Background
On March 26, 2025 final amendments to the Proceeds of Crime (Money Laundering) and Terrorist Financing Regulations were officially published in the Canada Gazette (SOR/2025-68). This round of anticipated changes introduces three company types that will become reporting entities. Below, we summarize the requirements that cheque cashing businesses, who will be classified as either domestic or foreign money services businesses (MSBs), will have to comply with as of April 1, 2025.
Requirements
MSBs (including cheque cashing businesses) must register with the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) and have in place a compliance program as defined under the PCMLTFA and associated regulations. The following is a summary of the requirements that MSBs must comply with, as well as links to FINTRAC guidance.
Program Elements
- Appoint a compliance officer who is responsible for implementing the compliance program and have oversight. The Compliance Officer must always have access to management and have the authority to carry out their duties.
- Develop and apply written compliance policies and procedures that describe what is required under law and how these obligations will be met. These must be kept up to date and approved by a senior officer.
- Conduct and document a risk assessment of your business. This assessment should include all activities that could make an entity vulnerable to money laundering or terrorist financing, as well as the mitigating controls that are put into place to prevent such risks.
- Develop and maintain an ongoing compliance training program for your staff and agents. Everyone that deals with customers, customer funds, or transactions must receive AML and ATF training at least annually.
- Conducting compliance effectiveness reviews. This is an audit that tests a company’s AML and ATF program and its effectiveness. These reviews must be completed at least once every two years.
Operational Elements
- Register with FINTRAC before conducting prescribed transactions. The registration information must be kept up to date and renewed every two years;
- Reporting certain transactions. Where there are reasonable grounds to suspect that a particular financial transaction is related to the commission of a money laundering or terrorist activity financing offence, a Suspicious Transaction Report must be summitted to FINTRAC. This includes Large Cash, Large Virtual Currency and Electronic Funds Transfer reporting;
- Follow ministerial directives and perform watchlist screening. Where a company may be in possession of funds or property that belong to a terrorist (either an individual or an organization) or a listed person, a Listed Person or Entity Report must be submitted to FINTRAC;
- Identifying customers. As it relates to cheque cashing services, MSBs will need to verify the identity of a customer using prescribed methods for individuals and entities where there is a request to cash one or more cheques that total $3,000 or more;
- Conducting ongoing transaction monitoring for customers that have formed a business relationship;
- Conducting enhanced due diligence and enhanced transaction monitoring for high-risk customers; and
- Keeping certain records. MSBs must keep specific records. As it relates to cheque cashing activities (over $3,000) the following records must be retained:
- the date when each cheque is cashed;
- the person’s or entity’s name and address, the nature of their principal business or their occupation and, in the case of a person, their date of birth;
- the total amount of the cheque or cheques;
- the name of the issuer of each cheque;
- the number of every account that is affected by the cashing of the cheque or cheques, the type of account and the name of each account holder;
- every reference number that is connected to the cashing of the cheque or cheques and that has a function equivalent to that of an account number; and
- if the cashing of the cheque or cheques involves virtual currency, every transaction identifier, including the sending and receiving addresses.
What Next?
Companies that perform cheque cashing activities should start working on developing their compliance program immediately if they have not done so already. FINTRAC has updated their sector-specific guidance page with relevant information for this new reporting entity and should be read.
We’re Here To Help
If you would like assistance in understanding what these changes mean to your business, or if you need help in creating or updating your compliance program and processes, please get in touch.