Canada Seeks to Widen AML Compliance Net

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WSJ | By Mara Lemos Stein | Apr 25, 2018

Proposed changes to Canada’s anti-money laundering and terrorist financing law would bring Canada more in line with other western economies and address concerns raised by international financial regulators.

The government continues to accept comments through May 18 on its anti-money laundering and terrorist financing regime review, which includes proposals to extend reporting obligations to various business sectors not covered under existing rules.

“Canada has been a little behind the curve…and is stepping up to the plate with this review,” said Kashif Zaman, a partner in the financial services group of law firm Osler, Hoskin & Harcourt LLP.

The government’s review started in February and is looking to to bring under the law entities such as non-federally regulated mortgage lenders, privately owned automated-teller machines, horse-betting businesses, financing and leasing firms, high-value goods dealers and jewelry auction houses, among others.

Some of these businesses operate with little regulatory obligations so the implementation of these proposals would create a significant need for compliance procedures, said Koker Christensen, partner in the financial institutions group of law firm Fasken Martineau Dumoulin LLP.

The government signaled it is aware of the potential financial and operational burdens and of privacy concerns an expanded regime could bring to some firms.

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“In evaluating each measure, the costs of addressing the identified risk must be weighed against the potential benefit of preventing or tracing [money laundering/terrorist financing] activity in the identified sectors,” said the government in its consultation paper.

Addressing concerns

The regime review aims to address some of the concerns raised by a Financial Action Task Force review published in 2016 that found Canada should expand the sectors it covers and strengthen transparency. The FATF is an inter-governmental body focused on combating money laundering and terrorist financing risks in the global financial system.

The G20 countries said they are committed to establishing beneficial-ownership registers to facilitate the identification of the people behind corporate entities.

Canada doesn’t have a central registry of beneficial owners; information on entities is “spread across a number of different statutes,” according to the consultation paper. Around 9% of corporations are established under the federal statute and most are incorporated at the provinces and territories, it said.

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The National Crowdfunding & Fintech Association of Canada (NCFA Canada) is a cross-Canada non-profit actively engaged with both social and investment crowdfunding, alternative finance, fintech, P2P, ICO, and online investing stakeholders across the country. NCFA Canada provides education, research, industry stewardship, and networking opportunities to over 1600+ members and works closely with industry, government, academia, community and eco-system partners and affiliates to create a strong and vibrant crowdfunding and fintech industry in Canada.  For more information, please visit:  www.ncfacanada.org

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