Regulations Amending the Proceeds of Crime (Money Laundering) and Terrorist Financing Regulations and the Proceeds of Crime (Money Laundering) and Terrorist Financing Administrative Monetary Penalties Regulations: SOR/2023-194
Canada Gazette, Part II, Volume 157, Number 21
Registration
SOR/2023-194 September 26, 2023
PROCEEDS OF CRIME (MONEY LAUNDERING) AND TERRORIST FINANCING ACT
P.C. 2023-910 September 25, 2023
Her Excellency the Governor General in Council, on the recommendation of the Minister of Finance, makes the annexed Regulations Amending the Proceeds of Crime (Money Laundering) and Terrorist Financing Regulations and the Proceeds of Crime (Money Laundering) and Terrorist Financing Administrative Monetary Penalties Regulations under subsections 73(1)footnote a and 73.1(1)footnote b of the Proceeds of Crime (Money Laundering) and Terrorist Financing Act.footnote c
Regulations Amending the Proceeds of Crime (Money Laundering) and Terrorist Financing Regulations and the Proceeds of Crime (Money Laundering) and Terrorist Financing Administrative Monetary Penalties Regulations
Proceeds of Crime (Money Laundering) and Terrorist Financing Regulations
1 Subsection 1(2) of the Proceeds of Crime (Money Laundering) and Terrorist Financing Regulations footnote 1 is amended by adding the following in alphabetical order:
- mortgage administrator
- means a person or entity, other than a financial entity, that is engaged in the business of servicing mortgage agreements on real property or hypothec agreements on immovables on behalf of a lender. (administrateur hypothécaire)
- mortgage broker
- means a person or entity that is authorized under provincial legislation to act as an intermediary between a lender and a borrower with respect to loans secured by mortgages on real property or hypothecs on immovables. (courtier hypothécaire)
- mortgage lender
- means a person or entity, other than a financial entity, that is engaged in the business of providing loans secured by mortgages on real property or hypothecs on immovables. (prêteur hypothécaire)
2 Paragraph 4.1(c) of the Regulations is replaced by the following:
- (c) if the person or entity is a real estate broker or sales representative, real estate developer, mortgage administrator, mortgage broker or mortgage lender, the first time that the person or entity is required to verify the identity of the client under these Regulations,
3 (1) Subparagraph 16(1)(a)(i) of the Regulations is replaced by the following:
- (i) an entity referred to in paragraph 5(f) of the Act,
(2) Subsection 16(2) of the Regulations is amended by striking out “and” at the end of paragraph (g) and by adding the following after that paragraph:
- (g.1) a record of measures taken to determine the nature of the clientele and markets served by the foreign financial institution;
(3) Subsection 16(2) of the Regulations is amended by adding the following after paragraph (h):
- (i) a record of the measures taken to assess the reputation of the foreign financial institution with respect to its compliance with anti-money laundering and anti-terrorist financing requirements and the results of those measures; and
- (j) a record of measures taken to assess the quality of the anti-money laundering and anti-terrorist financing supervision of the jurisdiction in which the foreign financial institution was incorporated and the jurisdiction in which it conducts transactions in the context of the correspondent banking relationship and the results of those measures.
(4) Section 16 of the Regulations is amended by adding the following after subsection (3):
(3.1) A financial entity that enters into a correspondent banking relationship shall periodically conduct, at a frequency that is appropriate to the level of risk, based on a risk assessment referred to in subsection 9.6(2) of the Act that takes into account the information collected in respect of the foreign financial institution in accordance with the Act and these Regulations, ongoing monitoring of that correspondent banking relationship for the purpose of
- (a) detecting any transactions that are required to be reported in accordance with section 7 of the Act;
- (b) keeping the information referred to in subsections (2) and (3) and sections 90 and 91 of these Regulations up to date;
- (c) reassessing the level of risk associated with the foreign financial institution’s transactions and activities related to the correspondent banking relationship; and
- (d) determining whether transactions or activities are consistent with the information obtained about the foreign financial institution and with the risk assessment.
