Effective June 1, 2020, Canadian cryptocurrency exchanges and foreign cryptocurrency exchanges serving Canadians will be required by Canada’s Finance Department to register as Money Service Bureaus (MSBs) with FINTRAC (Financial Transactions and Reports Analysis Centre of Canada) to comply with recent amendments to the Proceeds of Crime (Money Laundering) and Terrorist Financing Act, 2019 (PCMLTFA, 2019, or the Amendments).
The definition of an MSB will be expanded to include domestic and foreign businesses that are “dealing in virtual currency.” These “dealing in” activities will now include virtual or cryptocurrency exchange services and value transfer services. As required of all MSBs, individuals and entities dealing in cryptocurrencies would need to fulfil all obligations, including implementing a full compliance program and registering with FINTRAC. Those reporting entities receiving $10,000 or more in cryptocurrency in deposit or any form of payment, would have to meet record keeping, identification, and reporting obligations.
According to the Finance Department, the goal of the Amendments is to close the gaps the exist in Canada’s AML/ATF Regime, by addressing the inherent vulnerabilities in cryptocurrencies for money laundering and terrorist financing. In order to do this in a way that is both consistent with the existing legal framework, while not unduly hindering innovation, the Amendments have been targeted at individuals and entities engaged in the business of dealing in cryptocurrencies, and not the cryptocurrencies themselves.
Canada Gazette, Part 2, Volume 153, Number 14: Regulations Amending Certain Regulations Made Under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act, 2019, can be found on the website of the Government of Canada.
For more information, please call Barbara Hendrickson at BAX Securities Law (416) 601-1004.
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