department of Finance received a submission from an individual proposing that the definition of title insurer would not capture attempted transactions (i.e., when title insurance is refused). No change is needed to the definition of title insurer as under the PCMLTFA, all reporting entities are required to submit suspicious transaction reports for both attempted transactions and completed transactions, as further indicated in FINTRAC guidance. Therefore, the pre-published definition of title insurer does not supersede the requirement to report both attempted and completed suspicious transactions.

5. Request to apply requirements to title insurance for lenders

The Department of Finance received one submission from an individual that suggested that title insurance policies provided to lenders (i.e., title insurance policy issued to lenders to protect their financial interest in the property) should be captured by the Regulations. The Department considered this comment and determined that since the lender receiving title insurance would necessarily be a reporting entity under the PCMLTFA, and not the individual responsible for the real estate transaction, AML/ATF requirements for title insurers do not need to be extended to lender title insurance policies.

6. Request to change record-keeping duration

The Department of Finance received a request from an individual that records be kept for five years or longer and to include additional record-keeping requirements, such as information on why title insurance was declined. The current record keeping timeline requirement is already a minimum of five years and information on why title insurance was declined would be captured under the proposed suspicious transaction reporting requirements. This information is already part of FINTRAC’s guidance material for record-keeping requirements for financial entities and will be included as part of the guidance material for title insurers. No changes to the Amendments are needed.

7. Request to change requirements related to risk assessments

The Department of Finance received a submission from an individual that noted the volume of purchasers (individuals and entities) to whom a title insurance policy is issued each year makes it impractical and not economically viable to conduct risk assessments of each purchaser but that there are processes in place to assess the risk of title fraud for each transaction. The stakeholder suggested that title insurers’ purchaser risk assessment should be limited to those purchasers for which the purchase transaction had been declined due to suspected fraud or money laundering, and for which a suspicious transaction report would be filed. There is no standard risk assessment methodology required for reporting entities under the PCMLTFA. FINTRAC guidance on risk assessments provides helpful examples and outlines expectations for risk assessments. Risk assessments can be tailored to each reporting entity’s business model, size, risk, and types of products. Reporting entities should document the steps of the risk assessment, the process followed, and the rationale that supports the assessment (i.e., doing less for low-risk transactions and enhanced measures for high-risk transactions). Given that risk assessments should be tailored to the business model of the reporting entity, there is no need to make a change to the Regulatory Amendments relating to risk assessments.

8. Request to change “know your client” (KYC) and ongoing monitoring obligations

The Department of Finance received a request from an industry association to limit the proposed KYC obligations to just transactions where the purchaser did not utilize the services of a real estate agent and did not obtain mortgage financing. The submission also proposed removing ongoing monitoring obligations for title insurers given that most title insurance transactions are one-time purchases. The proposed KYC and ongoing monitoring obligations are risk-based and, like risk assessments, can be adapted to accommodate industry practices. More generally, KYC and ongoing monitoring requirements are core obligations of AML/ATF regulation and are needed to effectively address money laundering and terrorist financing risks in the real estate sector. For these reasons, no changes are being made to the KYC and ongoing monitoring obligations in the Regulatory Amendments.

Unrepresented Parties

Changes following prepublication

1. Changes to coming into force

The Department of Finance received a request from an industry association for more time to implement the Regulatory Amendments. The Department of Finance is committed to limiting the regulatory burden and providing industry time to adapt to changing requirements, wherever possible.

Change: The coming info force for the Regulatory Amendments related to unrepresented parties is extended from immediately after the final publication of the Regulations to October 1, 2025. The cost-benefit analysis has been updated accordingly. This change will provide enough time for industry associations to update their guidance to reflect that real estate agents are now required to identify unrepresented parties (no longer just reasonable measures).

No changes following prepublication

2. Request to extend AML/ATF regulation to for sale by owner (FSBO) companies

The Department of Finance received a request from an industry association to extend AML/ATF obligations to FSBO companies, explaining that such companies are exposed to AML/ATF risks, and that regulating FSBO companies would support a level playing field in the real estate sector. The government consulted on whether to extend AML/ATF obligations to FSBO companies in its 2023 public Consultation on Strengthening Canada’s Anti-Money Laundering and Anti-Terrorist Financing Regime. Regulating FSBO companies is out of the scope of the Regulatory Amendments and would likely require legislative changes. The Department of Finance will consider this suggestion, along with other submissions received in its 2023 public consultation on the subject, in the context of possible future legislative and/or regulatory amendments.

Casino disbursement reporting

FINTRAC identified the need for the Regulatory Amendments as part of its ongoing review of its reporting forms, including Casino Disbursement Reports. FINTRAC maintains dedicated outreach and engagement with the casino sector on reporting obligations, which were used to raise awareness regarding the need to report on the final beneficiary of casino disbursements and the proposed updated casinos disbursement reporting form. Casino stakeholders did not raise concerns regarding the proposed changes to the reporting form and are being kept up to date of the changes through a dedicated Guidance page on FINTRAC’s website.

No changes following prepublication

The Regulatory Amendments were published in the Canada Gazette, Part I on July 6, 2024. No comments were received on the Amendments relating to casino disbursement reporting during the 30-day consultation period. Therefore, no changes are made to the Regulatory Amendments relating to casino disbursement reporting.

Modern treaty obligations and Indigenous engagement and consultation

An assessment of modern treaty implications did not identify any adverse impacts on potential or established Aboriginal or treaty rights, which are recognized and affirmed in section 35 of the Constitution Act, 1982.

Instrument choice

Sanctioned property reporting

In accordance with the PCMLTFA and its regulations, reporting entities are currently submitting terrorist property reports to FINTRAC. Given the existing terrorist property reporting regime, regulatory amendments to expand to a sanctioned property regime are the simplest, lowest cost, and most effective means for Canada to enhance its use of this important information to combat sanctions evasion and help Canada meet its international obligations under the FATF. Therefore, other instruments were not considered.

The status quo was not considered a viable option since not acting would significantly weaken Canada’s sanctions regime, making it easier for actors to evade sanctions due to incomplete information on sanctioned property. In contrast, the Regulatory Amendments related to sanctioned property enhance Canada’s ability to receive and analyze information regarding immobilized sanctioned property. The Amendments also provide greater clarity to reporting entities regarding the type of information that needs to be reported, enhance understanding and better equip FINTRAC to identify and address sanctions evasion, and enhance Canada’s compliance with its international obligations under the FATF.

MSB registration framework

To address risks associated with the use of MSBs for money laundering and terrorist financing purposes, foreign MSBs are already required to submit criminal record checks to FINTRAC upon registration. To address risks that domestic MSBs could be used by criminals for illicit operations, the Regulatory Amendments support extending the obligation to submit a criminal record check upon registration to domestic MSBs, as well as require domestic MSBs to obtain and verify criminal record checks for their agents. The approach brings consistency to the AML/ATF regulation of MSBs and is aligned with the need for supervision to ensure compliance. For these reasons, alternative instruments to regulation were not considered.

White-label ATMs (WLATMs)

The Regulatory Amendments address money laundering and terrorist financing risks associated with WLATMs. Legislative provisions were introduced in the Fall Economic Statement Act, 2023, and regulations are required to implement and bring the legislation into force. Given the legislation, non-regulatory instruments were not considered.

Allowing the status quo to continue would compromise the AML/ATF Regime’s effectiveness, increase the likelihood of criminal activity, and compromise the integrity of Canada’s financial system. This has the potential to 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.

An alternate option could have been to regulate individual WLATMs for AML/ATF purposes similar to the approach in Quebec. The Quebec regime involves provincial licensing of all WLATMs, police checks, and requirements relating to customer identification, record-keeping, and reporting. While this approach can also be effective in addressing AML/ATF risks, the Department of Finance has determined that regulating acquirers that connect WLATMs to a payment network would also be an effective approach to address AML/ATF risks associated with WLATMs given the “gatekeeper” role they play in the sector and the risk that individual WLATMs may also be criminally controlled.

Internationally, addressing risks related to WLATMs is required for Canada to meet its international obligations under the FATF, and the FATF has identified the lack of AML requirements for the WLATM sector as a gap in Canada’s AML/ATF Regime. Given the risks associated with the status quo, and the additional complexity associated with regulating individual WLATMs, it was determined that the Regulatory Amendments related to WLATM acquirers are the most appropriate instrument.

Real estate (title insurers and unrepresented parties)

The Regulatory Amendments address money laundering and terrorist financing risks in the real estate sector.

Under the status quo, known AML/ATF risks in Canada’s real estate sector would remain, which could contribute to increased housing prices. In contrast, regulating title insurers addresses money laundering and terrorist financing risks through the collection of information, which will be assessed by FINTRAC and some of which could be disclosed to law enforcement to help detect and disrupt illicit activities in the real estate sector. Real estate representatives are already required to take reasonable measures to identify unrepresented parties; making this identification an obligation further ensures that agents follow up on suspicious behaviour when they cannot identify unrepresented parties in transactions, which could lead to more suspicious transaction reports to FINTRAC. These AML/ATF requirements for real estate agents are established in regulations, meaning the existing requirements can only be amended by regulation. Therefore, other instruments were not considered.

In addition to addressing money laundering and terrorist financing risks in the real estate sector, this change also strengthens Canada’s adherence to its international obligations under the FATF.

