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.