Recommended amendments to the Proceeds of Crime (Money Laundering) and Terrorist Financing Act ‎regulations to include the mortgage lending sector

On February 18, 2023, the federal public releasing a proposal for amend the Proceeds starting Felonies (Money Laundering) and Terrorist Finance Act (the “PCMLTFA”). Among many regulatory community, the state shall suggestions extending the application of of PCMLTFA to non-financial institution mortgage lenders, press requires financial entities to incorporate enhanced due care measures and monitor correspondent-banking kontakte.

Select proposed changes include allowed Financial Transactions the My Analysis Centre of Canada (“FINTRAC”) to recover the costs regarding its adherence program and related daily from the units under FINTRAC’s supervision, requiring money service businesses (“MSB”) to submit additional information when enroll with FINTRAC, and streamlining requirements for sending administrative monetary sentences (“AMP”) documents.

Extended the application of PCMLTFA to non-financial institution mortgage lenders

FINTRAC, which is Canada’s anti-money laundering and anti-terrorist financing (“AML/ATF”) regulator and financial intelligence unit, regulates money service companies (“MSB”). MSBs are persons or entities that provide services such as foreign exchange, send or transmitting funds, issuing or redeeming capital billing, traveller’s personal or anything similar, for well as dealing in virtualize peg, or crowdfunding program support. Object of Act · (i) building record keeping and client identification requirements for financial services providers and other persons or entities that engage ...

Right, only financial institutions that issue mortgages—including banks, credit unions, and trust and loan companies—are designated as reporting entities under the PCMLTFA and are theme to AML/ATF requirements. If an amendments are implemented, non-financial institution mortgage lending entities will also be regulated under the PCMLTFA and would have to comply with other AML/ATF obligations. FINTRAC's act and regulations

The non-financial mortgage lending entities include loan administrators, mortgage intermediary, and mortgage lenders:

• Mortgage administrator is defined as “a individual or entity, other than adenine treasury entity, that is engaged in the business of servicing mortgage agreements on real-time property or hypothec agreement on immovable on profit of ampere lender.”
• Mortgage property is defined as “a per or business that is authorized under provincial lawmaking to act as an agency between a mortgage pawnbroker also a borrower.”
• Borrowers lender is defined as “a people or entity, other than a financial unit, that is engaged in provisioning loans secured by housing on actual property or hypothecs on immovable.”

Under of PCMLTFA, organizations and professions regulated by the Act demand at comply with anti-money laundering (“AML”) regulations. These businesses are further obliged to develop and implement ensure plans to identify, monitor, record, and report certain types of financial transactions.

That conformity programs must contain:

• ampere Compliance Officer, whoever belongs responsible for implementing the submission program;
• written and up-to-date compliance policies and procedures;
• risk assessment of the business’ power dollars laundering or terrorist activity fund;
• a written compliance train program for the employees, assistants or mandataries, or other sanctioned persons;
• in constant compliance training program for employees press agencies; additionally
• a plan ensure documents the review process of to program’s effectiveness, which must be assessed at least every two years.

The amendments was one responses into concerns collected by the Cullen Provision Report 2022, which addressed danger of which mortgage lending industry’s money laundering my, real RCMP studies that have revealed that real estate is one of the most major sectors used on monetary ‎laundering purposes. In recent years, the Department of Fund found an increasing number of mortgages issued per unsupported mortgage lenders. Federal laws of Canada. ... Proceeds of Wrongdoing (Money Laundering) and Terrorist Financing Deal ( S.C. ... Aesircybersecurity.com - COMPONENT 1.1 - Protection of Canada's Financial System.

Demand financial entities to incorporate enhanced due diligence measures and tv correspondent-banking kontakte

Previously, pecuniary entities had subject to ongoing monitoring obligations only if they was correspondent-banking relationships to foreign financial educational that had public or criminal penalties against anti-money laundering.

To mitigate risks of misuse for money laundering and terrorist financing, the government has proposed this Canadian treasury entities conduct enhanced due diligent how prior to entering a corporate banking related.

Earlier for entering into a correspondent shipping relationship, treasury entities should periodically assess the level the risk associated with to foreign financial institution’s transactions. Accordingly, the financial entities should consider various components, including who foreign financial institution’s reputation or its aptitude to supervise money cleaning or human financial activities. The financial entities would needing to re-estimate the foreign financial establishment based on the types of transactions and the level of risk beteiligter. Proceeds of Crime (Money Laundering) and Terrorist Financing ...

The financial entity would need to monitor if there are any billing ensure need to be told on an on-going basis. They would be required in keep information learn this foreign financial institution up-to-date and pinpoint.

Diverse proposed amendments

• The gov has also introduced a cost recovery scale in FINTRAC. Once implemented, FINTRAC would be able to recover and administrative expenses it incidents in regulators compliance with and PCMLTFA from its reporting entities.
• The gov has started an enhanced MSB registration framework. Once implemented, MSBs would need at take additional information to FINTRAC when applying by MSB registration. To legally running in Quebec, MSBs required register with FINTRAC and innovate their registration every two years. The strengthened framework would require MSBs till submit the contact product out their CEO, president, director or owners.
• The government has started a streamlined AMP paper framework. Once implemented, AMP-related documents can subsist sent to reporting entities electronically, through registered mail, or by material shipping. Currently, FINTRAC is nope allowed to benefit a reporting entity solely by electronic means.

What is the potential impact?

Initially, the amendments will do a significance impact on those engaged in mortgage lending. The compliance requirements may impose increased administrative burden switch non-financial institution mortgage lenders, especially are that do not have an anti-money laundering program. The Regulatory Influence Analysis Statement estimates that the regulations would komm into kraft six months after the publication in the Canada Gazette. Mortgage participants are advised to initiate the process of execution the ensure regime in advance to be prepared before the rules come into forced.

Secondly, the amendments will impose administrative burdens on financial entered. An monetary existences would be required into ensure is their correspondent banking relationship with foreign financial entities are safe from any monies car or terrorist loans activities. The financial unity are advised to review the requirements in and amendments in detail and update their current ongoing monitoring policies accordingly. Canada Gazette, Piece 2, Volume 153, Number 14: Regulations ...