Casino disbursement reporting

Given the casino disbursement reporting regime is established by regulations, changes to close gaps and improve the regulations’ effectiveness necessitate regulatory amendments. Failing to address gaps relating to the final beneficiary of disbursements would undermine the effectiveness of the casino disbursement reporting regime, increasing money laundering and terrorist financing risks in the casino sector. Finally, closing the gap helps Canada meet its international obligations under the FATF.

Regulatory analysis

Benefits and costs

The impacts of the proposed regulatory Amendments have been assessed in accordance with the Treasury Board Secretariat (TBS) Canadian Cost-Benefit Analysis Guide. Benefits and costs associated with the Regulatory Amendments are determined by comparing the baseline scenario against the regulatory scenario. The baseline scenario depicts what is likely to happen in the future if the Regulatory Amendments are not implemented. The regulatory scenario describes the changes that occur due to the Regulatory Amendments.

The total present value (TPV) cost of the Regulatory Amendments is $15.7 million (or $2.2 million annualized) in 2021 dollars. Unless otherwise stated, all monetary values are expressed in 2021 dollars, discounted to 2024 using a discount rate of 7 percent over a 10-year period (2024 to 2033). The benefits of the Regulatory Amendments are described qualitatively due to the difficulty associated with quantifying the benefits of activities outside the formal and legal economy; primarily the quantification of the benefits to society of proceeds of crime that are not laundered nor used for terrorist financing.

A full cost-benefit report with more details on the methodology and assumptions employed is available upon request.

Changes following prepublication

Changes were made that impact the costing of two measures following prepublication in the Canada Gazette, Part I, on July 6, 2024. First, the extension of the coming into force date for the measure regarding real estate: unrepresented parties to October 1, 2025, means that costs for this measure now begin in 2025 (as opposed to 2024, as was the case in prepublication). Secondly, changes were made to the measure regarding real estate: title insurers. Specifically, costs relating to developing and maintaining a compliance program was reduced by 10% to reflect the reduction in costs associated with not having to identify politically exposed persons, heads of international organizations, or be subject to requirements to identify beneficial owners of corporations, which also resulted in the removal of the cost associated with homeowners, that are corporations, providing beneficial ownership information to title insurers. Third, as the regulatory scenario has been adapted to only require title insurers to identify and keep records of information that they are already gathering and holding on a voluntary basis, costs related to new record keeping and documentation saving requirements have been removed. Finally, since regulations that apply AML/ATF obligations to armoured cars has come into force following prepublication, treating them as MSBs, the number of MSBs taken into account in the analysis has increased by the number of armoured car companies (15) subject to the measures relating to sanctioned property reporting and the MSB registration framework.

Baseline and regulatory scenarios

Sanctioned property reporting

If reporting entities were to maintain their unamended reporting obligations in a baseline scenario, there will not be any increase in regulatory costs. In the baseline scenario, FINTRAC does not receive sanctioned property reports, which restricts the amount of sanctions evasion-related information it can collect, thereby affecting its ability to combat sanctions evasion. In the regulatory scenario, reporting entities are required to fill out a new sanctioned property report (which expands on the existing terrorist property report) and submit the new sanctioned property reports to FINTRAC. Costs associated with this regulatory change are mitigated by the fact that the regulatory scenario represents an expansion and clarification of existing terrorist property reporting. All reporting entities (i.e., financial entities, MSBs, casinos, accountants, dealers in previous metals and stones, life insurers, real estate brokers or sales representatives and developers, securities dealers, and BC notaries) were required to submit terrorist property reports and will be required to submit sanctioned property reports. However, due to the nature of the requirement (i.e., holding sanctioned property), most sanctioned property reports are expected to come from large financial entities (i.e., large banks and credit unions).

MSB registration framework

The baseline scenario is that domestic MSBs are not required to submit criminal record checks, nor any information related to the criminal record checks of their agents, during registration (and re-registration) as an MSB. As a result, domestic MSBs and their agents, may not have a valid criminal record check, a gap which exposes MSBs to money laundering and terrorist financing risks. The Regulatory Amendments require MSBs to submit criminal record checks of their chief executive officer, president, directors, and every person who controls directly or indirectly 20% or more of the MSB or shares of the MSB, as well as information related to the criminal record checks of their agents, to FINTRAC upon registration (and re-registration) every two years. This change mitigates risks associated with MSBs and their agents using the MSB for money laundering or terrorist financing purposes by ensuring that none of the designated individuals nor agents have a criminal history that would trigger ineligibility requirements related to past criminal behaviours set out in the PCMLTFA. Under the regulatory scenario, MSBs need to ensure that all information related to the criminal record checks must have been obtained from the relevant authority within the last six months (relative to the time of registration or re-registration), meaning that MSBs would need to conduct the obligatory criminal record checks in advance of their registration (and re-registration) every two years.

White-label ATMs (WLATMs)

Under the baseline scenario, WLATM acquirers would continue to be unsupervised for AML/ATF purposes at the federal level, which would maintain money laundering and terrorist financing risks posed by WLATMs. Under the regulatory scenario, acquirers offering cash withdrawal services for WLATMs are required to meet general AML/ATF obligations (e.g., register with FINTRAC, develop a compliance program, apply customer due diligence measures, keep records, report suspicious transactions, and follow ministerial directives), as well as to provide to FINTRAC, in the context of the application for registration as an MSB, information with respect to WLATMs serviced (e.g., owner, lessor and operator of the WLATM; cash owner; settlement bank account information; location and model of WLATM; source of cash in WLATM; and the method used to transport cash). Regulatory costs are mitigated by the fact that most of the proposed administrative and compliance requirements are already performed by WLATM acquirers as part of Interac’s internal operating procedures.

Real estate (title insurers and unrepresented parties)

Under the baseline scenario, there would be no regulation of title insurers for AML/ATF purposes, which means money laundering and terrorist financing risks in the real estate sector, not effectively addressed through the AML/ATF regulation of real estate agents, brokers, sales representatives, and developers, would continue. Under the regulatory scenario, title insurers are made reporting entities under the PCMLTFA and are subject to general AML/ATF obligations (e.g., develop a compliance program, apply customer due diligence measures, keep records, report suspicious transactions, and follow ministerial directives). While title insurers will be required to gather certain information and keep records, the regulatory scenario has been adapted to reflect their business model. More specifically, following detailed consultations, the title insurance sector has explained what information they are already gathering, and keeping records of, and for how long. The regulations have been amended to only require title insurers to identify and keep records of information that they are already gathering and holding on a voluntary basis. Therefore, there are no additional marginal costs for title insurers related to record keeping under the regulatory scenario. The regulatory scenario helps address money laundering and terrorist financing risks in the real estate sector by requiring title insurers to report information to FINTRAC on title insurance and real estate-related transactions, which will be assessed by FINTRAC and some of which could be disclosed to law enforcement to help detect and disrupt illicit activities in the real estate sector.

Under the baseline scenario, real estate representatives were required to take “reasonable measures” to identify unrepresented parties in a real estate transaction. Under the regulatory scenario, the “reasonable measures” approach is replaced with an obligation, mandating real estate representatives to identify unrepresented parties and third parties in real estate transactions. This change helps identify suspicious behaviour when agents cannot identify unrepresented parties in transactions, which could lead to more suspicious transaction reports to FINTRAC. Based on this information, FINTRAC would be better equipped to identify potential money laundering and terrorist financing activities in the real estate sector and disclose relevant information and analysis to law enforcement officers.

Casino disbursement reporting

Under the baseline scenario, casinos are required to report on disbursements of over $10,000 but were not required to report on the ultimate beneficiary of such a disbursement. This situation undermines the intent of the casino disbursement reporting obligation, which seeks to include the true beneficiary of large casino disbursements for the purposes of detecting and deterring money laundering and terrorist financing risks. Under the regulatory scenario, casinos are required to report the ultimate beneficiary of a casino disbursement above $10,000 and specify if the disbursement is received on behalf of a third party.

Benefits

The benefits of the Regulatory Amendments, while likely significant, are not monetized due to the lack of available or reliable data to accurately measure the changes to the reputation of Canada’s financial system and the reduction in risk that results from the implementation of the Regulatory Amendments. In addition, quantification of these benefits would require significant information on both the degree to which these activities are currently occurring, which by their nature is clandestine, and how much the measures are able to decrease money laundering and terrorist funding activities.

The Regulatory Amendments strengthen Canada’s AML/ATF framework and improve its effectiveness by broadening the scope of reporting entities to include WLATM acquirers and title insurers, strengthening Canada’s sanctions regime, addressing AML/ATF risks in the MSB and real estate sectors, addressing gaps in casino disbursement reporting, and more closely aligning the Canadian AML/ATF framework with international standards.

Money laundering and terrorist activity financing have criminal and economic effects and contribute to facilitating and perpetuating criminal activity. Money laundering and terrorist financing harm the integrity and stability of the financial sector and the broader economy and threaten the quality of life of Canadians. Money laundering damages the financial institutions that are critical to economic growth (through internal corruption and reputational damage) and causes economic distortions by impairing legitimate private sector activities. For example, the Expert Panel on Money Laundering appointed by the government of British Columbia (BC) estimated that money laundering in BC’s real estate sector raised housing prices by approximately 5% in 2018. It also reduces productivity by diverting resources and encouraging crime and corruption and distorts the economy’s international trade and capital flows (through reputational damage and market distortions) to the detriment of long-term economic development. Finally, money laundering can also reduce tax revenue as it becomes more difficult for municipal, provincial, and federal governments to collect revenue from related transactions which frequently take place in the underground economy.

