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 anti-Terrorist Financing (ATF) 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.