On March 26, 2025, the Department of Finance published in the Canada Gazette, Part II two regulations under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA):
- SOR/2025-67 Proceeds of Crime (Money Laundering) and Terrorist Financing Reporting of Goods Regulations; and
- SOR/2025-68 Regulations Amending the Proceeds of Crime (Money Laundering) and Terrorist Financing Regulations and the Proceeds of Crime (Money Laundering) and Terrorist Financing Administrative Monetary Penalties Regulations.
The regulations establish requirements relating to trade-based financial crime, bring factors, cheque cashers and financing or leasing entities within the scope of the PCMLTFA, impose new requirements relating to clients' beneficial ownership registrations in high-risk situations, and facilitate information sharing between reporting entities.
Trade-Based Financial Crime
Starting April 1, 2025:
- Entities engaged in import and export activities will be required to declare whether their imported or exported goods are proceeds of crime or are otherwise related to money laundering, terrorist financing, or sanctions evasion.
- Importers, exporters, bonded warehouses and producers of exported goods will be required to keep certain prescribed records.
- An administrative monetary penalty scheme will be established to promote compliance with Part 2.1 of the PCMLTFA on the Reporting of Goods.
AML Obligations for Factors, Cheque Cashers and Financing or Leasing Entities
Starting April 1, 2025, factors, cheque cashers and financing or leasing entities will be included as reporting entities under the PCMLTFA. In addition, cheque cashers will be categorized as a money services business. In the first year following the coming into force dates, Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) will put emphasis on engagement, outreach and guidance activities related to new regulatory obligations in order to foster greater awareness and understanding amongst new reporting entities. This will include industry consultation to develop guidance so new reporting entities will be well positioned to implement and mature their compliance programs.
Factors must:
- Implement a compliance program;
- Verify the identity of persons and entities for certain activities and transactions, subject to certain exceptions;
- Carry out other customer due diligence activities as prescribed by FINTRAC and submit prescribed reports to FINTRAC;
- Keep prescribed records, including a receipt of funds record for each payment of $3,000 or more received; and
- Apply ministerial directives, as applicable.
Cheque cashers must:
- Register as a money services business (MSB) and fulfill all obligations under the PCMLTFA that apply to MSBs, as applicable;
- Implement a compliance program;
- Verify the identity of a client who cashes a cheque valued at $3,000 or more, subject to certain exceptions;
- Carry out other customer due diligence activities as prescribed by FINTRAC and submit prescribed reports to FINTRAC; and
- Apply ministerial directives, as applicable.
Financing and leasing entities become subject to the PCMLTFA when they engage in financing or leasing of (i) property for business purposes, other than real property or immovables, (ii) property valued at $100,000 or more, other than real property or immovables, or (iii) passenger vehicles in Canada. If subject to the PCMLTFA, they must:
- Implement a compliance program;
- Verify the identity of persons and entities for certain activities and transactions, subject to certain exceptions;
- Carry out other customer due diligence activities as prescribed by FINTRAC and submit prescribed reports to FINTRAC;
- Keep prescribed records, with certain exceptions; and
- Apply ministerial directives, as applicable.
Corporate Beneficial Ownership
Starting October 1, 2025:
- Reporting entities will be required to report to the Director appointed under the Canada Business Corporations Act any material discrepancies between their records and a corporate client’s registry filings to the federal beneficial ownership registry in circumstances where they assess there is a high risk of a money laundering or terrorist financing offence.
- This reporting obligation expands on existing PCMLTFA provisions to obtain and verify corporate beneficial ownership information when verifying an entity’s identity.
Information Sharing
Since March 4, 2025:
- Reporting entities will be more easily able to share information with each other while maintaining privacy protections, with oversight from the Office of the Privacy Commissioner of Canada (“Commissioner”).
- Reporting entities that choose to make use of the information disclosure exception will be required to develop codes of practice explaining how the disclosure exception will be applied. Codes of practice must meet certain prescribed requirements.
- Reporting entities will be required to provide the codes of practice to the Commissioner for approval and to FINTRAC for comment in advance of use.
- Reporting entities will be required to notify the Commissioner and FINTRAC if any revisions are made to the codes of practice. They must also resubmit codes of practice to the Commissioner for approval and to FINTRAC for comment every five years, regardless of whether any changes were made.
