Obligations for Canadian businesses dealing in virtual currencies take effect

Amendments to the Proceeds of Crime - Money Laundering and Terrorist Financing Act (PCMLTFA) have come into effect begging of June 2021.

These create or change obligations for reporting entities (REs), including specific record-keeping and reporting obligations related to virtual currency transactions.

The first phase of amendments to the PCMLTFA came into force on 1 June 2020 and added regulatory obligations for businesses dealing in virtual currencies. These obligations included requirements for domestic and foreign persons and entities dealing in virtual currencies to register with the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) as ‘money services businesses’ (MSBs), implement a full compliance program, and report any transactions that they suspect may be related to money laundering or terrorist financing activity.

The second phase of the amendments came into force on 1 June 2021 and require REs to comply with obligations related to virtual currency transactions by submitting a Large Virtual Currency Transaction Report (LVCTR) to FINTRAC when they receive an amount of virtual currency equivalent to CAD 10,000 or more in a single transaction or over multiple transactions in a 24-hour period.

FINTRAC has indicated a flexible transition period between 1 June 2021 and 1 December 2021 to provide REs with enough time to implement their LVCTR systems and meet their reporting obligations.

As of 1 June 2021, REs must (i) keep records of all reportable transactions, (ii) complete the implementation of a LVCTR system as soon as possible prior to 1 December 2021, and (iii) submit all unreported large virtual currency transactions for the period of 1 June 2021 to 30 November 2021 as soon as possible and no later than 31 March 2022 using FINTRAC Upload or the FINTRAC web reporting system (F2R). After 1 December 2021, REs are required to submit LVCTRs within five business days after the date on which the virtual currency amount is received.

Also, effective as of 1 June 2021 is the ‘travel rule’ which requires specific information to be included when an EFT or virtual currency transfer is sent or received. This requirement applies to financial entities, domestic, and foreign MSBs (and casinos with respect to EFTs) when initiating EFTs or virtual currency transfers. You can find more info related to the Canadian AML amendments here.