A strengthened AML/ATF framework helps to combat money laundering and terrorist financing threats while protecting Canadians, the integrity of markets and the global financial system, and increases the investment attractiveness and competitiveness of Canada. The Regulatory Amendments support the security, stability, utility, and efficiency of the financial sector framework by strengthening the AML/ATF framework to combat financial crime. All Canadians benefit from a stable, efficient, and competitive financial sector that facilitates economic activity and supports economic growth.

The Regulatory Amendments regarding sanctioned property reporting, WLATMs, real estate, and casino disbursement reporting improve Canada’s compliance with FATF international standards. Better adhering to these standards will improve the integrity of the global AML/ATF framework, positively impacting Canada’s international reputation, and may lead to regulatory efficiencies with other countries’ AML/ATF regimes, making it easier for Canadian businesses to operate internationally. Furthermore, better meeting these standards will help ensure Canada is not flagged as a jurisdiction of concern by the FATF for lack of action to address key AML/ATF deficiencies and ultimately prevent other countries from levying sanctions on Canada. Such reputational, economic, and national security impacts are important, but difficult to quantify.

Costs

As a result of the Regulatory Amendments, businesses, government, and individuals are expected to incur an estimated TPV of $14,995,670 in compliance costs and $744,782 in administrative costs for an estimated $15,740,453 TPV in costs over a 10-year period (or $2,241,086 annually). Affected businesses are expected to incur an estimated TPV of $11,128,652 in costs. Affected businesses include approximately 25,619 existing reporting entities (financial entities, MSBs, casinos, accountants, life insurers, real estate brokers or sales representatives and developers, securities dealers, and BC notaries); nine new reporting entities (four title insurers and five WLATM acquirers); and 10,000 corporate owners of WLATMs. The only affected government entity is FINTRAC who is expected to incur an estimated TPV of $3,662,556 in costs over a 10-year period (or $521,466 annually) to administer and ensure compliance with the proposed Amendments. Individuals are expected to incur an estimated $949,245 TPV in costs over a 10-year period (or $135,151 annually). Affected individuals include unrepresented parties in real estate transactions and individuals receiving disbursements from a casino for another entity or person. A summary of affected stakeholders by regulatory measure is below.

Summary of affected stakeholders by measure

Measure	Stakeholder	Stakeholder type	Number of stakeholders
Sanctioned property reporting	Various table b1 note *	Business	25,619
MSB registration framework	Money services businesses	Business	2,581
White-label ATMs (WLATMs)	Acquirers of WLATMs	Business	5
	WLATM owners that are businesses	Business	10,000
Real estate: title insurers	Title insurers	Business	4
Real estate: unrepresented parties	Real estate brokers or sales representatives and developers	Business	7,676
	Unrepresented parties to a real estate transaction	Individual	44,351
Casino disbursement reporting	Casinos	Business	18
	Person who is receiving a casino disbursement over $10K for another entity or person	Individual	15,000
All Measures	FINTRAC	Government	1
Table b1 note(s) Table b1 note * Various includes the following: financial entities (556), money service businesses (2,581), casinos (18), accountants (5,214), dealers in precious metals and stones (4,187), life insurers (3,766), real estate brokers or sales representatives and developers (7,676), security dealers (1,424), and BC notaries (197). Return to table b1 note * referrer

Summary of key assumptions by measure

All costs in the table below are undiscounted and are per affected entity per year unless otherwise stated. In general, the assumptions were informed by consultations with the affected industry sectors and FINTRAC, as well as previous Regulatory Impact Analysis Statements. More details on assumptions and sources are included in the full cost-benefit analysis, available on request.

Measure	Assumption
Sanctioned property reporting	20 hours for large financial entities, and 30 minutes for all other reporting entities, to update IT systems (one-time). 20 hours for large financial entities to familiarize themselves with the new guidance and update any training (ongoing). 6 minutes for large financial entities, and 12 minutes for all other reporting entities, to complete and file a sanctioned property report (ongoing). $104,000 for FINTRAC to administer and ensure compliance (one-time).
MSB registration framework	Average fee of $64 for obtaining criminal record checks (ongoing). 15 minutes for obtaining a criminal record check (ongoing). 6 minutes to compile and present information related to a criminal record check of agents to FINTRAC in context of registration (and re-registration) every two years (ongoing). 2 minutes to provide a criminal record check of an MSB’s CEO, President, Board of Directors, and significant shareholders to FINTRAC in context of registration (and re-registration) every two years (ongoing). 1 minute to save a criminal record check (ongoing). 2 minutes per MSB to supervise and ensure compliance with the new requirements (ongoing).
White-label ATMs (WLATMs) and Real estate: title insurers	20 hours to develop an internal compliance program (one-time). 48 hours to maintain the compliance program (ongoing). 15 minutes to complete and send required reports to FINTRAC (ongoing). 4 hours to update client intake forms (one-time). 32 hours for large firms, and 16 hours for small and medium firms to set up information technology systems for reporting to FINTRAC (one-time). $10,000 for large firms, and $2,500 for small firms, to invest in storage capacity for required record keeping obligations (one-time). 32 hours for large firms, and 16 hours for small firms to prepare and comply with FINTRAC assessment (ongoing). 1 hour to save all required documentation (ongoing).
White-label ATMs (WLATMs)	30 minutes to register as a MSB with FINTRAC (ongoing). 5 minutes to submit information related to connecting a WLATM to a payment network to FINTRAC during registration as a MSB (one-time). 5 minutes for WLATM owners that are businesses to provide beneficial ownership information to acquirers (one-time). $350,000 for FINTRAC to administer and ensure compliance (ongoing).
Real estate: title insurers	18 hours to develop an internal compliance program (one-time). 43.2 hours to maintain the compliance program (ongoing). 32 hours to set up information technology systems for reporting to FINTRAC (one-time). $230,000 for FINTRAC to administer and ensure compliance (ongoing)
Real estate: unrepresented parties	15 minutes to complete and send additional reports to FINTRAC (ongoing). 30 minutes for real estate agent/brokerage to familiarize themselves with the new guidance and update any training (one-time). 4 minutes for the real estate agent/brokerage to ask for and verify identities of unrepresented parties (ongoing). 4 minutes for unrepresented parties to provide their identity and answer questions (ongoing). 1 minute for real estate agent/brokerage to save the identity of an unrepresented party (ongoing). 10% of real estate transactions are expected to be affected by the new requirement.
Casino disbursement reporting	4 hours to update information technology to process new casino disbursement form (one-time). 10 minutes for individuals to complete the new part of the casino disbursement form (ongoing). 4 minutes for the casino to ask for and verify identity of the final beneficiary (ongoing). 4 minutes for the final beneficiary to provide their identity and answer questions (ongoing). 1 minute for the casino to save the identity of an unrepresented party (ongoing). 15,000 casino disbursement reports will be affected (ongoing).

Note: Some of the measures could also lead to costs associated with information technology storage capacity, for example, with respect to storing criminal record checks for the MSB registration framework, unrepresented parties, and casino disbursements. Given the record checks and identification are likely to be 1–2 page pdf documents and stored electronically, it is assumed that the storage of these documents could be accommodated without additional new investments in information technology storage capacity, such as what would be required for the savings of all compliance related documentation as a result of the imposition of AML/ATF regulation on new sectors (i.e., white-label ATMs and title insurers). Any such costs are therefore expected to be negligible.

Note also that the numbers below may not add up perfectly due to rounding.

Sanctioned property reporting

The TPV of costs associated with moving from terrorist property reports to sanctioned property reports is $1,132,245 or $161,206 annualized. Costs arise from the following:

• One-time upfront cost for businesses (i.e. the 25 619 existing reporting entities under the PCMLTFA) to adopt internal information technology and other systems (TPV: $541,798);
• One-time upfront cost for businesses (i.e. the 25 619 existing reporting entities under the PCMLTFA) to familiarize themselves with the form and update-related guidance and training (TPV: $484,803);
• Ongoing marginal cost for businesses (i.e. the 25 619 existing reporting entities under the PCMLTFA) of completing and filing the new form with FINTRAC (TPV $1,644); and
• One-time upfront cost to government (i.e. FINTRAC) to support the development, filing, review, and compliance functions relating to the new sanctioned property reports ($104,000).

MSB registration framework

The TPV of costs associated with requiring criminal record checks, and information related to criminal record checks, of MSBs is $8,557,650 or $1,218,417 annualized. Costs arise from the following:

• Ongoing labour costs to MSBs for conducting criminal record checks of agents (including agents that are corporations) every two years (TPV: $674,243);
• Ongoing labour costs to MSBs for conducting criminal record checks of their chief executive officer, president, directors, and every person who controls directly or indirectly 20% or more of the MSB or shares of the MSB (TPV: $367,428);
• Ongoing labour cost of providing information related to criminal checks of agents (including agents that are corporations) to FINTRAC every two years (TPV: $269,697);
• Ongoing labour cost of providing criminal record checks of an MSB’s chief executive officer, president, directors, and every person who controls directly or indirectly 20% or more of the MSB or shares of the MSB to FINTRAC every two years (TPV: $48,941);
• Ongoing cost related to fees for criminal record checks of agents (including agents that are corporations) every two years (TPV: $4,586,724);
• Ongoing cost related to fees for criminal record checks of an MSB’s chief executive officer, president, directors, and every person who controls directly or indirectly 20% or more of the MSB or shares of the MSB to FINTRAC every two years (TPV: $2,514,514);
• Ongoing labour cost to save criminal record checks of agents (including agents that are corporations) [TPV: $44,770];
• Ongoing labour cost to save criminal record checks of an MSB’s chief executive officer, president, directors, and every person who controls directly or indirectly 20% or more of the MSB or shares of the MSB (TPV: $24,397); and
• Ongoing labour cost to FINTRAC of administering and ensuring compliance with criminal record checks (TPV: $26,935).

Note: Since regulations already prohibit the chief executive officer, president, directors, or significant shareholders with certain criminal records from registering an MSB, it is not expected that there will be job losses for these individuals attributable to the Regulatory Amendments. However, since the Regulatory Amendments would expand the prohibition to agents (in addition to the criminal check and submission requirement), there could be job losses for agents attributable to the Regulatory Amendments. This in turn could result in transitional costs for affected businesses and for those employees not engaged in prohibited and/or illegal activities (e.g. added costs for businesses to hire/train replacements, added search costs for employees to find alternative employment, wage loss to employees seeking re-employment). It is estimated that there will be 23 540 criminal record checks associated with agents during each two-year re-registration period; however, due to data limitations, the number of job losses that could materialize cannot be estimated.

White-label ATMs (WLATMs)

The TPV of costs associated with imposing AML/ATF obligations on WLATM acquirers is $2,427,891 or $345,677 annualized. Costs arise from the following:

• Upfront cost to WLATM acquirers to develop an internal compliance program (TPV: $5,350);
• Upfront cost to WLATM acquirers of updating client intake forms, for example for identity verification (TPV: $727);
• Upfront cost to WLATM acquirers to set up their information technology systems to report certain transactions to FINTRAC (TPV $4,070);
• Upfront capital cost to WLATM acquirers to store records (TPV: $24,020);
• Ongoing cost to WLATM acquirers to register as an MSB with FINTRAC every two years (TPV: $279);
• Ongoing cost to WLATM acquirers of submitting required reporting to FINTRAC (TPV: $2,415);
• Ongoing cost to WLATM acquirers of preparing and complying with FINTRAC assessments (TPV: $2,499);
• Ongoing cost to WLATM acquirers of maintaining a compliance program (TPV: $89,508);
• Upfront cost of reporting information to FINTRAC related to connecting a WLATM to a payment network (TPV: $140,188);
• Upfront cost to WLATM owners that are businesses of providing additional information related to their beneficial ownership to WLATM acquirers (TPV $26,570);
• Ongoing cost of saving all required documentation relating to the new AML/ATF requirements (TPV: $1,116); and
• Ongoing cost to FINTRAC of administering and ensuring compliance with AML/ATF obligations (TPV: $2,131,151).

Real estate

Title insurers

The TPV of costs associated with imposing AML/ATF obligations on title insurers is $1,481,467 or $210,928 annualized. Costs arise from the following:

• Upfront cost to title insurers to develop an internal compliance program (TPV: $3,852);
• Upfront cost to title insurers of updating client intake forms, for example for identity verification (TPV: $581);
• Upfront cost to title insurers to set up their information technology systems to report certain transactions to FINTRAC (TPV $4,651);
• Ongoing cost to title insurers of submitting required reporting to FINTRAC (TPV: $4,610);
• Ongoing cost to title insurers of preparing and complying with FINTRAC assessments (TPV: $2,856);
• Ongoing cost to title insurers of maintaining a compliance program (TPV: $64,446); and
• Ongoing cost to FINTRAC of ensuring compliance with AML/ATF obligations (TPV: $1,400,470).

Unrepresented parties

The TPV of costs associated with imposing AML/ATF obligations on real estate brokers and sales representatives to verify the identify of unrepresented parties and third parties in real estate transactions is $1,147,425 or $163,368 annualized. Costs arise from the following:

• Upfront cost to real estate brokers and sales representatives related to updating existing industry guidance on identity verification of unrepresented parties (TPV: $122,860);
• Ongoing costs to real estate brokers and sales representatives related to incremental increase in suspicious transaction reporting of unrepresented parties in real estate transactions (TPV: $25,483);
• Ongoing costs to real estate brokers and sales representatives related to request and verify identify of unrepresented parties in real estate transactions (TPV: $478,115);
• Ongoing costs to real estate brokers and sales representatives to save identities of unrepresented parties in real estate transactions (TPV: $119,170); and
• Ongoing cost to unrepresented parties in real estate transactions to provide their identity and respond to verifying questions from real estate brokers and/or sales representatives (TPV: $401,797).

FINTRAC has indicated no marginal costs are associated with administering and ensuring compliance with this Regulatory Amendment. This is because the verification of unrepresented parties and third parties in real estate transactions is already required on a “reasonable measures” basis, and FINTRAC believes any additional marginal costs to administer and ensure compliance would be extremely small and included in its ongoing compliance activities.

Note: the analysis has estimated the incremental costs of verifying unrepresented parties. Should there be any instances where entities cannot be identified, such transactions are assumed to be associated with illegal activities, and therefore, as per the TBS Cost-Benefit Analysis Guide, the costs of such activities (i.e. of the transaction not proceeding) would not have standing and are excluded.

Casino disbursement reporting

The TPV of costs associated with imposing an obligation on casinos to identify and report on the final beneficiary of disbursements over $10,000 is $993,774 or $141,491 annualized. Costs arise from the following:

• Upfront cost to casinos related to the updating of internal information management systems to accommodate the new section on the casino disbursement reporting form (TPV: $2,995);
• Ongoing cost to casinos to request and verify the identifies of the final beneficiary of casino disbursements over $10,000 (TPV: $354,878);
• Ongoing cost to casinos to save the identity of the final beneficiary of casino disbursements over $10,000 (TPV: $88,453);
• Ongoing cost for individuals receiving a casino disbursement over $10,000 for someone else to complete the new section on the casino disbursement reporting form (TPV: $390,698); and
• Ongoing cost for individuals receiving a casino disbursement over $10,000 for someone else to provide their identify and respond to verification questions (TPV: $156,750).

FINTRAC has indicated that it is not expected to incur marginal costs associated with administering and ensuring compliance with this Regulatory Amendment. This is because it is a small amendment to existing reporting requirements, and FINTRAC believes any additional marginal costs to administer and ensure compliance would be extremely small and included in its ongoing compliance activities.

Cost-benefit statement

• Number of years: 10 (2024–2033)
• Price year: 2021
• Present value base year: 2024
• Discount rate: 7%

Monetized costs
Annual values for years 1, 2, and 10 are undiscounted. Numbers may not add up perfectly due to rounding.

Impacted stakeholder / measure	Description of cost	Year 1 (2024)	Year 2 (2025)	Year 10 (2033)	Total (present value)	Annualized value
Industry Sanctioned property reporting	Costs to reporting entities (adopting systems, guidance familiarization, and submitting reports)	$574,472	$736,031	$235,732	$1,028,245	$146,399
Government Sanctioned property reporting	Costs to FINTRAC to administer and enforce compliance with the new sanctioned property reports	$104,000	$0	$0	$104,000	$14,807
Sub-total - Sanctioned property reporting	All costs	$678,472	$736,031	$235,732	$1,132,245	$161,206
Industry MSB registration framework	Costs to MSBs (labour and fess for conducting required criminal labour checks and reporting)	$0	$1,032,422	$1,032,422	$8,530,716	$1,214,582
Government MSB registration framework	Costs to FINTRAC to administer and enforce compliance with the new criminal record check requirements	$0	$4,276	$4,276	$26,935	$3,835
Sub-total - MSB registration framework	All costs	$0	$1,036,698	$1,036,698	$8,557,650	$1,218,417
Industry White-label ATMs (WLATMs)	Costs to acquirers of WLATMs (develop and maintain compliance program, update client intake forms, set up reporting systems, record keeping, registration, submitting reports, complying with FINTRAC assessment, registering as MSB, providing information related to WLATMs connected to a payment network, and saving all required documentation) Costs to WLATM owners that are businesses of providing information to WLATM acquirers	$0	$240,393	$15,724	$296,740	$42,249
Government White-label ATMs (WLATMs)	Costs to FINTRAC of ensuring compliance with AML/ATF obligations	$0	$350,000	$350,000	$2,131,151	$303,428
Sub-total - White-label ATMs	All costs	$0	$590,393	$365,724	$2,427,891	$345,677
Industry Real estate: Title insurers	Costs to title insurers (develop and maintain compliance program, update client intake forms, set up reporting systems, submitting reports, and complying with FINTRAC assessment)	$0	$22,187	$11,786	$80,996	$11,532
Government Real estate: Title insurers	Costs to FINTRAC of ensuring compliance with AML/ATF obligations	$0	$230,000	$230,000	$1,400,470	$199,395
Sub-total - Real estate: Title insurers	All costs	$0	$252,187	$241,786	$1,481,467	$210,928
Industry Real estate: Unrepresented parties	Costs to real estate brokers and sales representatives (updating guidance, increase in reporting, record keeping)	$0	$238,718	$98,056	$745,628	$106,161
Individuals Real estate: Unrepresented parties	Costs to unrepresented parties in real estate transactions (providing their identity to real estate brokers and/or sales representatives and responding to verification questions)	$0	$65,987	$65,987	$401,797	$57,207
Sub-total – Real estate: Unrepresented parties	All costs	$0	$304,706	$164,043	$1,147,425	$163,368
Industry Casino disbursement reports	Cost to casinos (updating information technology systems, request, verify, and save identities of final beneficiaries)	$64,007	$61,012	$61,012	$446,326	$63,547
Individuals Casino disbursement reports	Cost to individuals (filing out new section on form and providing identity and responding to verification questions)	$77,944	$77,944	$77,944	$547,448	$77,944
Sub-total - Casino disbursement reports	All costs	$141,951	$138,956	$138,956	$993,774	$141,491
All stakeholders	Total costs	$820,423	$3,058,970	$2,182,939	$15,740,453	$2,241,086

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.
• 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 internationally.
• The Regulatory Amendments regarding sanctioned property reporting, WLATMs, real estate, and casino disbursement reporting improve Canada’s compliance with FATF international standards, positively impacting Canada’s international reputation, and may lead to regulatory efficiencies with other countries’ AML/ATF regimes.

Negative impacts

• Storage costs for certain small documents, such as criminal record checks, are assumed to be accommodated without additional new investments in information technology storage capacity. These costs are expected to be negligible.
• Potential job losses resulting from the new requirements imposed on MSB agents (i.e. presenting information related to criminal record checks to FINTRAC during registration and re-registration as an MSB) could not be estimated due to the lack of information on how many of these agents may have criminal histories that would cause them to lose their jobs.

Sensitivity analysis

Summary of sensitivity analysis

Cost Scenario	Total (present value)	Annualized value
Low	$9,384,677	$1,336,167
Medium (central case)	$15,740,453	$2,241,086
High	$19,904,804	$2,833,996

Sanctioned property reporting — TPV: $1,132,245

The largest cost associated with this measure is the one-time upfront cost for reporting entities to adapt their internal information technology systems as a result of moving from terrorist property reporting to sanctioned property reporting. The analysis assumes it will take 20 hours for large financial institutions to update internal systems (i.e. the central case scenario). However, should it take longer to update their internal systems, for example 40 hours instead 20, then the cost would double from a TPV of $541,798 to $1,083,597 (i.e. under the high scenario). Conversely, should it take less time to update internal systems, for example 10 hours instead of 20, the result would be a reduction in costs to a TPV of $270,899 (i.e. under the low scenario).

MSB registration framework — TPV: $8,557,650

The largest cost associated with this measure is the cost of obtaining criminal record checks, both in terms of labour costs to fill out and request the criminal check and the fee charged to obtain the criminal record. The analysis assumes that it takes 15 minutes (labour cost) to fill out the request for a criminal record check. The 15-minute estimate is based on consultation with the on-line provincial criminal record check systems. Should it take longer to fill out the form and request the criminal record checks, for example 30 minutes, then the cost would double, from a TPV of $1,041,671 to $2,083,342 (i.e. under the high scenario). Conversely, should it take less time to complete the criminal record check request, for example 7.5 minutes instead of 15 minutes, the result would be a reduction in costs to a TPV of $520,836 (i.e. under the low scenario).

The assumed fee for obtaining a criminal record check is $64, as it is the weighted average (by population) of current provincial fees to obtain a criminal record check for employment purposes. Fees for record checks vary by province, from a high of $80.25 in Quebec to a low of $20 in Newfoundland. Should the number of MSB agents that reside in each province differ from the general population distribution by province, then the fees paid would change. For example, if all MSB agents resided in Quebec, the fees for MSB agents to obtain their criminal record checks in future years would rise from a TPV of $7,101,238 to $8,904,286 (i.e. under the high scenario). Conversely, if all MSB agents resided in Newfoundland, the ongoing fees paid by MSB agents to obtain their criminal record checks in future years would drop to a TPV of $2,219,137 (i.e. under the low scenario).

White-label ATMs (WLATMs) — TPV: $2,427,891

The largest cost associated with this measure is the one-time upfront cost to WLATM acquirers of providing information to FINTRAC, in the context of their registration as an MSB, information related to WLATMs that they connect to a payment network. The analysis assumes that it will take WLATM acquirers 5 minutes to compile and provide this information, per WLATM serviced. However, if it instead took 10 minutes to provide this information, then the costs would double, from a TPV of $140,188 to $280,376 (i.e. under the high scenario). Conversely, should it only take 2.5 minutes to compile this information, then the costs would drop to a TPV of $70,094 (i.e. under the low scenario).

Real estate (title insurers and unrepresented parties) — TPV: $2,628,892

The largest cost associated with these proposals is the cost to the real estate agent of requesting identification and asking verification questions regarding unrepresented parties in real estate transactions. For the central case scenario, it is assumed that 10% of real estate transactions include unrepresented parties. There are currently no statistics regarding the number of real estate transactions that involve unrepresented parties. Were the number closer to 20%, then the costs associated would double from a TPV of $478,115 to $956,230 (i.e. under the high scenario). Conversely, if the number were closer to 5% then the costs would half to a TPV of $239,058 (i.e. under the low scenario).

Casino disbursement reports — TPV: $993,774

The largest cost associated with the measure is the cost for individuals to complete the new section on the casino disbursement reporting form. For the central case scenario, it is assumed that it would take 10 minutes for each individual to fill out this information, but no additional time for the casino to submit the additional information as there is no increase in the number of casino disbursement forms a casino submits to FINTRAC (there are only differences in the parts of the form that are completed). FINTRAC has indicated that it receives around 300 000 casino disbursement reports each year, and for the central case scenario, it is assumed that 5% of these, or 15 000 forms, would need the additional section to be completed. If it were 10% of forms, then the costs would double from a TPV of $390,698 to $781,396 (i.e. under the high scenario). Conversely, should 2.5% of forms be affected by the proposed regulatory Amendment, then costs would half to a TPV of $195,349.

Distributional analysis

Summary of costs for small and medium/large businesses Numbers may not sum perfectly due to rounding.

Provision	Business size	Total (present value)	Annualized value
Sanctioned property reporting	Small	$984,962	$140,236
	Medium/large	$43,283	$6,163
MSB registration framework	Small	$5,567,755	$792,723
	Medium/large	$2,962,961	$421,859
White-label ATMs	Small	$125,389	$17,853
	Medium/large	$171,352	$24,397
Real estate: title insurers	Small	$0	$0
	Medium/large	$80,996	$11,532
Real estate: unrepresented parties	Small	$727,400	$103,565
	Medium/large	$18,228	$2,595
Casino disbursement reports	Small	$178,994	$25,485
	Medium/large	$267,333	$38,062
Sub-total – Small businesses	Small	$7,584,499	$1,079,862
Sub total – Medium/large businesses	Medium/large	$3,544,153	$504,608
Sub-total – All businesses	All businesses	$11,128,652	$1,584,470
Sub-total – Government	All government	$3,662,556	$521,466
Sub-total – Individuals	All individuals	$949,245	$135,151
Total	All stakeholders	$15,740,453	$2,241,086

Sanctioned property reports — TPV: $1,132,245

Since reporting entities were already required to submit terrorist property reports, the move to sanctioned property reports is incremental. Typically, it could be assumed that small stakeholders must expend extra time and effort to familiarize themselves with the sanctioned property obligations and to update their systems to ensure they are compliant with the reporting requirements. However, FINTRAC has indicated that the majority of sanctioned property reports are likely to come from large financial entities. To reflect these nuances, the analysis provides different cost estimates for large financial entities versus other reporting entities.

MSB registration framework — TPV: $8,557,650

The largest single cost to all businesses relates to the fees for obtaining criminal record checks (TPV: $6,959,194). While large MSBs have more agents than small MSBs, 98% of MSBs are small businesses, which results in a disproportionate burden on small business. While the fees for the record checks are the same for all businesses, the Department of Finance recognizes that MSBs will require time to implement these changes and has therefore provided an extended transition time (i.e. delay in coming into force) for businesses to comply with the new requirements.

White-label ATMs (WLATMs) — TPV: $2,427,891

Initial costs may be greater for small stakeholders as it may take more effort to establish systems to ensure compliance with the new requirements. The Department of Finance recognizes that businesses require time to implement these changes and therefore provides an extended transition time (i.e. delay in coming into force) for businesses to comply with the new requirements. Regulatory costs are mitigated by the fact that most of the proposed administrative and compliance requirements are already performed by WLATM acquirers as part of Interac’s internal operating procedures.

Real estate (title insurers and unrepresented parties) — TPV: $2,628,892

While title insurers are large stakeholders, the costs imposed may be passed along to Canadian consumers, making the price of title insurance, and thus home ownership, more expensive. However, this risk pales in comparison to risks related to fraud in the real estate sector, which can put at risk the single greatest purchase most Canadian families make in their lifetime. The costs are also small when compared to the cost of money laundering in the real estate sector. With respect to unrepresented parties, the obligation to identify unrepresented parties will result in only a small marginal increase in costs since real estate representatives were already required to take “reasonable measures” to do so.

Casino disbursement reporting — TPV: $993,774

FINTRAC is already undertaking the modernization of their forms that impacts the casino sector. Casinos were consulted prior to the modernization and are currently working on updating their forms and including the new section. Therefore, the cost associated with the collection of information under the new part of the casino disbursement reports is expected to be relatively minor. While small casinos may need to exert more effort to update their systems to ensure compliance with the reporting requirements, they are also likely to submit less casino disbursement forms.

