Background:
Regulators around the globe are increasingly vigilant about money laundering and terrorist financing. The growing influence in society of socially conscious investors and focus on Environmental Social Governance (ESG) principles further intensifies the scrutiny on illicit financial transactions.
Unfortunately, Canada, and more specifically our major financial centres like Vancouver, Toronto, and Montreal, are known to be havens for illicit financial activity. We even have our own name for laundering money, “snow washing.” Professional criminals have been exploiting Canada's weaknesses, using mainly real estate and casinos to clean money. In fact, it's estimated that money laundering accounted for $5.3 billion in real estate transactions in B.C. in 2018 alone. To learn more about where Canada falls short in its fight against money laundering, read our article here.
Anti-money laundering in Canada: Understanding Canada’s updated regulations and ...
In an effort to fight money laundering, Canada recently updated its regulations. Learn why Canada is a haven for illicit financial activity and how to remain compliant with the evolving regulatory landscape.
Read moreCanada's amendments to the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA) came into effect in June 2021. These amendments are designed to bolster Canada's anti-money laundering (AML) regime as well as align with leading international standards. Canadian businesses need to be vigilant and armed with AML solutions that comply with the updated Act. Even businesses with established AML controls should carefully review the new amendments to identify any gaps and ensure compliance.
The regulatory amendments to the PCMLTFA are extensive and complex. This guide provides a high-level overview of the new sectors impacted by the update, as well as of some of the more noteworthy changes to reporting and know your client (KYC) requirements. Reaching out to a BDO advisor is recommended to help you determine if your business is impacted and how to remain compliant.
What new sectors are impacted by the amendments?
Some industries and businesses that were not previously subject to the PCMLTFA regulations are now considered reporting entities (REs) and subject to the reporting rules. The new sectors and products impacted include:
- Businesses involved with virtual currency (VC) transactions
- Foreign money services businesses (MSBs)
- Life insurance providers (that provide loan and mortgage products)
- Prepaid credit card issuers
If it's determined that your business provides these services or products you will be subject to PCMLTFA requirements and will be required to:
- Register with Financial Transactions and Reports Analysis Centre of Canada (FINTRAC)
- Develop and implement a compliance program
- Establish a risk assessment, to assess risks with your clients and your business as a whole
- Perform customer and client due diligence
- Develop a system to track, review, and report transactions–in alignment with the specific reporting requirements for that sector or product.
Important amendments to the PCMLTFA:
- Make a payment of $100,000 or more to a prepaid payment product,
- Request a transfer of $100,000 or more in virtual currency, or
- Receive $100,000 or more in virtual currency.
How BDO can help
BDO can help your organization navigate complex regulatory requirements and avoid being an unwitting participant in money laundering schemes. BDO provides tailored AML solutions that suit your unique requirements, including:
Design and implementation of AML compliance programs and policies
- AML risk assessments
- Pre-inspection (readiness) reviews
- Independent AML program testing
- AML training & workshops
- AML advisory
- AML systems vendor selection assistance
- AML program remediation
- AML compliance reviews pursuant to M&A transactions
- On-call AML advisory
- Independent investigations
- Litigation support (expert witness)