FEDERAL GRINCH BRINGS MORE RED TAPE FOR DEALERS
On Nov. 30, 2024, the Government of Canada published draft amendments to regulations under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (the “PCMLTFA”). The stated purpose of the proposed amendments is to strengthen Canada’s Anti-Money Laundering and Anti-Terrorist Financing (“AML/ATF”) framework and address evolving threats to Canada’s financial system while aligning the country with international standards set by the Financial Action Task Force, the international AML/ATF standard-setting body.
This will be the same reporting system banks use for Source of Funds declarations and that sort of thing. The Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) is Canada’s financial intelligence unit and anti-money laundering and anti-terrorist financing supervisor. Its mandate is to facilitate the detection, prevention and deterrence of money laundering and the financing of terrorist activities, while ensuring the protection of personal information under its control.
Vehicle over $100,000 finance and leasing
The Federal Government want to extend this kind of reporting to vehicle leasing and financing for business purposes, passenger vehicles and goods valued above $100,000.
Part of the problem is this massive document invites comments only until December 30th, and this while the holiday season is upon us! Even the Ottawa bureaucrats are not in the office after this week.
The other problem is we have seen no evidence this problem exists in Ontario. We have never seen a massive prosecution or enforcement in the automotive industry involving money laundering or terrorist funding. This has all the earmarks of a solution in search of a problem and worse, an exercise in optics that will add costs, red tape and increase the price of vehicles for consumers.
The proposed amendments are planned to come into force in two phases. Those related to information sharing would come into force immediately upon publication of the final regulations in the Canada Gazette. The other amendments would come into force on Oct. 1, 2025, to allow businesses to prepare to comply with the new requirements.
Leasing and financing companies will be regulated under FINTRAC and be required to implement compliance measures set out in the PCMLTFA. These include AML/ATF compliance programs, customer due diligence, record-keeping, and reporting of suspicious transactions. Such companies would also be required to verify identity and keep a record of every transaction of $3,000 or more.
An administrative monetary penalty for non-compliance is proposed with a range of $1,000 to $500,000 depending on the seriousness of the violation.
Strengthening border controls
Ottawa also proposes to grant the Canada Border Services Agency (CBSA) the power to seize and forfeit goods where it has reasonable grounds to believe that the goods are proceeds of crime or related to money laundering, terrorist financing or sanctions evasion.
Traders (persons or entities) would be required to attest to the CBSA that imported and exported goods are not proceeds of crime or related to money laundering, terrorist financing, or sanctions evasion. They would also be required to attest that the goods represented as being imported/exported are, in fact, being imported/exported, as a means to combat the use of phantom shipments.
Entities involved in importing and exporting goods would need to implement systems to report transactions to the CBSA, ensuring adherence to the new trade-based financial crime reporting obligations. Record-keeping requirements would also be imposed similar to what is already required for customs and tax purposes.
The UCDA will certainly be making submissions on these concerning developments, and we urge you to do the same here:
https://canadagazette.gc.ca/rp-pr/p1/2024/2024-11-30/html/reg1-eng.html
and let your MP know what you think as well here: