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Integrity Over Profit

Earlier this week I was approached by a client with whom we had completed a full overhaul of their Risk Assessment documentation, which occurred about 3-4 months ago. The project was completed with excellent results, and from all accounts, an ideal outcome. Mainly, the client was satisfied with the deliverable, felt more confident in the status of their overall compliance program, and was a delight to work with.

When they reached out this week, they were inquiring about Outlier completing their upcoming 2 year Compliance Effectiveness Review (CER). This was a clear indication of their satisfaction, which was a good feeling. However, we had to keep in mind that we (Outlier) revised their Risk Assessment documentation not too long ago. After some internal discussion, we felt it was not the right move for us to take on their CER, as we would be reviewing a portion of our own work. Not only would this be less value to the client, but should their financial service provider or FINTRAC determine that their reviewer was also the drafter of a portion of the compliance documentation, that would be a bad look. FINTRAC guidance states “Also, as a best practice, to ensure that your review is impartial, it should not be conducted by someone who is directly involved in your compliance program activities.”

Informing the client about our perceived conflict, and that it would not be the right move given the situation, felt less than optimal. No one wants to turn business away. However, the response was received with grace and understanding. This isn’t a shock as this individual is, in my opinion, an underrated pillar of the AML community, and generally, a person with a high degree of integrity.

Ok, So What?

This post is not intended to be a self-congratulatory post, but rather a message to highlight an important point for reporting entities. We have sat through examinations with clients where FINTRAC has identified the lack of separation between the drafter of the documentation and reviewer of the documentation. This situation left the reporting entity in a position they could not defend, resulting in, what I deem, an entirely unnecessary position. Had the reviewer acted with integrity, by informing the reporting entity about the potential risk and downfalls, the FINTRAC examination would have resulted in a more favorable outcome, including one less deficiency.

From my experience, the separation between the drafter and reviewer should go beyond merely assigning different people, or different departments, within the same organization because the baseline knowledge is consistent across the business. You want completely fresh eyes on your compliance program and its effectiveness.

The intent of this post is to serve as an FYI to reporting entities that relying on one firm to handle all aspects of compliance support is not an ideal scenario and can lead to problems down the line. There is no shortage of fantastic compliance consulting firms in Canada, each with deep expertise when it comes to Canadian regulatory requirements and FINTRAC expectations. If you would like some suggestions on additional firms that can offer compliance support, please feel free to reach out to us, and we can make warm introductions to other trusted firms.

Finally, this also raises concerns regarding independence of the CER process when the same company is engaged for multiple reviews in succession. We have strongly suggested to a few longstanding clients that they source a different reviewer for a “fresh set of eyes,” after completing multiple CERs for them previously. We have also received feedback from clients that during FINTRAC exams, FINTRAC examiners are suggesting the same thing. While its nice to have a good relationship with your compliance support providers, there comes a point where a changeup is not only suggested, it is necessary. It’s better to make the choice yourself, rather than have FINTRAC make it for you.

Independent Support

If you are in need of a completely independent reviewer, a suggestion for a couple of different options, or just have general questions, please feel free to contact us. We are here to help, and truly believe that rising tides lift all boats.

New Reporting Entity: Factoring Companies

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 Factoring Companies will have to comply with as of April 1, 2025.

Factoring Companies (Factors)

Factors supply liquidity to a customer in exchange for the cash value of a certain amount of the customer’s accounts receivable (i.e. invoices) to be collected later by the factoring company. A factor is defined as a person or entity that is engaged in the business of factoring, with or without recourse against the assignor.

Requirements

All reporting entities (including Factoring Companies, 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 CTF training at least annually.
  • Conducting compliance effectiveness reviews. This is an audit that tests a company’s AML and CTF 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 summitted 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 a factoring agreement or when an information record is created, Factoring Companies 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, Factoring Companies are required to keep the following records:
    • an information record in respect of the person or entity with whom it enters into the agreement;
    • 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 agreement 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 factor;
    • a record of the financial capacity of the person or entity with which it enters into the agreement and the terms of the agreement;
    • for any payment it makes, a record of:
      • the date of the payment,
      • if the payment is in funds, the type and amount of each type of funds involved,
      • if the payment is not in funds, the type of payment and its value,
      • the method by which the payment is made,
      • the name of every person or entity involved in the payment, and
      • every account number or other equivalent reference number connected to the payment; and
    • a receipt of funds record in respect of every amount of $3,000 or more that it receives, unless the amount is 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.

What Next?

Factoring Companies 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.