Small business lens

Changes following prepublication

Changes were made that specifically impact the small business lens, following prepublication in the Canada Gazette, Part I, on July 6, 2024. First, as title insurers are no longer to be subject to requirements to identify beneficial owners of corporations, the costs associated with home-owners, which are corporations, providing beneficial ownership information to title insurers, have been removed. As these home-owners that are corporations were the only small businesses impacted by measure regarding title insurance, the measure has been removed from the small business lens. In addition, since regulations that apply AML/ATF obligations to armoured cars has come into force following prepublication, treating them as MSBs, the number of MSBs taken into account in the analysis has increased by the number of armoured car companies (15) subject to the measures relating to sanctioned property reporting and the MSB registration framework.

Small business lens summary

It is estimated that 45 118 small businesses will be impacted by the Regulatory Amendments, including:

• 24 927 by the new obligations for sanctioned property reporting;
• 2 520 by the new MSB registration requirements;
• 10 003 by the new obligations for WLATM acquirers;
• 7 658 by the new requirements regarding unrepresented parties in real estate transactions; and
• 10 by the new obligations regarding casino disbursement reporting.

The total incremental costs imposed on small businesses are estimated to be $7,584,499 (TPV) or $1,079,862 annualized, which is equivalent to $23.93 annualized per small business impacted (all annualized per small business figures are derived by dividing the annualized value by the number of affected stakeholders). Costs include (note numbers may not add up perfectly due to rounding):

• TPV of $984,962 or $140,236 annualized in costs for sanctioned property reports, which is equivalent to $5.63 annualized per small business affected. The per small business cost is relatively low as most sanctioned property reports are submitted by 11 large financial entities and few are submitted by the 24 927 small businesses (i.e. other reporting entities), included in the analysis.
• TPV of $5,567,755 or $792,723 annualized in costs for strengthening the MSB registration framework, which is equivalent to $314.57 annualized per small business affected. The per small business affected costs are relatively high, mostly due to the $64 average fee charged to obtain a criminal record check. There could also be additional transitional costs for small businesses (i.e. added costs to hire/train replacements) due to potential job losses resulting from prohibiting agents with certain criminal records and the requirement to submit information related to a criminal record check. However, due to data limitations, the number of job losses that could materialize cannot be estimated.
• TPV of $125,389 or $17,853 annualized in costs for imposing AML/ATF requirements on acquirers for white-label ATMs, which is equivalent to $1.78 annualized per small business affected. The per business cost is very low as it takes into account 10 000 WLATM owners that have to provide beneficial ownership information to the WLATM acquirers. Were these stakeholders and associated costs removed, the annualized per small business cost for the three small WLATM acquirers would rise significantly to $4,690 which is a more accurate reflection of the costs of AML/ATF regulation.
• No costs for small businesses are associated from imposing AML/ATF requirements on title insurers as all title insurers are medium/large businesses.
• TPV of $727,400 or $103,565 annualized in costs for requiring real estate representatives to identify unrepresented parties in real estate transactions, which is equivalent to $13.52 annualized per small business affected. Home purchasers that are unrepresented parties in real estate transactions are not small businesses; thus the small business totals refer only to the effects on the 7 658 small real estate agents, brokers, and sales representatives.
• TPV of $178,994 or $25,485 annualized in costs for requiring casinos to identify and report on the final beneficiary of a casino disbursement above $10,000, which is equivalent to $2,548 annualized per small business affected. There are only 10 small casinos taken into account in the small business analysis, which is why the cost per small business affected is relatively high, given the Regulatory Amendment involves a change to existing reporting, rather than introducing a totally new requirement.

Alternative compliance options for small businesses are not possible because the Regulatory Amendments are intended to close potential openings for the illicit movement of funds. Furthermore, the changes relating to sanctioned property reporting, real estate, WLATM acquirers, and casino disbursement reporting are non-discretionary changes required for Canada to meet its obligations under the FATF. The Department of Finance recognizes that businesses, irrespective of size, require time to implement these changes and therefore provides an extended period of transition time for businesses (i.e. delay in coming into force, see section below entitled “Coming into force”) for businesses to comply with new requirements. While this does not constitute a special consideration for small businesses alone, it should be noted that impacts on businesses have been considered and balanced against relevant money laundering and terrorist financing risks, when establishing the compliance requirements for reporting entities generally, and for businesses that would be impacted by the Regulatory Amendments, specifically through delays in the coming into force for each proposed measure.

• Number of small businesses impacted: 45 118
• Number of years: 10 (2024–2033)
• Price year: 2021
• Present value base year: 2024
• Discount rate: 7%

Compliance costs
Numbers may not add up perfectly due to rounding.

Measure	Description of cost	Present value	Annualized value
Sanctioned property reporting	One-time upfront cost to adopt internal information technology and other systems	$518,482	$73,820
	One-time upfront cost to become familiar with the new requirements and update related training and guidance	$465,983	$66,346
	Ongoing marginal cost of completing, filing, and sending the new forms/reports to FINTRAC	$497	$71
Sub-total – Sanctioned property reporting	All compliance costs for small businesses – Sanctioned property reports	$984,962	$140,236
MSB registration framework	Ongoing labour costs to request a criminal record check for an MSB’s CEO, president, directors, and significant shareholders	$358,745	$51,077
	Ongoing labour costs to request a criminal record check of agents	$322,383	$45,900
	Ongoing fee for obtaining criminal record checks of agents	$2,209,577	$314,594
	Ongoing fee for obtaining criminal record checks of an MSB’s CEO, president, directors, and significant shareholders	$2,455,086	$349,549
Sub-total – MSB registration framework	All compliance costs for small businesses – MSB registration framework	$5,345,790	$761,120
White-label ATMs	Upfront cost to develop an internal compliance program	$3,210	$457
	Upfront cost of updating client intake forms	$436	$62
	Upfront costs of setting up information technology systems for AML/ATF regulation	$1,744	$248
	Upfront capital cost to store required records	$6,551	$933
	Ongoing cost of maintaining compliance program	$53,705	$7,646
	Upfront cost for WLATMs that are small businesses of providing additional information to WLATM acquirers	$26,570	$3,783
Sub-total – White-label ATMs	All compliance costs for small businesses – White-label ATMs	$92,215	$13,129
Real estate: Unrepresented parties	Ongoing costs related to expected increase in completing, filing, and sending suspicious transaction reports to FINTRAC	$21,362	$3,041
	Ongoing cost to become familiar with the changes and update industry guidance	$122,572	$17,452
	Ongoing cost to real estate agents and sales representatives to ask for and verify identity of unrepresented parties	$467,053	$66,498
Sub-total – Real estate: Unrepresented parties	All compliance costs for small businesses – Real estate: Unrepresented parties	$610,987	$86,991
Casino disbursement reports	Upfront cost to update information technology for new forms	$1,664	$237
	Ongoing cost to casinos to ask for and verify identity of the final beneficiary of casino disbursements	$141,949	$20210
Sub-total – Casino disbursement reports	All compliance costs for small businesses – Casino disbursement reporting	$143,613	$20,447
Total	All compliance costs for small businesses	$7,177,568	$1,021,924

Administrative costs
Numbers may not add up perfectly due to rounding.

Measure	Description of cost	Present value	Annualized value
MSB registration framework	Ongoing reporting of information related to criminal record checks of agents to FINTRAC	$128,953	$18,360
	Ongoing Reporting of information relating to a criminal record check of an MSB’s CEO, President, Directors, and significant shareholders	$47,785	$6,803
	Ongoing labour cost to save criminal record checks of agents	$21,406	$3,048
	Ongoing labour cost to save criminal record checks of a MSB’s own CEO, President, Directors, and significant shareholders	$23,821	$3,392
Sub-total – MSB registration framework	All administrative costs for small businesses – MSB registration framework	$221,965	$31,603
White-label ATMs	Ongoing Cost - Registering as MSB with FINTRAC	$167	$24
	Ongoing cost of submitting required reporting to FINTRAC	$1,033	$147
	Ongoing cost of preparing and complying with FINTRAC assessment	$1,071	$153
	Upfront cost of reporting WLATMs connected to a payment network	$30,232	$4,304
	Ongoing labour cost to WLATM acquirers of saving all required documentation	$669	$95
Sub-total – White-label ATMs	All administrative costs for small businesses – White-label ATMs	$33,173	$4,723
Real estate: Unrepresented parties	Ongoing cost to save identities of unrepresented parties	$116,413	$16,575
Sub-total – Real estate: unrepresented parties	All administrative costs for small businesses – Real estate: unrepresented parties	$116,413	$16,575
Casino disbursement reports	Ongoing cost to save identities of final beneficiaries of casino disbursements	$35,381	$5,037
Sub-total – Casino disbursement reports	All administrative costs for small businesses – Casino disbursement reporting	$35,381	$5,037
Total	All administrative costs for small businesses	$406,931	$57,938

Total compliance and administrative costs

Totals	Present value	Annualized value
Total cost (all impacted small businesses)	$7,584,499	$1,079,862
Cost per impacted small business	$168.10	$23.93

One-for-one rule

Changes following prepublication

Changes were made that impact the one-for-one rule of three measures following prepublication in the Canada Gazette, Part I, on July 6, 2024. First, the extension of the coming-into-force date for the measure regarding real estate: unrepresented parties to October 1, 2025, means that administrative costs for this measure now begin in 2025 (as opposed to 2024, as was the case in prepublication). Secondly, changes were made to the measure regarding real estate: title insurers. Specifically, administrative costs relating to saving all required documents have been removed, as the regulatory scenario has been adapted to only require title insurers to save information that they are already gathering and saving on a voluntary basis. The result is that the administrative costs for both measures are lower than what was estimated at prepublication. Finally, since regulations that apply AML/ATF obligations to armoured cars has come into force following prepublication, treating them as MSBs, the number of MSBs taken into account in the analysis has increased by the number of armoured car companies (15), which leads to a small increase in the administrative costs for the measures relating to the MSB registration framework.