4 The Regulations are amended by adding the following after section 64:
Mortgage Administrators, Mortgage Brokers and Mortgage Lenders
64.1 (1) A mortgage administrator is engaged in a business or profession for the purposes of paragraph 5(i) of the Act.
(2) A mortgage broker is engaged in a business or profession for the purposes of paragraph 5(i) of the Act.
(3) A mortgage lender is engaged in a business or profession for the purposes of paragraph 5(i) of the Act.
64.2 A mortgage administrator, mortgage broker or mortgage lender that receives an amount of $10,000 or more in cash in a single transaction shall report the transaction to the Centre, together with the information set out in Schedule 1, unless the amount is received from a financial entity or public body or from a person who is acting on behalf of a client that is a financial entity or public body.
64.3 A mortgage administrator, mortgage broker or mortgage lender that receives an amount of $10,000 or more in virtual currency in a single transaction shall report the transaction to the Centre, together with the information set out in Schedule 4, unless the amount is received from a financial entity or public body or from a person who is acting on behalf of a client that is a financial entity or public body.
64.4 A mortgage administrator, mortgage broker or mortgage lender shall keep a large cash transaction record in respect of every amount of $10,000 or more in cash that they receive in a single transaction, unless the amount is received from a financial entity or public body or from a person who is acting on behalf of a client that is a financial entity or public body.
64.5 A mortgage administrator, mortgage broker or mortgage lender shall keep a large virtual currency transaction record in respect of every amount of $10,000 or more in virtual currency that they receive in a single transaction, unless the amount is received from a financial entity or public body or from a person who is acting on behalf of a client that is a financial entity or public body.
64.6 A mortgage administrator, mortgage broker or mortgage lender shall keep the following records:
- (a) a receipt of funds record in respect of every amount that they receive in connection with a mortgage on real property or a hypothec on immovables, unless the amount is received from a financial entity or public body or from a person who is acting on behalf of a client that is a financial entity or public body;
- (b) an information record in respect of every person or entity
- (i) in the case of a mortgage administrator, for which they service a mortgage agreement on real property or a hypothec agreement on immovables,
- (ii) in the case of a mortgage broker, for which they arrange a loan secured by a mortgage on real property or by a hypothec on immovables, and
- (iii) in the case of a mortgage lender, to which they provide a loan secured by a mortgage on real property or by a hypothec on immovables or from which they raise funds for such a loan;
- (c) in respect of any loan secured by a mortgage on real property or by a hypothec on immovables that it enters into with a client, a record of the client’s financial capacity, the terms of the loan, the nature of the client’s principal business or their occupation and, if the client is a person, the name and address of their business or place of work; and
- (d) if the receipt of funds record or information record is in respect of a corporation, a copy of the part of official corporate records that contains any provision relating to the power to bind the corporation in respect of transactions with the mortgage administrator, mortgage broker or mortgage lender.
5 Section 90 of the Regulations is amended by striking out “and” at the end of paragraph (a) and replacing paragraph (b) with the following:
- (b) shall take reasonable measures to
- (i) ascertain, based on information that is accessible to the public, whether any civil or criminal penalties have been imposed on the foreign financial institution in respect of anti-money laundering or anti-terrorist financing requirements and, if such a penalty has been imposed, shall monitor all transactions conducted in the context of the correspondent banking relationship to detect any transactions that are required to be reported to the Centre under section 7 of the Act,
- (ii) assess, based on information that is accessible to the public, the reputation of the foreign financial institution with respect to its compliance with anti-money laundering and anti-terrorist financing requirements, and
- (iii) assess, based on information that is accessible to the public, the quality of the anti-money laundering and anti-terrorist financing supervision of the jurisdiction in which the foreign financial institution was incorporated and the jurisdiction in which it conducts transactions in the context of the correspondent banking relationship; and
- (c) shall take reasonable measures to determine the nature of the clientele and markets served by the foreign financial institution.