New Reporting Entity: Financing and Leasing Entities

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 CTF training at least annually.
  • Conducting compliance effectiveness reviews. This is an audit that tests a company’s AML and CTF 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 summitted 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.

New Reporting Entity: Cheque Cashing

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 CTF training at least annually.
  • Conducting compliance effectiveness reviews. This is an audit that tests a company’s AML and CTF 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.

2025 AML Changes: New Import/Export Declarations, Information Sharing, Beneficial Ownership Transparency and New Reporting Entities

Background

On March 26, 2025 final amendments to the Proceeds of Crime (Money Laundering) and Terrorist Financing Regulations and creation of a new regulation were officially published in the Canada Gazette (SOR/2025-67 and SOR/2025-68). This round of anticipated changes introduces three company types that will become reporting entities. Additionally, the amendments bring in changes related to reporting of goods, information sharing, and beneficial ownership discrepancy reporting.

In traditional fashion, to make reading these changes a little easier, we (thanks Rodney) have created a redlined version of the regulations, with new content showing as tracked changes, which can be found in a combined document here.

While there are no substantial changes to the requirements from the draft amendments published on November 30, 2025 in the Canada Gazette, one noteworthy change is that the in-force date of most requirements was moved from October 1, 2025, to April 1, 2025, which will likely leave companies scrambling.

The incoming requirements are meant to improve Canada’s anti-money laundering (AML), Counter Terrorist Financing (CTF) and sanctions regime, and implement measures announced in Budget 2022, Budget 2023, Budget 2024, the 2023 Fall Economic Statement, and Canada’s last Parliamentary Review. On February 4, 2025, the Prime Minister issued the Directive on Transnational Crime and Border Security, which stated the urgent need to disrupt profits laundered by organized crime in connection with illegal trade in drugs such as fentanyl. The amendments provided in the finalized regulations were identified as key measures to support this Directive.

The regulatory impact analysis statement (RIAS) accompanying the finalized regulations indicates that these amendments are also needed for Canada to align to Financial Action Task Force (FATF) standards ahead of Canada’s next mutual examination by the FATF later in 2025. The RIAS states that FINTRAC is committed to working with reporting entities to ease the implementation process along this accelerated and exceptional timeline, and will put emphasis on engagement, outreach and guidance activities related to new regulatory obligations.

What’s Changed?

Trade Based Money Laundering (TBML)

The regulatory amendments introduce a new Proceeds of Crime (Money Laundering) and Terrorist Financing Reporting of Goods Regulation.   

Under the new regulation, anyone who is importing or exporting goods into or out of Canada needs to file a declaration with the Canada Border Services Agency (CBSA) as follows:

  • whether the goods are proceeds of crime as defined by subsection 462.3(1) of the Criminal Code or are goods related to money laundering, to the financing of terrorist activities or to sanctions evasion; and
  • that the goods are actually being imported or exported, as the case may be.

The amendments will also include seizure and forfeiture rules. Under the framework, the CBSA will have powers to seize and forfeit goods when they have reasonable grounds to believe that the goods are proceeds of crime or related to money laundering, terrorist financing, or sanctions evasion.

As part of the new requirements, there are substantial record-keeping obligations, including details such as the origin, making, purchase, importation, costs, and value of the goods, as well as records related to payments for the goods.

This change comes into force April 1, 2025.

Information Sharing

The regulatory amendments introduce measures to allow for reporting entities to share information with each other to detect and deter money laundering, terrorist financing, and sanctions evasion, while maintaining privacy protections for personal information.

Reporting entities that wish to share information (it’s voluntary) would be required to establish and implement a code of practice for disclosing, collecting and using personal information without consent. The code must:

  • describe the personal information of an individual that may be disclosed, collected or used without their knowledge or consent;
  • describe the purposes for which an individual’s personal information may be disclosed, collected or used without their knowledge or consent;
  • describe the manner in which an individual’s personal information may be disclosed, collected or used without their knowledge or consent;
  • describe the measures to be taken to ensure the protection of personal information, including measures concerning the retention of such information and the keeping of records; and
  • include information demonstrating that the code complies with the requirements of the Act.

The Code must be provided to the Office of the Privacy Commissioner of Canada (OPC) for approval, as well as to FINTRAC for comment in advance of use. The OPC must approve the code within 120 calendar days (an increase from the proposed 90 days in the draft amendments). The OPC will continue to have the ability to extend the deadline by an additional 15 days, provided it notifies the reporting entity. Reporting entities would be required to resubmit their Codes to the OPC and FINTRAC every five years regardless of changes or not. The OPC has published guidance on how to submit Codes for review and approval.

This change comes into force immediately.

