The PCMLTFA is the Canadian federal statute that establishes the country's anti-money laundering and anti-terrorist financing regime; its full title is the Proceeds of Crime (Money Laundering) and Terrorist Financing Act, passed in 2000 as chapter 17 of the Statutes of Canada. It defines which businesses are reporting entities, requires them to identify clients, keep records, report certain transactions and maintain a compliance program, and creates the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) as the agency that receives reports and supervises compliance.
The Act is the source of legal obligation. FINTRAC administers it and publishes detailed guidance, but guidance explains how FINTRAC interprets the law; the binding requirements are in the Act and in the regulations made under it.
History of the PCMLTFA
The statute was enacted in 2000 as the Proceeds of Crime (Money Laundering) Act, replacing earlier record-keeping legislation and introducing mandatory reporting of suspicious transactions. After the September 2001 attacks, the Anti-terrorism Act extended it to terrorist financing and renamed it. Later amendments brought in registration of money services businesses with FINTRAC, extended coverage to dealers in virtual currency and, from 2020, to a foreign money services business serving clients in Canada. Further sectors, including armoured car services and mortgage administrators, were added in the 2020s. Canada's regime is regularly assessed against the standards of the Financial Action Task Force (FATF).
Structure: the Act and its regulations
The Act sets out the framework, while most operational detail lives in regulations, including the Proceeds of Crime (Money Laundering) and Terrorist Financing Regulations, the Suspicious Transaction Reporting Regulations, the Registration Regulations, the Administrative Monetary Penalties Regulations and the Cross-border Currency and Monetary Instruments Reporting Regulations. The cross-border part of the Act, requiring travelers to declare currency of CAD 10,000 or more, is enforced by the Canada Border Services Agency.
Reporting entities
Reporting entities include banks, credit unions and trust and loan companies, life insurers, securities dealers, money services businesses including virtual currency dealers, casinos, real estate brokers and developers, dealers in precious metals and stones, accountants and British Columbia notaries. Lawyers are not covered for most purposes following a 2015 Supreme Court of Canada decision on solicitor-client privilege.
Core obligations
- Compliance program: appoint a compliance officer, maintain written policies, conduct a documented risk-based assessment, deliver training and review the program's effectiveness every two years, a requirement similar to an independent AML review.
- Know your client: verify identity, determine third-party involvement and beneficial ownership, and identify politically exposed persons and heads of international organizations.
- Record keeping, generally for at least five years.
- Reporting to FINTRAC, including suspicious transaction reports, large cash transaction reports of CAD 10,000 or more, electronic funds transfer reports for international transfers of CAD 10,000 or more, large virtual currency transaction reports and terrorist property reports.
- Ministerial directives on transactions involving specified high-risk jurisdictions.
Transactions by the same person totaling the threshold within 24 hours must generally be aggregated, which limits the effect of structuring. The Act also contains travel rule obligations for funds and virtual currency transfers, similar to the FATF Travel Rule.
Enforcement
FINTRAC examines reporting entities and may impose administrative monetary penalties for violations, publicly naming penalized businesses. It can also refuse or revoke MSB registration. Serious contraventions, such as failing to report suspicious transactions or operating an unregistered MSB, are criminal offences prosecuted in the courts. FINTRAC discloses financial intelligence to police and security agencies when it has reasonable grounds to suspect it would be relevant to investigating money laundering or terrorist financing. Payment service providers in Canada must also consider the separate Retail Payment Activities Act, which the Bank of Canada supervises and which covers operational and safeguarding standards rather than money laundering. For the agency itself, see the FINTRAC regulator profile.