Canadian AML Compliance: A Catch-Up Game

Canada AML Beam Solutions transaction monitoring

Canada’s anti-money laundering standards are perceived as lagging behind those of other western countries. A 2016 report by the Financial Action Task Force expressed concern that Canada is insufficiently monitoring certain high risk sectors.

Specifically, legal counsel, law firms, and Quebec notaries are not covered and, according to the report, “constitute a significant loophole in Canada’s AML/CFT framework.” In addition, the Canadian government is specifically looking at establishing AML compliance obligations for certain entities including more kinds of lending operations, privately owned automated-teller machines, certain gambling institutions, and high-value goods dealers, among others. While these types of companies are currently unregulated with respect to money laundering, they create money laundering opportunities and pose a risk to the financial ecosystem.

Canada is also working towards regulating fintech companies and cryptocurrency. The current proposal for fintechs is structured to allow for a “sandbox” period to test out technology prior to the full force of regulation taking effect. Recently, Canada also released an official draft of new regulations that will treat cryptocurrency exchanges and payment processors as money service businesses.

Although Canada is seemingly behind the US and other G20 countries on the path to comprehensive and effective AML regulations, important steps are being made to close the gap. Progress minimizing risks surrounding gambling, high-value goods dealers, FinTechs, and cryptocurrency is crucial to securing the financial system. Even small points of entry for illegal money allow broader access to financial services across the financial system and facilitate crime.