Discrepancy Reporting

The amendments introduce a requirement for reporting entities dealing with a Canada Business Corporations Act (CBCA) corporation to report any material discrepancies found while obtaining and verifying the accuracy of beneficial ownership information under current AML requirements. The reporting requirement will not apply if the material discrepancy is resolved within 30 days (originally 15 days in the draft amendments) from the date it is identified. Currently, what is deemed to be material is not well defined (outside of missing beneficial owners). There are examples of what is considered not material.

The information with respect to the discrepancy includes:

  • Name of reported company and identifying number on its certificate of incorporation, amalgamation or continuance;
  • Date on which discrepancy was identified; and
  • Description of discrepancy.

This comes into force October 1, 2025.

New Reporting Entities

The regulatory amendments outline the inclusion of three new regulated entities, as announced in Budget 2024, which were highlighted as concerns during Canada’s last FATF mutual evaluation: factoring companies (referred to as “factors”), cheque cashing companies, and financing and leasing companies. These entities will be subject to the PCMLTFA as of April 1, 2025, and must implement compliance programs.

We have created a separate blog post for each of the newly regulated company types (factoring companies, cheque cashing companies, and financing and leasing companies) to make it easier to digest the requirements that apply to each of the new reporting entities.

What Next?

FINTRAC will be issuing and updating guidance related to the changes. While we await guidance, entities should start updating their compliance program and processes to reflect the new requirements as they apply to their business. New reporting entities should start working on developing their compliance program immediately if they have not already done so.

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.

FINTRAC Information Requests for Bitcoin ATM Operators

As compliance geeks, we’re compelled to open with some important caveats. This post is made by Outlier Compliance Group, which is a private consulting firm, and does not speak in any official capacity for the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC), Canada’s anti-money laundering (AML) regulator. If FINTRAC indicates something that does not align with the views expressed here, it’s safe to assume that their position is the correct one (and if that’s the case, please let us know).

What’s the issue?

Several clients and colleagues called us with questions about email requests for information received from FINTRAC in January/February 2025. These requests were received by virtual currency (VC) dealers that operate one or more automated teller machines (ATMs). To some, these emails seemed unusual, and in a time in which we’re all bombarded with scams, it makes sense to check the legitimacy.

As a first step, we always check the sender. In this case, the email was from MSBRegistration@fintrac-canafe.gc.ca which is a legitimate FINTRAC email address. All FINTRAC email addresses end in “@fintrac-canafe.gc.ca”. It is noteworthy that there may be some phishing red flags present, although these were legitimate emails:

  • The receiving company is not specified (other than by the receiver’s email address);
  • The intended recipient is not named (other than by the receiver’s email address), and at least one email that we saw was directed to “to whom it may concern”;
  • The request for information asks for a response by email, rather than a more secure channel such as Canada Post’s ePost service, which FINTRAC generally uses to receive information during examinations.

FINTRAC has confirmed that these requests for data are legitimate, and that businesses receiving the requests that prefer to send data via a secure method (ePost) may request to do so.

What’s being requested?

The subject line of the email is “Request for Wallet Addresses Information under subsection 63.1(2) of the PCMLTFA” and, as implied, FINTRAC is requesting comprehensive lists of the VC addresses used by the companies.

While the data being requested (virtual currency wallet addresses) is public in some ways (transactions are posted on public blockchains), not all wallets are attributed to specific businesses, and there are many reasons that a business may prefer to exchange this data with the regulator securely.

No time period is provided in the request, and for some companies, particularly those that use hierarchical deterministic wallet types, which generate new addresses for every transaction, this can mean thousands of addresses. If this is the case, we recommend reaching out to FINTRAC as soon as possible, as a smaller time period may suffice for the regulator’s analysis, depending on the transaction volumes.

What is Section 63.1(2) of the PCMLTFA?

The Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA) section 63.1(2) reads:

Obligation to provide information

(2) The person or entity on whom the notice is served shall provide, in accordance with the notice, the documents or other information with respect to the administration of Part 1 or 1.1 that the authorized person may reasonably require.

In plain language, this means that FINTRAC has the right to request information from reporting entities, and they are exercising this right by sending the request that you’ve received.

Did you receive an email?

If you are a VC ATM operator, and you aren’t sure if you’ve received a request, check your e-mail (including spam and deleted folders) using the search terms:

  • Request for Wallet Addresses Information under subsection 63.1(2) of the PCMLTFA; and/or
  • MSBRegistration@fintrac-canafe.gc.ca.

We aren’t sure if this request was sent to all VC ATM operators, or only a select group (again, we don’t speak for FINTRAC), but if you did receive a request, it’s important to respond to it within the time indicated in the email. Like all requests from regulators, it is time sensitive.

