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Ottawa to review Crypto, Stablecoins and CBDCs; Budget promises more financial cops

Investment Executive | James Langton | Apr 8, 2022

AML money laundering review - Ottawa to review Crypto, Stablecoins and CBDCs; Budget promises more financial copsIn yesterday’s budget, the federal government announced plans to launch a new authority, the Canada Financial Crimes Agency, which it envisions as the future lead law enforcement agency in the fight against financial crime.

Alongside the launch of a new federal policing unit, the budget also pledged increased funding — $89.9 million over five years, and $8.8 million annually after that — to beef up the existing AML agency, the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC).  This represents a 24% increase to FINTRAC’s budget, and provisions for a 13% increase in staff.

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Government in the budget said:

“This increased capacity will enable FINTRAC to implement new anti-money laundering and anti-terrorist financing requirements for crowdfunding platforms and payment service providers; support the supervision of federally regulated financial institutions; continue to build expertise related to virtual currency; modernize its compliance functions; and update its financial management, human resources, intelligence, and disaster recovery systems.”

It’s also already working on legislative changes to strengthen the existing AML legislation, the Criminal Code, and other legislation, “to enhance the ability of authorities to detect, deter, investigate, and prosecute financial crimes,” the budget said; while also enabling the government to tackle emerging threats that may not be covered under the existing regime.

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Investment Executive | James Langton | Apr 7, 2022

Ottawa to review crypto, CBDC: A new review of financial sector legislation will examine the emergence of cryptocurrencies and other digital assets, and the implications for the financial system.

In today federal budget, the government announced plans for a review, led by the Department of Finance, which will examine the so-called “digitalization” of money and its possible impact on the traditional financial sector.  The budget pledged $17.7 million in funding over five years to finance a review that will, among other things, consider the need for a central bank digital currency (CBDC) in Canada.

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A number of countries are exploring the potential of CBDCs, with the idea that their development could enhance payment systems, foster financial innovation and improve inclusion, while potentially reducing credit and liquidity risk.  However, there also concerns that the introduction of CBDCs could undermine bank deposits, which are a traditional source of bank funding; while also cutting into banks’ revenues from payments processing.  The government said that the review will also consider how to adapt the financial sector’s regulatory framework to deal with the risks posed by the digitalization of money; and, how to maintain the security and stability of the financial sector amid the development of these emerging technologies.

“The first phase of the review will be directed at digital currencies, including cryptocurrencies and stablecoins,” the government said in today’s budget.

Bank dispute resolution overhaul

The budget also reiterated the federal government’s pledge to amend financial sector legislation to overhaul the banking sector’s dispute resolution regime.

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Specifically, the government indicated that it will introduce amendments to “provide for a single, non-profit external complaints handling body (ECB) in banking and to strengthen the ECB system.”

“Canadians deserve a fair and impartial process to address unresolved complaints with their banks,” the government said in today’s budget. “Banks should not be able to choose the complaints handling body they participate in, and the system should not be run on a for-profit basis.”

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NCFA Jan 2018 resize - Ottawa to review Crypto, Stablecoins and CBDCs; Budget promises more financial copsThe National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org

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