Two sets of regulations are amended as part of this regulatory package:

• Proposed Regulations Amending Certain Regulations Made Under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (Property Reporting, Title Insurers, Private Automated Banking Machines, Unrepresented Parties in Real Property or Immovables Transactions and Casino Disbursement Reporting): these proposed Amendments are estimated to impose $19,396 in annualized administrative costs on businesses. This regulation implements non-discretionary obligations and is exempt from the requirement to offset the administrative burden under the one-for-one rule.
• Proposed Regulations Amending Certain Regulations Made Under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (Money Service Business Registration): these proposed Amendments are estimated to impose $21,071 in annualized administrative costs on businesses.

All costing assumptions are explained in the “Cost” section of this Regulatory Analysis chapter. Values reported for the purposes of the one-for-one rule are measured in 2012 price levels; annualized values are discounted to 2012 using a discount rate of 7%, as required by the Red Tape Reduction Regulations. Wages used in the calculation of labour costs are 2021 wages converted to 2012 prices as taken from Statistics Canada: Employee Wages by Occupation, Annual, 1997 to 2022. Specifically, all labour costs are based on wages for “Finance, insurance, and related administrative occupations” (with an additional 25% overhead), except for wages for casino disbursement reports, which are based on wages for “Professional occupations in business and finance” (with an additional 25% overhead).

Proposed Regulations Amending Certain Regulations Made Under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (Property Reporting, Title Insurers, Private Automated Banking Machines, Unrepresented Parties in Real Property or Immovables Transactions and Casino Disbursement Reporting) [Annualized administrative costs: $19,396]

These Regulatory Amendments implement non-discretionary obligations and are exempt from the requirement to offset the administrative burden under the one-for-one rule.

Sanctioned property reporting

This Regulatory Amendment incurs only compliance costs. The one-for-one rule does not apply, as there is no incremental change in the administrative burden on business. In addition, the Regulatory Amendment is non-discretionary, as it is required to bring Canada into compliance with the FATF Standards, which Canada is required to endorse and implement as a member of the FATF. The specific FATF Standards that this proposed Amendment will meet are Recommendations 6 and 7. Pursuant to FATF Recommendation 6 on financial sanctions related to terrorism and terrorist financing and Recommendation 7 on targeted financial sanctions related to proliferation, the FATF requires that all member countries have legislation or regulations in place to ensure that financial institutions and certain professions are implementing UN mandated lists. Reporting on sanctioned property is an important element of implementing UN mandated sanctions lists as it ensures that reporting entities are implementing and reporting on sanctions effectively. Canada does not currently have a standardized process built into the AML/ATF framework for sanctioned property reporting, and the Department of Finance has assessed that regulatory amendments are needed to close this gap in Canada’s compliance with FATF obligations.

White-label ATMs (WLATMs)

It is estimated that the Regulatory Amendments result in an annualized increase in administrative costs to WLATM acquirers of $7,960, which is equivalent to $1,592 annualized per business affected. These administrative costs are to WLATM acquirers only, as the 10 000 WLATMs owners included in the analysis are affected by the Regulatory Amendments only in terms of compliance costs.

This Regulatory Amendment is non-discretionary, as it is required to bring Canada into compliance with the FATF Standards, which Canada is required to endorse and implement as a member of the FATF. The specific FATF Standards that this proposed Amendment will meet are Recommendation one. FATF Recommendation 1 requires countries to assess their money laundering and terrorist financing risks and to take action to ensure risks are effectively mitigated, including by applying a risk-based approach to ensure measures are commensurate with risks. During the last mutual evaluation of Canada in 2016, the FATF highlighted the lack of AML requirements for WLATMs as a gap in Canada’s AML/ATF Regime. The Regulatory Amendments directly address this gap.

In addition to setting international AML/ATF standards, the FATF also monitors countries’ progress in implementing its Standards and will publicly list countries that do not implement the Standards and have strategic deficiencies in their AML/ATF regime (i.e. the FATF grey list). If Canada does not implement these standards, Canada could be at risk of being grey listed, which could have negative economic consequences as well as reputational damage. As such, the Regulatory Amendment is non-discretionary, as it is required for Canada to comply with international obligations.

Real estate (title insurers and unrepresented parties)

This Regulatory Amendment implements non-discretionary obligations and is exempt from the requirement to offset the administrative burden under the one-for-one rule.

It is estimated that the Regulatory Amendments for title insurers result in an annualized increase in administrative costs of $155, which is equivalent to $38.80 annualized per business affected. The administrative costs to title insurers are lower than those for WLATM acquirers as title insurers are exempted from requirements relating to beneficial ownership and the record-keeping requirements have been reduced to reflect information records that title insurers are already gathering and saving on a voluntary basis, thus eliminating any increased marginal costs related to saving additional information records. WLATM acquirers also face the additional costs associated with reporting information on WLATMs connected to a payment network during registration as an MSB, which is a cost not incurred by title insurers.

It is estimated that the Regulatory Amendments related to unrepresented parties result in an annualized increase in administrative costs of $6,475, which is equivalent to $0.84 annualized per business affected.

Taken together, the Regulatory Amendments for real estate (title insurers and unrepresented parties) result in an annualized increase in administrative costs of $6,630 which is equivalent to $0.86 annualized per business affected. The per business costs are relatively low as 7 680 businesses are affected by the Regulatory Amendments regarding real estate, as opposed to only four businesses affected by the changes relating to title insurers.

Similar to the Regulatory Amendments related to WLATMs acquirers, this Regulatory Amendment is non-discretionary, as it is required to bring Canada into full compliance with the FATF Standards, which Canada is required to endorse and implement as a member of the FATF. The specific FATF Standard that this Amendment will meet is Recommendation 22. FATF Recommendation 22 requires all designated non-financial businesses and professions, including real estate professionals, to apply customer due diligence and record-keeping requirements. The FATF notes that real estate professionals include real estate agents as well as those professionals that may carry out or prepare for transactions for clients involving the buying and selling of real estate, such as lawyers, real estate developers, title insurers, and other independent legal professionals and accountants.

Casino disbursement reporting

It is estimated that the Regulatory Amendments for casino disbursement reporting result in an annualized increase in administrative costs of $4,806, which is equivalent to $267 annualized per business affected. These costs relate exclusively to casinos saving the identities of final beneficiaries. Although this is a relatively low cost per identity saved, it is assumed that casinos would need to save the identities of 15 000 final beneficiaries as a result of this change, increasing the aggregate costs to casinos.

This Regulatory Amendment is non-discretionary, as it is required to bring Canada into full compliance with the FATF Standards, which Canada is required to endorse and implement as a member of the FATF. The specific FATF Standards that this Amendment will meet are Recommendations 25 and 26. FATF Recommendations 24 and 25 require countries to assess the risk of the misuse of legal persons and arrangements for money laundering or terrorist financing and take measures to prevent their misuse. Canada’s last mutual evaluation in 2016 as well as FATF’s Follow-Up Report on Canada in 2021 found Canada to be partially compliant with Recommendation 24 and non-compliant with Recommendation 25 (non-compliant being the lowest assessment result possible). Increasing transparency regarding the ultimate beneficiary of casino disbursements ensures that this sector is not being misused to obfuscate money laundering or terrorist financing and supports Canada’s adherence to FATF Recommendations 24 and 25.

Proposed Regulations Amending Certain Regulations Made Under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (Money Service Business Registration) [annualized administrative costs: $21,071]

MSB registration framework

The one-for-one rule applies since there is an incremental increase in the administrative burden on business, and the proposal is considered a burden in under the rule. The Regulatory Amendments result in an annualized increase in administrative costs of $21,071, which is equivalent to $8.16 annualized per business affected.

This Regulatory Amendment is expected to increase the administrative costs for MSBs as a result of new obligations to report to FINTRAC on certain elements of the criminal record checks of MSBs’ agents and MSBs’ chief executive officer, president, directors, and significant shareholders. Administrative costs are also raised by the requirement to save these criminal record checks. Compliance costs associated with obtaining the criminal record checks, including the fee, are not included under the one-for-one rule.

Regulatory cooperation and alignment

The Regulatory Amendments relating to the MSB registration framework are based on international best practices and the FATF Recommendations. The Regulatory Amendments relating to sanctioned property reporting, white-label ATMs, real estate, and casino disbursements implement non-discretionary international obligations under the FATF. These Regulatory Amendments will more closely align with over 200 jurisdictions around the world that have also committed to the FATF Recommendations, including all the members of the G7, such as the United States, noting that each country must apply the Recommendations based on their national circumstances.

Effects on the environment

In accordance with the Cabinet Directive on the Environmental Assessment of Policy, Plan and Program Proposals, a preliminary scan concluded that a strategic environmental assessment is not required.

Gender-based analysis plus

No specific gender-based analysis plus (GBA+) impacts have been identified for the Regulatory Amendments. More generally, the Regulatory Amendments seek to strengthen Canada’s AML/ATF framework, which acts as a deterrent to financial crimes, and helps to protect Canadians, and uphold the security, stability, utility, and efficiency of the Canadian and global financial systems to drive economic growth.

The Regulatory Amendments benefit all Canadians by combatting money laundering and terrorist financing, which pose threats to Canadians and the economy. This protects the integrity of the financial system, facilitating the flow of funds domestically and internationally. It also indirectly benefits women, young people, 2SLGBTQI+ people, Indigenous people, persons with disabilities, and seniors who are disproportionately victimized by crime that is supported and perpetuated by money laundering. For example, Indigenous people and persons with disabilities experience higher rates of violent victimization compared to other Canadians, and the Canadian Anti-Fraud Centre reports that seniors and vulnerable Canadians are increasingly being targeted for fraud. With respect to human trafficking for sexual exploitation, traffickers target Canada’s most vulnerable citizens, the majority of victims being women under the age of 25, including minors.

Noting that money laundering is a criminal and clandestine activity, and it is therefore very difficult to know in advance (ex-ante) the impact of the proposed Regulatory Measures on specific crimes, below are key takeaways from two studies that examine the distributional impacts of economically motivated crimes that give rise to money laundering, and which a strong AML/ATF Regime helps to address:

• Trafficking in persons in Canada, 2021 (statcan.gc.ca)
  • 96% of the 2 688 victims of police reporting human trafficking in Canada between 2011 and 2021 were women and girls.
  • Over the same period, 45% of victims were aged 18–24 and 24% were aged 17 and younger. Overall, 67% of victims were women and girls aged 24 and under.
  • Over the same period 81% of persons accused of human trafficking were men and boys.
• Exploring the intersectionality of characteristics among those who experienced opioid overdoses: A cluster analysis (statcan.gc.ca)
  • This Statistics Canada British Columbia Opioid Overdose Analytical File providing statistics on individuals experiencing fatal and non-fatal opioid overdoses between 2014 and 2016 in British Columbia linked with Statistics Canada data found that, of 13 318 individuals who experienced a total of 19 125 opioid overdose events:
    • 65% were male; 45% were between 25 and 45 years old; and 40% were unemployed.

Implementation, compliance and enforcement, and service standards

Implementation

Coming into force

The Regulatory Amendments relating to sanctioned property reporting come into force 60 days after their publication in the Canada Gazette, Part II, for sanctions under the United Nations Act, and on October 1, 2025, for sanctions under the Special Economic Measures Act (SEMA) and the Justice for Victims of Corrupt Foreign Officials Act (JVCFOA). The longer implementation time for sanctions under SEMA and the JVCFOA relate to the much larger number of sanctions that exist under these Acts, and the longer implementation period provides reporting entities with additional time to implement the sanctioned property requirements for sanctions under these Acts. Both implementation periods reflect the government’s priority to implement these measures as soon as possible to address sanctions evasion and adhere to Canada’s international obligations, including under the FATF.

The Regulatory Amendments relating to strengthening the MSB registration framework, white-label ATMs, and real estate (title insurers and unrepresented parties) come into force on October 1, 2025. The delayed coming into force provides businesses impacted by the changes with sufficient time to adjust to the new requirements and update their systems and processes to comply with the new obligations. It also provides FINTRAC with sufficient time to update and issue guidance and best practices regarding how reporting entities should meet their obligations, undertake outreach activities, and work with industry to establish typologies that can help new reporting entities gain a better understanding of relevant money laundering and terrorist financing risks.

Finally, the Regulatory Amendments relating casino disbursement reports come into force immediately on publication in the Canada Gazette, Part II. Unlike the measures coming into force later, these Amendments simply seek to close gaps related to existing requirements. Relevant stakeholders have been consulted, are aware of these changes, and have indicated their readiness to implement the changes. FINTRAC has already updated its casino disbursement reporting guidance and is prepared to implement these changes upon final publication in the Canada Gazette, Part II.

Order in Council

An Order in Council (OIC) is required to bring into force sections of the Budget Implementation Act, 2023, No. 1 (BIA 1, 2023), the Budget Implementation Act, 2024, No. 1 (BIA 1, 2024), and the Fall Economic Statement Act, 2023 (FES Act, 2023). These acts amend sections of the PCMLTFA that are needed to realize the policy intent of the Regulatory Amendments relating to sanctioned property reporting, the MSB registration framework, and white-label ATMs. The OIC ensures that the proposed regulatory Amendments and the required legislative provisions are brought into force at the same time; specifically at the dates indicated in the “Coming into force” section (above).

Sanctioned property reporting

To realize the regime for sanctioned property reporting, section 181 of BIA 1, 2023 needs to be brought into force. Section 181 of BIA 1, 2023 contains the substantive legislative obligation for reporting entities to report on sanctioned property under the Criminal Code, United Nations Act, Special Economic Measures Act and its Regulations, or the Justice for Victims of Corrupt Foreign Officials Act (Sergei Magnitsky Law). Section 181 also provides that such reporting must be in accordance with the Regulatory Amendments. Together, the Regulatory Amendments and the bringing into force of section 181 of BIA 1, 2023 will operationalize the framework for sanctioned property reporting. The OIC establishes 60 days after the order is made as section 181 would need to be brought into force at the same time as the earlier of the coming-into-force dates for sanctioned property reporting; i.e. for sanctions under the United Nations Act.

MSB registration framework

To realize the regime for strengthening the MSB registration framework, which was announced in Budget 2023, sections 182, 185, 186, 205 and 206 of BIA 1, 2023 need to be bought into force. In addition, a subsequent related technical amendment contained in section 346 of BIA 2024 also needs to be brought into force. This technical amendment in BIA 2024 corrects references to the criminal offences in the PCMLTFA for violations of the requirements related to criminal record checks for MSBs and their agents that are contained in BIA 2023 and the Regulatory Amendments. Both the BIA 2023 and BIA 2024 sections will be brought into force on the same date as the Regulatory Amendments related to the MSB registration framework: October 1, 2025.

White-label ATMs

To realize the regime for white-label ATMs, subsection 278(3) and section 279 of the FES Act, 2023 need to be brought into force. These provisions contain amendments to the PCMLTFA to define white-label ATMs and acquirers for white-label ATMs, and lists acquirers for white-label ATMs as reporting entities under the Act. These sections will be brought into force on the same date as the Regulatory Amendments related to white-label ATMs: October 1, 2025.

Compliance and enforcement

FINTRAC is Canada’s financial intelligence unit and AML/ATF regulator. In this role, FINTRAC is responsible for ensuring the compliance and enforcement of the Regulatory Amendments. FINTRAC’s supervisory function is entirely funded from its assessment of expenses funding model to charge reporting entities for the annual cost of its compliance program.

FINTRAC provides guidance and resources for reporting entities on its website: https://fintrac-canafe.canada.ca/guidance-directives/1-eng. This includes both sector-specific guidance, as well as detailed guidance broken down by regulatory requirement. FINTRAC will update this information on its website and raise awareness of the changes with existing reporting entities prior to the Regulatory Amendments coming into force. Specifically,

• Regarding sanctioned property reporting, FINTRAC already has guidance on terrorist property reporting. FINTRAC will update this guidance to reflect the shift to sanctioned property reporting before new reporting is required, i.e. before 60 days following final publication regarding property sanctioned under the United Nations Act and before October 1, 2025, for property sanctioned under other legislation.
• Regarding the MSB registration framework, FINTRAC already has guidance regarding the MSB registration process, which includes information regarding criminal record checks for foreign MSBs. FINTRAC will update this guidance to reflect the Regulations and application to domestic MSBs before the measure comes into force on October 1, 2025.
• Regarding white-label ATMs, this new reporting entity will be treated as a sub-segment of the MSB sector. FINTRAC already has numerous guidance publications relating to MSBs, which will be updated to reflect white-label ATMs before the measure comes into force on October 1, 2025.
• Regarding real estate, FINTRAC has extensive guidance for all sectors of reporting entities that cover a range of issues, such as reporting, compliance examinations, and penalties, that will apply to title insurers. Sector specific guidance that is tailored to title insurers will be issued before the measure comes into force on October 1, 2025.
• Regarding real estate: unrepresented parties, FINTRAC already has guidance regarding when and who reporting entities are required to identify in real estate transactions. FINTRAC will make a small update to this guidance to reflect the new requirements before the measure comes into force on October 1, 2025.
• Regarding casino disbursement reporting, FINTRAC has already updated its casino disbursement reporting guidance.

In general, and especially for significant policy changes, such as the addition of new reporting entities, FINTRAC issues and updates its guidance prior to the coming into force of the measure. This provides FINTRAC with certainty regarding the regulatory requirements and enables FINTRAC to undertake meaningful additional consultations to better understand how reporting entities intend to implement the measures and draft guidance that responds to their key questions or concerns. For example, FINTRAC will undertake outreach to white-label ATM acquirers and title insurers as these will become new reporting entities under the Regulatory Amendments and FINTRAC will help these sectors establish typologies to gain a better understanding of their relevant money laundering and terrorist financing risks. New reporting entity sectors are also able to consult the existing guidance publications available on FINTRAC’s website prior to the publication of tailored guidance.

Once the Regulatory Amendments come into force, FINTRAC will conduct ongoing supervisory activities, including assessments to ensure compliance. If non-compliance is identified, FINTRAC can impose administrative monetary penalties or take other enforcement actions, as necessary. FINTRAC’s administrative monetary penalties policy is available on its website.

Contact

Erin Hunt
Director General
Financial Crimes and Security Division
Financial Sector Policy Branch
Department of Finance
90 Elgin Street
Ottawa, Ontario
K1A 0G5
Email: fcs-scf@fin.gc.ca