Need a hand?

If you have questions about how to respond to FINTRAC’s request, or AML generally, please feel free to contact us here, or by email at info@outliercanada.com.

New Year – New Regs. Final Amendments to the Proceeds of Crime (Money Laundering) and Terrorist Financing Act and Regulations – January 2025

Background

On January 1, 2025 final amendments to regulations under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act were published in the Canada Gazette (SOR 2024-266 and SOR 2024-267). The most noteworthy changes fall under the Proceeds of Crime (Money Laundering) and Terrorist Financing Regulations. The final amendments include changes or new requirements related to:

  • MSB registration framework;
  • Sanctioned property reporting;
  • White-label ATMs;
  • Real estate (title insurance and unrepresented third-parties); and
  • Casino disbursements.

The regulatory impact statement states that these amendments implement measures announced in previous budgets, the 2023 Fall Economic Statement, our Parliamentary Review and Cullen Commission report ahead of Canada’s upcoming mutual evaluation by the Financial Action Task Force (FATF).

To make reading these changes a little easier, as we always do, (thanks Rodney) a redlined version of the regulations, with new content showing as tracked changes, is attached here.

What’s Changing?

From the draft regulations published back in July 2024, there have not been significant changes to the final publication. Some changes were made to address potential gaps, inconsistencies, and business realities in the context of application, and to provide greater flexibility in the coming-into-force dates. The most notable change from the draft relates to obligations for title insurers.

Below is a summary of what we feel are the most noteworthy changes and incoming requirements:

MSB Registration Framework

Money Services Businesses (MSBs) must register with FINTRAC. As part of registration, it will now be required to submit the following documentation as part of the application.

If the applicant is a corporation:

  • a certificate of incorporation or the most recent version of any other record that confirms its existence as a corporation and contains its name and address and the names of its directors; and
  • a document that sets out the ownership, control and structure of the corporation.

If the applicant is an entity other than a corporation:

  • the partnership agreement, articles of association or the most recent version of any other record that confirms its existence and contains its name and address; and
  • a document that sets out the ownership, control and structure of the entity.

Additionally, domestic MSBs will have to submit criminal record checks covering the CEO, President and directors, as well as every person who owns or controls 20% or more of the MSB. These criminal record checks must also be updated every two years as part of the renewal process. Where an MSB uses an agent or mandatary, criminal record checks are also required on those individuals. It should be noted that the 20% threshold does not align with reporting entity requirements for beneficial owners, which is at 25%. While industry asked for these numbers to align, Finance did not accept the change.

Sanctioned Property Reporting

The final amendments expand the definition of a listed person or entity to capture individuals and entities listed under all Canadian sanctions legislation including Special Economic Measures Act, the United Nations Act and the Justice for Victims of Corrupt Foreign Officials Act.

These changes also result in a new sanctioned property report. The report includes information fields such as:

  • how the reporting entity came to know that property in question is owned, held or controlled by or on behalf of listed person or entity;
  • the name of any person or entity that owns, holds or controls property on behalf of listed person or entity;
  • the name of any person or entity that has an interest or right in or is authorized to deal with property; and
  • a description of transactions involving property within previous six months.

White-Label ATMs

Final amendments will require those that provide acquiring services to white-label ATMs (WLATMs) to register with FINTRAC as MSBs and implement a full AML compliance regime. Similar to that of other regulated entities, a compliance regime will have to be in place which includes the following:

  • Appointment of a Compliance Officer;
  • Development of a documented compliance program (policies, procedures, risk assessment, ongoing training);
  • Conducting compliance effectiveness reviews;
  • Reporting certain transactions;
  • Identifying customers;
  • Keeping records;
  • Risk ranking customers and business relationships;
  • Conducting transaction monitoring and watchlist screening;
  • Conducting enhanced due diligence and transaction monitoring for high-risk customers and business relationships; and
  • Follow Ministerial Directives, sanctions, and other relevant transaction restrictions.

In addition to the records that must be retained as an MSB, WLATM operators will need to keep the following records:

  • Information on who owns, leases or operates a private automated banking machine in respect of which they provide acquirer services;
  • Information on the source of the cash that is loaded into a private automated banking machine in respect of which they provide acquirer services;
  • Information on account holder of a settlement account for a private automated banking machine in respect of which they provide acquirer services; and
  • The source and method used to transport cash loaded into a private automated banking machine.

