Canada's Proceeds of Crime and Terrorist Financing Act sets AML duties for reporting entities and covered activities. Identity checks, beneficial-owner checks and risk-based monitoring support FINTRAC reporting on suspicious activity, specified transfers and other reportable activity.
TL;DR:
- Reporting entities need risk-based AML programmes, identity checks, monitoring and records.
- FINTRAC reporting includes suspicious transactions and distinct threshold-based reports.
- Money-services registration is separate from Bank of Canada retail-payments registration.
Summary
Canada’s AML and terrorist-financing framework
The Proceeds of Crime (Money Laundering) and Terrorist Financing Act establishes measures to detect and deter money laundering and terrorist financing. It sets the legal framework for reporting entities, client identification, records, reporting and FINTRAC's role. The duties depend on the business and activities within the Act's scope, which include banks and covered domestic and foreign money-services businesses.
Identify customers and manage risk
The framework requires covered entities to maintain a compliance programme, verify identity, address beneficial ownership, assess risk and keep prescribed records. FINTRAC's sector guidance and implementing regulations explain the specific triggers and methods. For payments, the relevant activity can include remittances, foreign exchange, virtual-currency services and other covered functions; a generic processor label alone does not settle the legal perimeter.
Reports are not all triggered the same way
The regime includes suspicious-transaction reporting and other prescribed reports, such as those involving specified cash, virtual-currency or electronic-funds-transfer activity. Suspicious-transaction reporting is distinct from threshold-based reporting and should not be reduced to one universal transaction amount. The applicable regulation and sector guidance determine the exact trigger, information and timing for each report.
FINTRAC registration and supervision
The Act provides for registration of money-services businesses, including covered foreign businesses directing services at clients in Canada, and gives FINTRAC compliance and information powers. Registration under this AML regime should be distinguished from Bank of Canada registration under the Retail Payment Activities Act. A provider can face both frameworks for different reasons: financial-crime controls on one hand, and operational-risk and end-user-fund protection on the other. The two registrations are not interchangeable credentials.
Keywords
- PCMLTFA
- FINTRAC reporting
- beneficial ownership
- AML programmes
- transaction monitoring
- identity checks
- suspicious transactions
- record keeping
- MSB registration
- Canadian remittances