6 The Regulations are amended by adding the following after section 102:
Mortgage Administrators, Mortgage Brokers and Mortgage Lenders
102.1 A mortgage administrator, mortgage broker or mortgage lender shall
- (a) in accordance with section 105, verify the identity of a person who conducts a transaction in respect of which they are required to keep a record under section 64.6;
- (b) in accordance with section 109, verify the identity of a corporation that conducts a transaction referred to in paragraph (a) or on whose behalf a person conducts such a transaction; and
- (c) in accordance with section 112, verify the identity of an entity, other than a corporation, that conducts a transaction referred to in paragraph (a) or on whose behalf a person conducts such a transaction.
7 Paragraph 105(7)(a) of the Regulations is replaced by the following:
- (a) in the cases referred to in section 84, subparagraphs 86(a)(iii) and 88(a)(iii), paragraphs 95(1)(a) to (f), 96(a), 97(1)(a), 100(a), 101(1)(a), 102(a) and 102.1(a), subparagraphs 103(a)(iii) to (vii) and paragraph 104(a), at the time of the transaction;
8 Paragraph 109(4)(i) of the Regulations is replaced by the following:
- (i) in the cases referred to in paragraphs 96(b), 97(1)(b), 100(b), 101(1)(b), 102(b) and 102.1(b), within 30 days after the day on which the transaction is conducted.
9 Paragraph 112(3)(i) of the Regulations is replaced by the following:
- (i) in the cases referred to in paragraphs 96(c), 97(1)(c), 100(c), 101(1)(c), 102(c) and 102.1(c), within 30 days after the day on which the transaction is conducted.
10 Section 120.1 of the Regulations is replaced by the following:
120.1 (1) A British Columbia notary public, British Columbia notary corporation, accountant, accounting firm, real estate broker or sales representative, real estate developer, mortgage administrator, mortgage broker, mortgage lender, dealer in precious metals and precious stones, department or agent of His Majesty in right of Canada or agent or mandatary of His Majesty in right of a province shall take reasonable measures to determine whether a person with whom they enter into a business relationship is a politically exposed foreign person, a politically exposed domestic person, a head of an international organization, a family member — referred to in subsection 2(1) — of one of those persons or a person who is closely associated with a politically exposed foreign person.
(2) A British Columbia notary public, British Columbia notary corporation, accountant, accounting firm, real estate broker or sales representative, real estate developer, mortgage administrator, mortgage broker, mortgage lender, dealer in precious metals and precious stones, department or agent of His Majesty in right of Canada or agent or mandatary of His Majesty in right of a province shall periodically take reasonable measures to determine whether a person with whom they have a business relationship is a politically exposed foreign person, a politically exposed domestic person, a head of an international organization, a family member — referred to in subsection 2(1) — of one of those persons or a person who is closely associated with a politically exposed foreign person.
(3) A British Columbia notary public, British Columbia notary corporation, accountant, accounting firm, real estate broker or sales representative, real estate developer, mortgage administrator, mortgage broker, mortgage lender, dealer in precious metals and precious stones, department or agent of His Majesty in right of Canada or agent or mandatary of His Majesty in right of a province shall take reasonable measures to determine whether a person from whom they receive an amount of $100,000 or more, in cash or in virtual currency, is a politically exposed foreign person, a politically exposed domestic person or a head of an international organization, or a family member — referred to in subsection 2(1) — of, or a person who is closely associated with, one of those persons.