Real Estate – Title Insurance

Final amendments will make title insurers reporting entities under Canada’s AML/ATF Regime. Title insurers are defined as a person or entity that is engaged in the business of providing title insurance, as defined in the schedule to the Insurance Companies Act when they provide a title insurance policy to the purchaser of real property or an immovable.

Specifically, title insurers will be required to develop a compliance program, meet certain identity verification requirements, submit required reporting to FINTRAC, keep certain records, and follow application Ministerial Directives.

It should be noted that changes were made to remove certain record-keeping obligations noted in the draft regulations. Title insurers will only be required to keep records of information that is obtained for the sale of title insurance. The following are the specific records that must be kept for every title insurance policy provided to a purchaser of real property or an immovable:

  • the name and address of the purchaser and, in the case of a person, their date of birth;
  • the legal description and address of the real property or immovable;
  • the closing date of the purchase;
  • the purchase price;
  • the amount of any loan secured by a mortgage on the real property or a hypothec on the immovable and the name of the lender;
  • if known, the name of the vendor; and
  • any title information respecting the real property or immovable that is found in the land registry in which the title to the real property or immovable is recorded.

Given title insurers’ business model, wherein they do not have direct contact with the purchasers of title insurance, final amendments have been updated to remove beneficial ownership requirements as well as exempt third-party determination and PEP requirements for title insurers.

Real Estate – Unrepresented Parties

Final amendments will require real estate brokers and sales representatives to identify the party or parties (including third parties) not represented in real estate transactions. This is a change from the current requirement where real estate brokers and sales representatives are only required to take “reasonable measures” to identify unrepresented parties.

What Next?

The requirements summarized above come into force October 1, 2025. In the meantime, FINTRAC will have to issue guidance which has been promised before the noted in-force date.

While we await guidance, newly regulated entities should start working on developing their compliance program in anticipation of the respective in-force dates noted above. Other Reporting Entity types should take note of MSB framework changes and changes related to sanction property as it relates to their business model.

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.

Proposed 2025 AML Changes: New Import/Export Declarations, Information Sharing, Beneficial Ownership Transparency and New Reporting Entities

Background

On November 30, 2025 draft amendments to the regulations under the Proceeds of Crime Money Laundering and Terrorist Financing Act (PCMLTFA) were published in the Canada Gazette.

In the interest of time, we have published this blog summarizing what we feel to be the most noteworthy amendments but will follow up with a redlined version of the regulations, with new content showing as tracked changes, at a later date.

The noted changes are meant to improve Canada’s anti-money laundering (AML) and Counter Terrorist Financing (CTF) regime and implement measures announced in Budget 2022, Budget 2023, Budget 2024, the 2023 Fall Economic Statement and Canada’s last Parliamentary Review. This is addressed through six separate measures including the introduction of new regulated entities.

Measure 1: Trade Based Money Laundering (TBML)

The draft amendments include a new Proceeds of Crime (Money Laundering) and Terrorist Financing Reporting of Goods Regulation.

Currently, the Canada Border Services Agency (CBSA) can require receipts and invoices for the purposes of determining compliance with import laws, but they cannot request these documents for the purposes of detecting money laundering or terrorist financing.

 Under the proposed regulations, anyone who is importing or exporting goods into or out of Canada needs to file a declaration with the CBSA as follows:

  • whether the goods are proceeds of crime as defined by subsection 462.3(1) of the Criminal Code or are goods related to money laundering, to the financing of terrorist activities or to sanctions evasion; and
  • that the goods are actually being imported or exported, as the case may be.

The latter is meant to address “phantom shipments” that are used in trade-based money laundering (TBML) which was identified as a primary money laundering concern in Canada’s last Financial Action Task Force (FATF) evaluation.

The new regulations also bring about substantial record keeping requirements which include information such as the origin, marking, purchase, importation, costs and value of the goods, and records relating to payment for the goods. It’s noteworthy that FINTRAC’s 2023-24 Annual Report lists customs and excise related offences as being in the top five predicate offences related to case disclosures during the period.

Measure 2: Information Sharing

Information sharing between private entities has been recognized by the FATF as an important tool for disrupting money laundering and terrorist financing. Budget 2024 introduced legislative amendments to the Criminal Code and the PCMLTFA to enhance the ability of reporting entities to share information with each other as it relates to the detection of money laundering and terrorist financing.

The draft amendments introduce measures to allow for reporting entities to share information with each other to detect and deter money laundering, terrorist financing, and sanctions evasion, while maintaining privacy protections for personal information.

