Anti-money laundering (AML) is the set of laws, regulations, and procedures that are designed to prevent, detect, and disrupt the process of money laundering. Money laundering is the act of disguising the proceeds of illegal activities as legitimate funds. It is a serious crime that can undermine the integrity of financial systems and has the potential to finance terrorism and other illegal activities.
In Canada, the AML regime is administered by the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC), which is an independent government agency that is responsible for collecting, analyzing, and disseminating financial intelligence to assist in the detection and prevention of money laundering and terrorist financing.
AML laws in Canada
The main AML laws in Canada are the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA) and its associated regulations. The PCMLTFA establishes the legal framework for the prevention and detection of money laundering and terrorist financing in Canada and sets out the obligations of reporting entities, including financial institutions, money services businesses, and other designated sectors.
Under the PCMLTFA, reporting entities are required to:
- Implement a compliance program that includes policies, procedures, and controls to prevent and detect money laundering and terrorist financing.
- Report suspicious transactions and attempted transactions to FINTRAC.
- Report large cash transactions and cross-border currency movements to FINTRAC.
- Keep records of transactions and client information for a certain period of time.
- Identify and verify the identity of their clients.
- Report certain transactions or activities to FINTRAC, including those involving politically exposed persons (PEPs) and high-risk countries.
FINTRAC’s role in AML in Canada
FINTRAC plays a critical role in the AML regime in Canada by:
- Receiving and analyzing financial intelligence reports from reporting entities.
- Disseminating financial intelligence to law enforcement agencies and other partners.
- Providing guidance and assistance to reporting entities to help them understand and comply with their AML obligations.
- Conducting compliance examinations of reporting entities to ensure they are complying with the PCMLTFA and its associated regulations.
- Imposing administrative monetary penalties on reporting entities that fail to comply with their AML obligations.
International cooperation in AML
Canada is a member of the Financial Action Task Force (FATF), which is an intergovernmental organization that sets global standards for AML and combats terrorist financing. As a member of the FATF, Canada cooperates with other countries to exchange financial intelligence and to address AML and terrorist financing risks.
In conclusion, AML is an important part of Canada’s efforts to combat money laundering and terrorist financing. The AML regime in Canada is administered by FINTRAC and is supported by a network of reporting entities and international partners. By implementing effective AML measures, Canada can help to prevent the proceeds of illegal activities from being laundered and used to finance terrorism and other illegal activities.