(4) If a British Columbia notary public, British Columbia notary corporation, accountant, accounting firm, real estate broker or sales representative, real estate developer, mortgage administrator, mortgage broker, mortgage lender, dealer in precious metals and precious stones, department or agent of His Majesty in right of Canada or agent or mandatary of His Majesty in right of a province — or any of their employees or officers — detects a fact that constitutes reasonable grounds to suspect that a person with whom they have a business relationship is a politically exposed foreign person, a politically exposed domestic person or a head of an international organization, or a family member — referred to in subsection 2(1) — of, or a person who is closely associated with, one of those persons, the person or entity shall take reasonable measures to determine whether they are such a person.
11 (1) Subsection 140(1) of the English version of the Regulations is replaced by the following:
140 (1) For the purposes of paragraph 7(1)(a), sections 18 and 25 and paragraphs 30(1)(a) and 70(1)(a), if the person or entity that has the obligation to report authorizes another person or entity to receive funds on their behalf, and that other person or entity receives an amount of $10,000 or more in cash in a single transaction in accordance with the authorization, the person or entity that has the obligation to report is deemed to have received the amount when it is received by the other person or entity.
(2) Subsection 140(3) of the Regulations is replaced by the following:
(3) For the purposes of sections 39, 48, 54, 60, 64.2, 66 and 78, if the person or entity that has the obligation to report authorizes another person or entity to receive funds on their behalf in connection with the activity referred to in the applicable section, and that other person or entity receives an amount of $10,000 or more in cash in a single transaction in accordance with the authorization, the person or entity that has the obligation to report is deemed to have received the amount when it is received by the other person or entity.
12 (1) Subsection 141(1) of the English version of the Regulations is replaced by the following:
141 (1) For the purposes of paragraph 7(1)(d), sections 19 and 26 and paragraphs 30(1)(f) and 70(1)(d), if the person or entity that has the obligation to report authorizes another person or entity to receive virtual currency on their behalf, and that other person or entity receives an amount of $10,000 or more in virtual currency in a single transaction in accordance with the authorization, the person or entity that has the obligation to report is deemed to have received the amount when it is received by the other person or entity.
(2) Subsection 141(3) of the Regulations is replaced by the following:
(3) For the purposes of sections 40, 49, 55, 61, 64.3, 67 and 79, if the person or entity that has the obligation to report authorizes another person or entity to receive virtual currency on their behalf in connection with the activity referred to in the applicable section, and that other person or entity receives an amount of $10,000 or more in virtual currency in a single transaction in accordance with the authorization, the person or entity that has the obligation to report is deemed to have received the amount when it is received by the other person or entity.
13 (1) Subsection 142(1) of the English version of the Regulations is replaced by the following:
142 (1) For the purposes of sections 10, 20, 27 and 31 and subsection 72(1), if the person or entity that has the obligation to keep a large cash transaction record authorizes another person or entity to receive funds on their behalf, and that other person or entity receives an amount of $10,000 or more in cash in a single transaction in accordance with the authorization, the person or entity that has the obligation to keep the large cash transaction record is deemed to have received the amount when it is received by the other person or entity.
(2) Subsection 142(3) of the Regulations is replaced by the following:
(3) For the purposes of sections 41, 50, 56, 62, 64.4, 68 and 80, if the person or entity that has the obligation to keep a large cash transaction record authorizes another person or entity to receive funds on their behalf in connection with the activity referred to in the applicable section, and that other person or entity receives an amount of $10,000 or more in cash in a single transaction in accordance with the authorization, the person or entity that has the obligation to keep the large cash transaction record is deemed to have received the amount when it is received by the other person or entity.
14 (1) Subsection 143(1) of the English version of the Regulations is replaced by the following:
143 (1) For the purposes of sections 11, 21, 28, 32 and 73, if the person or entity that has the obligation to keep a large virtual currency transaction record authorizes another person or entity to receive virtual currency on their behalf, and that other person or entity receives an amount of $10,000 or more in virtual currency in a single transaction in accordance with the authorization, the person or entity that has the obligation to keep the large virtual currency transaction record is deemed to have received the amount when it is received by the other person or entity.