Reporting entities that wish to share information (it’s voluntary) would be required to establish and implement a code of practice for disclosing, collecting and using personal information without consent. The code must:

  • describe the purposes for which an individual’s personal information may be disclosed, collected or used without their knowledge or consent;
  • describe the manner in which an individual’s personal information may be disclosed, collected or used without their knowledge or consent;
  • describe the measures to be taken to ensure the protection of personal information, including measures concerning the retention of such information and the keeping of records;
  • include information demonstrating that the code complies with the requirements of the Act.

The Code must be provided to the Office of the Privacy Commissioner of Canada (OPC) for approval and to FINTRAC for comment in advance of use. The OPC would have a prescribed period of 90 days to approve a Code. The proposed amendments also include procedures for reporting entities to modify the Code, which would need the OPC’s approval if the changes are material. Reporting entities would be required to resubmit their Codes every five years regardless of changes or not.

Measure 3: Discrepancy Reporting

The draft amendments will require reporting entities who are dealing with a Canada Business Corporations Act (CBCA) corporation to report any material discrepancy it finds as part of obtaining and verify the accuracy of beneficial ownership information under current AML requirements. The reporting requirement will not apply if the material discrepancy is resolved within 15 days after the day on which it is identified. Currently, what is deemed to be material is not well defined (outside of missing beneficial owners).

The Information with respect to the discrepancy includes:

  • Name of reported company and identifying number on its certificate of incorporation, amalgamation or continuance,
  • Date on which discrepancy was identified, and
  • Description of discrepancy.

In case you missed it, the federal government launched a public, searchable beneficial ownership registry of federal corporations in early 2024.

Measure 4, 5 and 6: New Reporting Entities

The draft amendments outline the inclusion of three new regulated entities which were announced in Budget 2024 and where noted as concerns during Canada’s last FATF mutual evaluation: factoring companies (referred to as “factors”), cheque cashing companies, and financing and leasing companies.

Similar to that of other regulated entities, a compliance regime will have to be in place which includes the following:

  • Appointment of a Compliance Officer;
  • Development of a documented compliance program (policies, procedures, risk assessment, ongoing training);
  • Conducting compliance effectiveness reviews;
  • Reporting certain transactions;
  • Identifying customers;
  • Keeping records;
  • Risk ranking customers and business relationships;
  • Conducting transaction monitoring and watchlist screening;
  • Conducting enhanced due diligence and transaction monitoring for high-risk customers and business relationships; and
  • Follow Ministerial Directives, sanctions, and other relevant transaction restrictions.

4. Factoring Companies

Factoring companies supply liquidity to a customer in exchange for the cash value of a certain amount of the customer’s accounts receivable (i.e. invoices) to be collected later by the factoring company. A factor is defined as a person or entity that is engaged in the business of factoring, with or without recourse against the assignor.

The draft amendments require factoring companies to keep certain records which include:

  • an information record in respect of the person or entity with whom it enters into the agreement;
  • 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 agreement 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 factor;
  • a record of the financial capacity of the person or entity with which it enters into the agreement and the terms of the agreement;
  • for any payment it makes, a record of:
    • the date of the payment,
    • if the payment is in funds, the type and amount of each type of funds involved,
    • if the payment is not in funds, the type of payment and its value,
    • the method by which the payment is made,
    • the name of every person or entity involved in the payment, and
    • every account number or other equivalent reference number connected to the payment; and
  • a receipt of funds record in respect of every amount of $3,000 or more that it receives, unless the amount is 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.

5. Cheque Cashing

Cheque cashing is a financial service that offers clients the ability to cash a cheque immediately and hold free, for a fee.

Cheque cashing where cheques are not payable to a named person or entity is not currently captured under the PCMLTFA, but draft amendments would introduce such as regulated activity.

In addition to current money services business (MSB) requirements, the draft amendments require keeping certain records in respect to where an MSB cashes a cheque for more than CAD 3,000, including:

  • 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.

 6. Finance and Leasing Entities

The draft amendments define a financing or leasing entity 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. (entité de financement ou de bail)

The draft amendments require financing or leasing entities to keep certain records in respect of every financing or leasing arrangement which include:

  • 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?

The proposed changes related to measures 1, 3, 4, 5 and 6 would come into force on October 1, 2025, and the proposed amendments related to information sharing would come into force immediately on final publication in the Canada Gazette.

There is a 30 day comment period ending December 30, 2024 for the proposed regulations. It is strongly recommended that industry, and potentially impacted companies, review carefully and provide feedback. Comments can be submitted online via the commenting feature after each section of the proposed changes, or via email directly to Erin Hunt, Director General, Financial Crimes and Security Division, Financial Sector Policy Branch, Department of Finance, 90 Elgin Street, Ottawa, Ontario, K1A 0G5.

