On April 27, 2022, the Department of Finance’s proposed amendments to the regulations under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA) came into force. While proposed changes were signaled in the passing of the Emergencies Act and referenced further in the 2022 Federal Budget, the final amendments are quite broad and effectively extend PCMLTFA Regime obligations to previously exempt entities.
Key changes to the regulations removed exemptions for the payment processing of credit, debit, and prepaid products under the definition of electronic funds transfer. FINTRAC has also revised its interpretation of “funds transmitting” to include previously exempted entities who provide merchant services (i.e. the provision of settlements directly to merchants on behalf of the merchant’s customers for the purchase of goods and services), as well as payment processing for utility bills, mortgage and rent, payroll, and tuition.
These changes mean that crowdfunding platforms and certain payment service providers are now covered as money services businesses (MSBs) or foreign money services businesses (FMSBs) under the PCMLTFA, and have the following obligations:
- Register with FINTRAC
- Develop and maintain a compliance program
- Carry out know your client requirements, including verifying the identity of persons and entities for certain activities and transactions
- Keep certain records, including records related to transactions and client identification
- Report certain transactions to FINTRAC
These regulatory amendments take effect immediately.
For more information on the PCMLTFA, amendments to the regulations, and whether your business may now be subject to AML obligations, please reach out to Tracy Molino or Noah Walters at Dentons Canada LLP.