(2) Subsection 143(3) of the Regulations is replaced by the following:
(3) For the purposes of sections 42, 51, 57, 63, 64.5, 69 and 81, if the person or entity that has the obligation to keep a large virtual currency transaction record authorizes another person or entity to receive virtual currency on their behalf in connection with the activity referred to in the applicable section, and that other person or entity receives an amount of $10,000 or more in virtual currency in a single transaction in accordance with the authorization, the person or entity that has the obligation to keep the large virtual currency transaction record is deemed to have received the amount when it is received by the other person or entity.
15 Subparagraph 156(1)(c)(i) of the Regulations is replaced by the following:
- (i) their clients, business relationships and correspondent banking relationships,
16 Schedule 1 to the Regulations is amended by replacing the references after the heading “SCHEDULE 1” with the following:
(Paragraph 7(1)(a), sections 18 and 25, paragraphs 30(1)(a) and 33(1)(a), sections 39, 48, 54, 60, 64.2 and 66, paragraph 70(1)(a), section 78, subsection 131(3) and section 152)
17 Schedule 4 to the Regulations is amended by replacing the references after the heading “SCHEDULE 4” with the following:
(Paragraph 7(1)(d), sections 19 and 26, paragraphs 30(1)(f) and 33(1)(f), sections 40, 49, 55, 61, 64.3 and 67, paragraph 70(1)(d), section 79, subsection 131(3) and section 152)
18 The English version of the Regulations is amended by replacing “Her Majesty” with “His Majesty” in the following provisions:
- (a) the definition dealer in precious metals and precious stones in subsection 1(2);
- (b) paragraph (e) of the definition financial entity in subsection 1(2);
- (c) paragraph (a) of the definition public body in subsection 1(2);
- (d) subparagraph 16(1)(a)(v);
- (e) subsection 65(1);
- (f) the heading before section 76 and sections 76 to 81;
- (g) the portion of section 82 before paragraph (a);
- (h) the heading before section 104; and
- (i) the portion of section 104 before paragraph (a).
Proceeds of Crime (Money Laundering) and Terrorist Financing Administrative Monetary Penalties Regulations
| Item | Column 1 Provision of Act |
Column 2 Provision of Proceeds of Crime (Money Laundering) and Terrorist Financing Regulations |
Column 3 Classification of Violation |
|---|---|---|---|
| 18.1 | 9.4(1)(e) | 16(3.1) | Serious |
| Item | Column 1 Provision of Act |
Column 2 Provision of Proceeds of Crime (Money Laundering) and Terrorist Financing Regulations |
Column 3 Classification of Violation |
|---|---|---|---|
| 67.1 | 9(1) | 64.2 | Minor |
| 67.2 | 9(1) | 64.3 | Minor |
| 67.3 | 6 | 64.4 | Minor |
| 67.4 | 6 | 64.5 | Minor |
| 67.5 | 6 | 64.6 | Minor |
| Item | Column 1 Provision of Act |
Column 2 Provision of Proceeds of Crime (Money Laundering) and Terrorist Financing Regulations |
Column 3 Classification of Violation |
|---|---|---|---|
| 92 | 9.4(1)(a) | 90(b)(i) | Minor |
| 92.1 | 9.4(1)(a) | 90(b)(ii) | Minor |
| 92.2 | 9.4(1)(e) | 90(b)(iii) | Minor |
| 92.3 | 9.4(1)(e) | 90(c) | Minor |
| Item | Column 1 Provision of Act |
Column 2 Provision of Proceeds of Crime (Money Laundering) and Terrorist Financing Regulations |
Column 3 Classification of Violation |
|---|---|---|---|
| 103.1 | 6.1 | 102.1 | Minor |
Coming into Force
20 These Regulations come into force on the first anniversary of the day on which they are published in the Canada Gazette, Part II.
N.B. The Regulatory Impact Analysis Statement for these Regulations appears following SOR/2023-193, Regulations Amending Certain Regulations Made Under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act.