We’re Here To Help

If you have questions related to the proposed changes, or need help starting to plan, you can get in touch using the online form on our website, by emailing us directly at info@outliercanada.com, or by calling us toll-free at 1-844-919-1623.

Are You BOC Registration Ready?

By now, you have likely heard of the Retail Payment Activities Act (RPAA) and associated incoming requirements, which includes the requirement to register with the Bank of Canada (BOC). To help make this a bit easier, Outlier has put together a spreadsheet that will help if you are an organization that needs to register. The RPAA (including registration) generally applies to PSPs that perform any of the following five payment functions: 

  • the provision or maintenance of a payment account;
  • the holding of end-user funds until withdrawn by the end user or transferred to another individual or entity;
  • the initiation of a payment at the request of an end user;
  • the authorization of an electronic funds transfer, transmission, reception, or facilitation of a payment message; or
  • clearing or settlement.

The requirements apply to businesses with payment activities with a place of business in Canada, or those that provide services to end users in Canada. This includes activities that many Money Services Businesses (MSBs) provide. The BOC has provided a tool to determine if an organization must register with the BOC. For organizations that do register, the registration provisions of the RPAA will take place between November 1, 2024 to November 15, 2024. It should be noted that this is different from your MSB registration under AML requirements.

The registration application itself consists of 18 sections and comprises over 200 questions. While a substantial amount of information and data is needed, the majority of information relates to business and corporate information. This includes: 

  • Ownership structure and financial information;
  • Information related to your product services and flow of funds;
  • Information related users;
  • Value/volumes related to transactions;
  • Geographic perimeter; and
  • Information related to 3rd party vendors.

It is not a requirement to provide your operational risk management and incident response framework (policy and procedures) as part of the application process.

To help aid in the registration process, we have put together a spreadsheet that will allow you to keep needed data and information organized. It will also allow you to determine if you need  assistance with sections of the registration, or understanding what these changes mean to your business. The spreadsheet is a tool to assist with registration and not meant to replace the registration guidance the BOC has published. 

Note: requirements that introduce prescribed operational risk management standards under this new regime come into force at a later date on September 8, 2025.

Outlier is here to help, so please get in touch.

Regulated Entities Now Covering the Bill For FINTRAC Compliance Costs

Written with Heidi Unrau

 

We have recently become aware that some reporting entities may not be up to speed on a new piece of regulation that came into force earlier this year. If your business has received an invoice from The Financial Transactions and Reports Analysis Centre of Canada (FINTRAC), you will want to read this article.

As of April 1, 2024, FINTRAC officially transferred the cost of its compliance activity from taxpayers to the businesses it regulates, referred to as reporting entities (RE). The move comes four years after the government announced its intention to cut the purse strings in its 2020 Fall Economic Statement. This change allows FINTRAC to start recovering costs from the 2024-2025 fiscal year.

Why the Change?

FINTRAC, Canada’s financial intelligence agency, was previously bankrolled by the taxpayer through the federal budget. The purpose of the new funding model is to align the costs of compliance with those responsible for adhering to anti-money laundering regulations. Simply put, the businesses that are legally required to comply should be the ones funding the oversight needed to ensure compliance. The move aligns with other regulatory agencies that have already established funding models allowing them to recover the costs of their supervisory functions.

Each year, FINTRAC will forecast the total cost of the program for the next three fiscal years. This will determine the amount charged to reporting entities for the upcoming year. They must aso communicate how funds were spent against plans and priorities during the previous fiscal year. This information is included in FINTRAC’s Departmental Results Report.

How the Funding Model Works

Federally regulated financial institutions such as banks, trust and loan companies, and insurance companies are always required to contribute a minimum base amount. All other entities only pay if they submit 500 or more threshold transaction reports to FINTRAC in a fiscal year (i.e. large cash transaction reports [LCTRs], large virtual currency transaction reports [LVCTRs], electronic funds transfer reports [EFTRs], and casino disbursement reports [CDRs]). These ‘other entities’ include but are not limited to:

  • Money Services Businesses
  • Dealers in Precious Metals and Stones
  • Real Estate Brokerages
  • Securities Dealers
  • Casinos
  • Etc.

