AML in Canada

In Canada, there are two key laws aimed at preventing money laundering and terrorist financing, namely the Criminal Code and the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA). These laws play an integral role in Canada’s Anti-Money Laundering (AML) regime. The obligations outlined in the Criminal Code apply to all individuals and businesses, while the PCMLTFA specifically includes institutions under its obligations. Financial institutions, credit companies, insurance companies, casinos, and real estate brokers in Canada are required to adhere to these AML laws.

Some of the obligations imposed on these organizations in line with the PCMLTFA are as follows:

  1. Establishing a compliance program.
  2. Identifying and verifying customer information.
  3. Maintaining records of customer transactions.
  4. Reporting suspicious transactions.

Non-compliance with AML laws in Canada can lead to severe penalties and imprisonment, as outlined in the Criminal Code and the PCMLTFA.

In 2019, Canada implemented changes to its AML regulations in response to advancements in financial technology and the increasing prevalence of financial crimes. These new regulations enabled Canada to adopt more modern measures against money laundering and ensure compliance with recommendations from the Financial Action Task Force (FATF). Regulated entities are required to make necessary adjustments to their AML programs in accordance with the new regulations. Additionally, heightened measures are expected for politically exposed persons (PEPs), as they represent high-risk customers for financial institutions. Canada emphasizes the importance of actively combating financial crimes by implementing a risk-based approach within organizations.

Canada has established various organizations dedicated to combating money laundering, with a central entity known as FINTRAC. The Financial Transactions and Reports Analysis Center of Canada (FINTRAC) plays a crucial role in Canada’s efforts to effectively address financial crimes. Businesses operating under Anti-Money Laundering (AML) obligations in Canada are required to report suspicious transactions to FINTRAC. These reported transactions are analyzed by FINTRAC, which then takes appropriate measures based on its findings.

As an independent organization, FINTRAC reports to the Canadian Ministry of Finance. Its mandate includes the regulation and supervision of agencies responsible for strengthening AML frameworks within Canada. Furthermore, FINTRAC serves as the representative of Canada in the international arena of AML and actively collaborates with other regulatory bodies. Through these collaborations, FINTRAC works to promote effective AML measures both domestically and globally.