A consultation paper released today outlines proposed changes to Canada’s anti-money laundering and anti-terrorist financing regime. Many of the proposals affect financial intermediaries such as securities dealers, insurance agents, and their firms.

The paper will serve as a starting point for the parliamentary review required under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act. It will also bring Canada closer to meeting its obligations to the Financial Action Task Force, which has established 40 recommendations to fight money laundering and terrorist financing. This is particularly important as Canada is due to take over the presidency of the FATF in July 2006.

The key measures proposed in the discussion paper include:

  • expanding client identification, due diligence and record-keeping requirements;
  • addressing gaps in the regime with measures such as the reporting of suspicious attempted transactions and information sharing to detect and deter terrorist financing through charities;
  • improving compliance monitoring and enforcement, including the establishment of a registration regime for money service businesses;
  • strengthening the Financial Transactions and Reports Analysis Centre of Canada’s ability to provide intelligence; and
  • enhancing the coordination of Canada’s efforts to combat money laundering and terrorist financing.



The paper also notes that negotiations are continuing with representatives of the legal profession respecting measures to combat money laundering and terrorist financing.

In Nov. 2001, the Federation of Law Societies of Canada launched a constitutional challenge on the application of the PCMLTFA and its regulations to the legal profession. In March 2003, the government repealed the application of the PCMLTFA to the legal profession. At the same time, it indicated that it would develop a new legislative and regulatory regime for the legal profession that better takes into account the duties of legal counsel.

Some provincial/territorial law societies have adopted the model rule in an effort to implement an industry alternative to suspicious and large cash transaction reporting. It is expected that each law society will implement these rules.

The government says it will make a determination regarding the consistency and effectiveness of these rules and whether legislation or regulation is required with respect to large cash transactions. In addition, international standards, as set by the FATF, require that certain client identification, due diligence and record-keeping requirements for the legal profession be implemented through legislation or regulations. Discussions with the legal profession on each of these requirements are continuing and proposals will be forthcoming, the paper notes.

“Our government is committed to maintaining a strong and effective regime to combat both money laundering and terrorist financing,” said Minister of Finance Ralph Goodale said. “The proposals contained in this paper are designed to ensure that Canada is at the forefront in the global fight against these crimes.”

The deadline for interested parties to submit comments on the paper is September 30.