The Cost Formula

FINTRAC calculates how much reporting entities need to pay based on four key factors:

  1. Type of Entity: Federally regulated entities are charged differently from non-federally regulated entities. These include banks, trust and loan companies, and insurance companies. Federally regulated entities are subject to a base amount, whereas non-federally regulated entities are not subject to this particular fee.
  2. Base Amount: This is the minimum starting fee based on the total value of assets controlled by a federally regulated entity, excluding the assets of their subsidiaries. Base amounts are tiered based on asset value in Canadian dollars. There are nine asset value ranges, from $1 to $1 trillion, with corresponding base amounts ranging from $5,000 to $250,000.
    Range of asset values Corresponding base amount
    $1,000,000,000,000 or more $250,000
    Between $500,000,000,000 and $999,999,999,999 $200,000
    Between $100,000,000,000 and $499,999,999,999 $150,000
    Between $10,000,000,000 and $99,999,999,999 $100,000
    Between $1,000,000,000 and $9,999,999,999 $75,000
    Between $500,000,000 and $999,999,999 $50,000
    Between $100,000,000 and $499,999,999 $25,000
    Between $10,000,000 and $99,999,999 $10,000
    Between $1 and $9,999,999 $5,000

    Source: FINTRAC

  3. Remaining Compliance Cost: This is the leftover cost after collecting the base amounts, divided among all types of reporting entities.
  4. Transaction Volume: Businesses that report over 500 large transactions to FINTRAC pay an additional fee on top of the base amount. Federally regulated banks are not subject to this reporting threshold.

Therefore, the more assets you have and transactions reported to FINTRAC, the higher your final bill will be. Each type of business has its own formula for calculating their share of the cost:

Type of Entity (Business) How Charges Are Calculated
Federally Regulated Banks Base Fee + extra charges based on the value of Canadian Assets.
Trust & Loan Companies, Life Insurance Companies Fewer than 500 reports: Base Fee only.

500 or more reports: Base Fee + extra charges based on value of Canadian assets and volume of large transactions reported.
All Other Entities Over 500 reports: Charges based on volume of large transactions reported compared to others in the same category.

Case Study: How Much Will They Pay?

A small, family-owned currency exchange kiosk in Winnipeg, Manitoba, operates from a single location and is not part of a chain. FINTRAC regulates this type of business as a Money Services Business (MSB). The store typically submits roughly 700 large cash transaction reports each year. Since they exceed the 500 reports threshold, FINTRAC calculates their charges like this (based on industry averages):

Calculation

  1. Base Amount: Not applicable because it is not a federally regulated financial institution (FI).
  2. Remaining Compliance Cost: Total compliance cost to be divided is $33,110,000. This is the sum of all base amounts subtracted from the annual cost of FINTRAC’s compliance program.
  3. Total Reports Submitted by All Entities: 35,000,000 transaction reports were submitted to FINTRAC for the year by all reporting entities, including banks.
  4. Total Reports Submitted by Only Non-Bank Entities: 3,500,000 transactions were submitted to FINTRAC by non-bank entities only, regardless of the transaction reporting threshold amount.
  5. Total Reports Submitted Over the Threshold by Non-Bank Entities: 3,425,000 transactions were submitted to FINTRAC by non-bank entities exceeding the 500-transaction reporting threshold.
  6. Number of Reports Submitted by The Currency Exchange Kiosk: This is the total number of transactions reported to FINTRAC by the currency exchange kiosk in Winnipeg, MB.

Final Charge

Using FINTRAC’s formula: $33,110,000 x (3,500,000 ÷ 35,000,000) x (700 ÷ 3,425,000) = $676.70

Result

The currency exchange kiosk’s total charge for the year would be approximately $676.70. Based on their reporting activity, the bill reflects their share of FINTRAC’s overall compliance costs. Because the kiosk is not a federally regulated bank, trust, loan, or insurance company, the base amount does not apply.

FINTRAC will notify the business via email with an invoice for the cost assessment. The total amount owed is final, conclusive, binding, and due in full upon receipt of the invoice.

Impact on Your Business

The additional financial burden is not ideal, especially for small businesses, but there are ways you can prepare for it. First, you’ll need to budget effectively to avoid surprise charges. Visit the FINTRAC website for a detailed breakdown of the formula used for your type of business, known as ‘Type of Entity’.

Exact charges will vary from year to year depending on the value of your Canadian assets (if applicable), the number of large transactions reported (more or less than 500), and FINTRAC’s compliance cost analysis.

Next, and most importantly, you need an effective and efficient anti-money laundering program to avoid the cost of non-compliance. Violations can result in reputational damage that negatively impacts your business as well as potentially expensive fines, known as administrative monetary penalties (AMPs). FINTRAC has recently levied record-breaking fines for serious violations by repeat offenders. These penalties are preventable and well within your control.

Need a Hand?

If you have any questions or concerns about the new funding model, reach out to us today. We’re here to help you every step of the way, from understanding your new financial obligation, to building, reviewing, or fine-tuning your AML program.

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