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 Financing and Leasing Entities will have to comply with as of April 1, 2025.
Financing and Leasing Entities
A financing or leasing entity is defined as a person or entity that is engaged in the business of financing or leasing of:
- property, other than real property or immovables, for business purposes;
- passenger vehicles in Canada; or
- property, other than real property or immovables, that is valued at $100,000 or more.
Requirements
All reporting entities (including Financing and Leasing Entities, as of April 1, 2025) must have in place a compliance program as defined under the PCMLTFA and associated regulations. The following is a summary of the requirements, as well as links to FINTRAC guidance (some of which will need to be updated).
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
- 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 submitted to FINTRAC. This includes Large Cash and Large Virtual Currency 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. Upon entering into an agreement for the listed activities under the definition above, Financing and Leasing Entities will need to verify the identity of a customer using prescribed methods for individuals and entities.
- Conducting transaction monitoring.
- Conducting enhanced due diligence and enhanced transaction monitoring for high-risk customers.
- Keeping certain records. In addition to keeping records related to the requirements above, Financing and Leasing Entities are required to keep the following records:
- an information record in respect of the person or entity with which it enters into the arrangement;
- if the information record is in respect of an entity, a record of the name, address and date of birth of every person who enters into the arrangement on behalf of the entity and the nature of the person’s principal business or their occupation;
- if the information record is in respect of a corporation, a copy of the part of official corporate records that contains any provision relating to the power to bind the corporation in respect of transactions with the financial leasing entity;
- a record of the financial capacity of the person or entity with which it enters into the arrangement and the terms of the arrangement; and
- in respect of every payment that it receives under the arrangement, other than a payment received from a financial entity or public body or from a person who is acting on behalf of a client that is a financial entity or public body, a record of
- the date of the payment,
- the name of the person or entity that makes the payment,
- the amount of the payment and of any part of it that is made in cash, and
- the method by which the payment is made.
What Next?
Financing and Leasing Entities 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.